UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: May 27, 2015

(Date of earliest event reported)

 

 

CA, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

(State or other jurisdiction of incorporation)

 

1-9247   13-2857434
(Commission File Number)   (IRS Employer Identification No.)

520 Madison Avenue

New York, New York

   10022
(Address of principal executive offices)   (Zip Code)

(800) 225-5224

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

x Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

Acquisition Agreement

On May 27, 2015, CA, Inc., a Delaware corporation (the “Company”), Rally Software Development Corp., a Delaware corporation (“Rally”), and Grand Prix Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company (“Purchaser”), entered into an Acquisition Agreement (the “Acquisition Agreement”). Pursuant to the Acquisition Agreement, and upon the terms and subject to the conditions thereof, Purchaser has agreed to commence a cash tender offer to acquire all of the shares of Rally’s common stock (the “Offer”) for a purchase price of $19.50 per share, net to the holders thereof in cash, without interest (the “Offer Price”). On May 27, 2015, the boards of directors of both the Company and Rally approved the terms of the Acquisition Agreement.

The consummation of the Offer will be conditioned on (i) at least a majority of the shares of Rally’s common stock having been validly tendered into and not withdrawn from the Offer, (ii) receipt by the Company and Purchaser of certain regulatory approvals, (iii) the accuracy of the representations and warranties contained in the Acquisition Agreement, subject to certain qualifications, and (iv) other customary conditions. The Offer is not subject to a financing condition.

Following the consummation of the Offer, the Acquisition Agreement provides that Purchaser will merge with and into Rally (the “Merger”) and Rally will become a wholly owned subsidiary of the Company. In the Merger, each outstanding share of Rally’s common stock (other than shares owned by the Company, Rally or Purchaser or any of their direct or indirect wholly owned subsidiaries and shares with respect to which appraisal rights are properly exercised in accordance with Delaware law) will be converted into the right to receive the Offer Price. The consummation of the Merger is subject to certain closing conditions.

In addition, in connection with the transactions contemplated by the Acquisition Agreement, all vested options and vested restricted stock units of Rally will be converted into the right to receive cash based on a formula described in the Acquisition Agreement, and all unvested options and unvested restricted stock units will be converted into the right to receive cash that will vest on the same terms and conditions set forth in the applicable stock plans of Rally under which they were granted and the applicable agreements evidencing the grants thereof, including without limitation provisions with respect to vesting.

The Acquisition Agreement contains customary representations, warranties and covenants of the parties. Rally has agreed to refrain from engaging in certain activities until the effective time of the Merger. In addition, under the terms of the Acquisition Agreement, Rally agrees not to solicit or support any alternative acquisition proposals, subject to customary exceptions for Rally to respond to and support unsolicited proposals in the exercise of the fiduciary duties of the board of directors of Rally. Rally will be obligated to pay a termination fee of $17.4 million to the Company in certain circumstances.

The foregoing description of the Acquisition Agreement does not purport to be complete and is qualified in its entirety by reference to the Acquisition Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Acquisition Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, Rally or Purchaser. In particular, the assertions embodied in the representations and warranties contained in the Acquisition Agreement are made solely for the benefit of the parties thereto and the representations and warranties of Rally set forth therein are qualified by information in confidential disclosure schedules provided by Rally in connection with the signing of the Acquisition Agreement. These confidential disclosure schedules contain information that modify, qualify and create exceptions to the representations and warranties of Rally set forth in the Acquisition Agreement. Moreover, certain representations and warranties in the Acquisition Agreement were used for the purpose of allocating risk between the Company, Rally and Purchaser, rather than establishing matters of fact. Accordingly, the representations and warranties in the Acquisition Agreement may not constitute the actual state of facts about the Company, Rally or Purchaser.

Support Agreements

In order to induce the Company and Purchaser to enter into the Acquisition Agreement, certain of Rally’s directors and named executive officers, solely in his or her capacity as a stockholder of Rally, entered into Support Agreements with the Company and Purchaser (the “Support Agreements”), concurrent with the execution and delivery of the Acquisition Agreement. Shares held by these directors and officers and their affiliates subject to the Support Agreements represent, in the aggregate, approximately 5.9% of the shares of Rally’s common stock outstanding on the date of the Acquisition Agreement (including shares issuable upon exercise of options and other convertible securities). Subject to the terms and conditions of the Support Agreements, such stockholders agreed, among other things, solely in their capacities as stockholders of Rally, to tender their shares in the Offer and, if required, to vote their shares in favor of adoption of the Acquisition Agreement.

 

Item 7.01 Regulation FD Disclosure.

Updated Guidance

While the Company will provide official guidance upon consummation of the Merger described above, the estimated financial impact of the Merger is provided by the Company herein. The following information contains “forward-looking statements” (as defined below). As compared with the Company’s previous fiscal year 2016 guidance, the Company expects the Merger to: add between one to two percentage points of revenue; be modestly dilutive to both operating margins and diluted earnings per share; adversely affect GAAP operating margin by two percentage points and non-GAAP operating margin by one percentage point (with the 1% difference between the effect on GAAP and non-GAAP operating margin primarily related to purchased software amortization); and have no material effect on our cash flow from operations.

Please see below for information regarding non-GAAP financial measures, the cautionary statement regarding forward-looking statements, and the reconciliation of projected GAAP metrics to projected non-GAAP metrics, which are part of the disclosure under this Item 7.01 of Form 8-K.

Non-GAAP Financial Measures

This Form 8-K and the accompanying table include certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Non-GAAP metrics for operating margin exclude the following items: share-based compensation expense; non-cash amortization of purchased software and other intangible assets; charges relating to rebalancing initiatives that are large enough to require approval from the Company’s Board of Directors, fiscal 2007 restructuring costs and certain other gains and losses, which include the gains and losses since inception of hedges that mature within the quarter, but exclude gains and losses of hedges that do not mature within the quarter. The Company began expensing costs for internally developed software where development efforts commenced in the first quarter of fiscal 2014. Due to this change, the Company also adds back capitalized internal software costs and excludes amortization of internally developed software costs previously capitalized from these non-GAAP metrics. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, non-GAAP financial measures facilitate management’s internal comparisons to the Company’s historical operating results to competitors’ operating results and to estimates made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance and they are key variables in determining management incentive compensation. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this communication (such as statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates,” “targets” and similar expressions relating to the future) constitute “forward-looking statements” that are based upon the beliefs of, and assumptions made by, the Company’s management, as well as information currently available to management. These forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to consummate the transaction; the risk that an insufficient number of Rally’s stockholders tender into the Offer; the risk that regulatory approvals required for the acquisition are not obtained or are obtained subject to conditions that are not anticipated; the risk that the other conditions to the closing of the acquisition are not satisfied; potential adverse reactions or changes to customer, supplier, partner or employee relationships, including those resulting from the announcement or completion of the acquisition; uncertainties as to the timing of the acquisition; competitive responses to the proposed acquisition; response by activist stockholders to the acquisition; uncertainty of the expected financial performance of the Company following completion of the proposed transaction; the ability to successfully integrate Rally’s operations and employees in a timely manner; the ability to realize anticipated synergies, cost savings and operational efficiencies; unexpected costs, charges or expenses resulting from the acquisition; litigation relating to the acquisition; the inability to retain key personnel; any changes in general economic and/or industry specific conditions; and other factors described more fully in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”). Should one or more of these risks or uncertainties occur, or should the Company’s assumptions prove incorrect, actual results may vary materially from those described herein as believed, planned, anticipated, expected, estimated, targeted or similarly expressed in a forward-looking manner. The Company assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

CA Technologies

Reconciliation of Projected GAAP Operating Margin to Projected non-GAAP Operating Margin

 

     Fiscal Year Ending
March 31, 2016		  

Projected GAAP operating margin

      28 % 

Non-GAAP operating adjustments:

   

Purchased software amortization

      4 % 

Other intangibles amortization

      1 % 

Internally developed software products amortization

      3 % 

Share-based compensation

      2 % 
  

 

 

  

Total non-GAAP operating adjustment

   10 % 
  

 

 

  

Projected non-GAAP operating margin

   38 % 
  

 

 

  

Refer to the discussion of non-GAAP financial measures included in this Form 8-K for additional information.

In accordance with General Instruction B.2. of Form 8-K, the information in this Current Report on Form 8-K furnished pursuant to Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 8.01 Other Events.

On May 27, 2015, the Company and Rally issued a joint press release announcing that they had entered into the Acquisition Agreement. A copy of the press release is attached hereto as Exhibit 99.1 to this report.

Notice to Investors

The tender offer for the outstanding shares of Rally described herein has not yet commenced. This communication is provided for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any securities of Rally pursuant to the Offer or otherwise. Any offers to purchase or solicitations of offers to sell will be made only pursuant to the Tender Offer Statement on Schedule TO (including the offer to purchase, the letter of transmittal and other documents relating to the tender offer) which will be filed with the SEC by the Company and Purchaser. In addition, Rally will file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer. Rally’s stockholders are advised to read these documents, any amendments to these documents and any other documents relating to the Offer that are filed with the SEC carefully and in their entirety prior to making any decision with respect to the Offer because they contain important information, including the terms and conditions of the Offer. Rally’s stockholders may obtain copies of these documents (when they become available) for free at the SEC’s website at www.sec.gov.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
No.

   

Description

2.1    Acquisition Agreement among CA, Inc., Grand Prix Acquisition Corp. and Rally Software Development Corp. dated as of May 27, 2015. (Certain schedules referenced in the Acquisition Agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the U.S. Securities and Exchange Commission upon request.)
99.1    Joint Press Release of CA, Inc. and Rally Software Development Corp. dated May 27, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

CA, Inc.
Date: May 27, 2015 By:

/s/ Michael C. Bisignano

Michael C. Bisignano
Executive Vice President and General Counsel

Exhibit Index

 

Exhibit
No.

  

Description

2.1   Acquisition Agreement among CA, Inc., Grand Prix Acquisition Corp. and Rally Software Development Corp. dated as of May 27, 2015. (Certain schedules referenced in the Acquisition Agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the U.S. Securities and Exchange Commission upon request.)
99.1   Joint Press Release of CA, Inc. and Rally Software Development Corp. dated May 27, 2015.


Exhibit 2.1

CONFIDENTIAL

ACQUISITION AGREEMENT

BY AND AMONG

CA, INC.

GRAND PRIX ACQUISITION CORP.

AND

RALLY SOFTWARE DEVELOPMENT CORP.

May 27, 2015

TABLE OF CONTENTS

 

                 Page  
ARTICLE I THE OFFER      2   
           1.1      The Offer.      2   
           1.2      Company Offer Support      8   
ARTICLE II THE MERGER      12   
           2.1      The Merger      12   
           2.2      The Closing      13   
           2.3      The Surviving Corporation.      13   
           2.4      General Effects of the Merger      14   
           2.5      Effect of the Merger on Capital Stock      14   
           2.6      Payment of Merger Consideration      16   
           2.7      Necessary Further Action      18   
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY      19   
           3.1      Organization and Good Standing      19   
           3.2      Authorization and Enforceability.      20   
           3.3      Required Governmental Consents      21   
           3.4      Conflicts      21   
           3.5      Capitalization      22   
           3.6      Subsidiaries      23   
           3.7      SEC Reports      24   
           3.8      Financial Statements and Controls      25   
           3.9      Schedule 14D-9; Offer Documents      27   
           3.10      No Undisclosed Liabilities      27   
           3.11      Absence of Certain Changes      27   
           3.12      Material Contracts      29   
           3.13      Permits      33   
           3.14      Litigation      33   
           3.15      Taxes      33   
           3.16      Environmental Matters      36   
           3.17      Employee Benefit Plans.      36   
           3.18      Labor Matters.      40   
           3.19      Real Property      42   
           3.20      Tangible Personal Property      43   
           3.21      Intellectual Property      43   
           3.22      Compliance with Laws      47   
           3.23      Export Control and Import Laws      47   
           3.24      Anti-Corruption and Anti-Bribery Laws      48   
           3.25      Privacy and Data Protection      49   
           3.26      Customers; Suppliers; Distributors      50   
           3.27      Insurance      51   
           3.28      Related Party Transactions      51   
           3.29      Brokers      51   

 

-i-

TABLE OF CONTENTS

(continued)

 

                 Page  
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB      51   
           4.1      Organization      51   
           4.2      Authorization and Enforceability      52   
           4.3      Required Governmental Consents      52   
           4.4      Conflicts      52   
           4.5      Offer Documents; Schedule 14D-9      53   
           4.6      Ownership of Company Capital Stock      53   
           4.7      Funds      53   
           4.8      Litigation      53   
ARTICLE V CONDUCT OF COMPANY BUSINESS      54   
           5.1      Affirmative Obligations      54   
           5.2      Restrictions      54   
           5.3      No Control      58   
ARTICLE VI ADDITIONAL AGREEMENTS      58   
           6.1      Non-Solicitation of Competing Acquisition Proposals.      58   
           6.2      Commercially Reasonable Efforts to Complete      60   
           6.3      Regulatory Approvals.      60   
           6.4      Anti-Takeover Statutes      60   
           6.5      Access to Books, Records, Properties and Personnel      61   
           6.6      Notification Obligations.      62   
           6.7      Transaction-Related Litigation      63   
           6.8      Treatment of Company Warrants and Company Equity Awards.      64   
           6.9      Company Employee Matters.      67   
           6.10      Company Director and Officer Indemnification and Insurance      69   
           6.11      Section 16 Matters      71   
           6.12      Compensation Committee Approval of New Compensation Arrangements      71   
           6.13      Termination of Certain Agreements      71   
           6.14      Export Control Voluntary Disclosure      71   
           6.15      Obligations of Merger Sub      72   
ARTICLE VII TERMINATION OF AGREEMENT      72   
           7.1      Termination Prior to Acceptance Time      72   
           7.2      Notice and Effect of Termination      74   
           7.3      Termination Fees.      74   
ARTICLE VIII GENERAL PROVISIONS      76   
           8.1      Certain Interpretations      76   
           8.2      Non-Survival of Representations and Warranties      76   
           8.3      Amendment      77   
           8.4      Waiver      77   

 

-ii-

TABLE OF CONTENTS

(continued)

 

                 Page  
           8.5      Assignment      77   
           8.6      Notices      77   
           8.7      Fees and Expenses      78   
           8.8      Confidentiality      78   
           8.9      Public Disclosure      78   
           8.10      Entire Agreement      79   
           8.11      No Third Party Beneficiaries      79   
           8.12      Remedies      79   
           8.13      Severability      79   
           8.14      Governing Law      80   
           8.15      Consent to Jurisdiction      80   
           8.16      WAIVER OF JURY TRIAL      80   
           8.17      Counterparts      80   

 

-iii-

INDEX OF ANNEXES

Annex A – Certain Defined Terms

INDEX OF DEFINED TERMS

 

Defined Term

   

Reference

   

Page

10-Ks

    Article III    19

2014 10-K

    Article III    19

2015 10-K

    Article III    19

401(k) Plan

    6.9(f)    68

401(k) Termination Date

    6.9(f)    68

Acceptance Time

    1.1(f)    7

Acquisition Proposal

    Annex A    A-1

Acquisition Transaction

    Annex A    A-1

Affiliate

    Annex A    A-1

Affordable Care Act

    3.17(k)    39

Agreement

    Preamble    1

Anti-Corruption and Anti-Bribery Laws

    Annex A    A-1

Antitrust Laws

    Annex A    A-2

Assets

    3.20    42

Balance Sheet

    Annex A    A-2

BIS

    6.14    71

Book-Entry Shares

    2.6(c)    16

Business Day

    Annex A    A-2

Canceled Company Shares

    2.5(b)(ii)    15

Capitalization Date

    3.5(a)    22

Capitalization Representation

    1.1(b)(iv)    3

Certificate of Merger

    2.1    12

Certificates

    2.6(c)    16

Change in Control Plan

    Annex A    A-2

Closing

    2.2(a)    13

Closing Date

    2.2(a)    13

COBRA

    Annex A    A-2

Code

    Annex A    A-2

Collective Bargaining Agreements

    3.18(a)    40

Company

    Preamble    1

Company Board

    Annex A    A-2

Company Board Recommendation

    1.2(b)(i)    9

Company Board Recommendation Change

    1.2(b)(ii)    10

Company Capital Stock

    Annex A    A-2

Company Disclosure Schedule

    Article III    19

Company ESPP

    6.9(a)    67

Company Indemnified Parties

    6.10(a)    69

 

-iv-

Defined Term

   

Reference

   

Page

Company Intellectual Property

    Annex A    A-2

Company Material Adverse Effect

    Annex A    A-2

Company Options

    Annex A    A-4

Company Phantom Stock Rights

    Annex A    A-4

Company Preferred Stock

    Annex A    A-4

Company Products

    Annex A    A-4

Company Registered Intellectual Property

    3.21(b)    43

Company Representatives

    6.1(b)    58

Company RSUs

    Annex A    A-4

Company Securities

    3.5(c)    23

Company Shares

    Annex A    A-4

Company Stock Plans

    Annex A    A-4

Company Stockholders

    Annex A    A-4

Company Warrants

    Annex A    A-4

Compensation Committee

    3.2(f)    20

Confidentiality Agreement

    8.8    78

Consent

    3.3    21

Continuing Employees

    6.9(b)    67

Contract

    Annex A    A-4

Controlled Group Liability

    Annex A    A-4

Copyrights

    Annex A    A-6

Customer Data

    Annex A    A-4

Delaware Law

    Annex A    A-5

Delaware Secretary of State

    2.1    12

Determination Notice

    1.2(b)(iii)    10

DGCL

    Annex A    A-5

Dissenting Company Shares

    2.5(b)(iii)(A)    16

Dodd-Frank Act

    3.7    25

D&O Insurance

    6.10(b)    70

DOJ

    Annex A    A-5

DOL

    Annex A    A-5

Domain Names

    Annex A    A-6

EAR

    3.23(a)    47

ECCNs

    3.23(b)    47

Effective Time

    2.1    13

Employee

    Annex A    A-5

Employee Plans

    3.17(a)    37

Employment Offer Letter

    Annex A    A-2

Employment Offer Letters

    Annex A    A-2

Environmental Laws

    Annex A    A-5

Environmental Permit

    Annex A    A-5

ERISA

    Annex A    A-5

ERISA Affiliate

    Annex A    A-5

Exchange Act

    Annex A    A-5

Exchange Fund

    2.6(b)    16

 

-v-

Defined Term

   

Reference

   

Page

Expiration Date

    1.1(e)    6

Export Controls

    3.23(a)    46

Final Purchase

    6.9(a)    65

FTC

    Annex A    A-5

Fundamental Representations

    1.1(b)(iv)    3

Funded International Employee Plan

    3.17(c)    38

GAAP

    Annex A    A-5

Government Contract

    Annex A    A-5

Governmental Authority

    Annex A    A-6

Hazardous Material

    Annex A    A-6

Hazardous Materials Activity

    Annex A    A-6

HSR Act

    Annex A    A-6

Import Restrictions

    3.23(a)    47

In-Licenses

    3.21(i)    45

Initial Expiration Date

    1.1(e)    6

Initial Value

    Annex A    A-6

Intellectual Property Rights

    Annex A    A-6

International Employee Plans

    3.17(b)    37

Intervening Event

    Annex A    A-6

IP Contracts

    3.21(j)    45

IRS

    Annex A    A-7

ITAR

    3.23(a)    47

Key Employees

    Annex A    A-7

Knowledge

    Annex A    A-7

Law or Laws

    Annex A    A-7

Leased Real Property

    3.19(b)    42

Leases

    3.19(b)    42

Legal Proceeding

    Annex A    A-7

Liabilities

    Annex A    A-7

Lien

    Annex A    A-7

Material Contract

    3.12(a)    28

Material Customer

    3.26(a)    50

Material Distributor

    3.26(c)    50

Material Supplier

    3.26(b)    50

Maximum Annual Premium

    6.10(b)    70

Merger

    Annex A    A-12

Merger Consideration

    2.5(b)(i)    15

Merger Sub

    Annex A    A1

Minimum Condition

    1.1(b)(i)    3

Moral Rights

    Annex A    A-1

Non-U.S. Employees

    3.17(m)    39

NYSE

    Annex A    A-7

NYSE Rules

    Annex A    A-7

Object Code

    Annex A    A-8

OFAC

    0    47

 

-vi-

Defined Term

   

Reference

   

Page

Off-the-Shelf Software

    3.21(i)    44

Offer

    Preamble    1

Offer Conditions

    1.1(b)(ix)    5

Offer Documents

    1.1(g)    7

Offer Price

    Annex A    A-1

Open Source License

    Annex A    A-8

Open Source Materials

    Annex A    A-8

Option Consideration

    6.8(b)(i)    64

Order

    Annex A    A-8

Ordinary Course License

    Annex A    A-8

Out-Licenses

    3.21(j)    45

Parent

    Annex A    A-1

Parent Material Adverse Effect

    Annex A    A-8

Patents

    Annex A    A-6

Payment Agent

    2.6(a)    16

Permits

    3.13    33

Permitted Encumbrances

    Annex A    A-8

Person

    Annex A    A-8

Personal Data

    Annex A    A-8

Phantom Stock Plan

    Annex A    A-9

Privacy Legal Requirements

    Annex A    A-9

Privacy Policy

    Annex A    A-9

RAVEN

    2.3(a)(i)    14

Registered Intellectual Property

    Annex A    A-9

Regulatory Condition

    1.1(b)(ii)    3

RSU Consideration

    6.8(c)(i)    65

Sarbanes-Oxley Act

    Annex A    A-9

Schedule 14D-9

    1.2(a)    8

Schedule TO

    1.1(g)    7

SEC

    Annex A    A-9

SEC Reports

    3.7    24

Section 409A

    3.15(q)    36

Securities Act

    Annex A    A-9

Software

    Annex A    A-10

Source Code

    Annex A    A-10

Subsidiary

    Annex A    A-10

Subsidiary Securities

    3.6(d)    24

Superior Proposal

    Annex A    A-10

Support Agreement

    Annex A    A-2

Support Agreements

    Annex A    A-2

Surviving Corporation

    Annex A    A-12

Tail Policy

    6.10(b)    70

Tax

    Annex A    A-10

 

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Defined Term

   

Reference

   

Page

Tax Returns

    Annex A    A-11

Technology

    Annex A    A-11

Termination Date

    7.1(c)    72

Termination Fee Amount

    7.3(a)    75

Terminated Agreements

    6.12    71

Terminated Plan

    6.9(e)    68

Trade Secrets

    Annex A    A-6

Trademarks

    Annex A    A-6

Unvested Option

    Annex A    A-11

Unvested Option Cash

    6.8(b)(ii)    64

Unvested Phantom Stock Right

    Annex A    A-11

Unvested Phantom Stock Right Consideration

    6.8(d)(iii)    66

Unvested RSU

    Annex A    A-11

Unvested RSU Cash

    6.8(c)(ii)    65

USML

    3.23(b)    47

Vested Option

    Annex A    A-11

Vested Phantom Stock Right

    Annex A    A-11

Vested RSU

    Annex A    A-11

 

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ACQUISITION AGREEMENT

THIS ACQUISITION AGREEMENT (this “Agreement”) is made and entered into as of May 27, 2015 by and among CA, Inc., a Delaware corporation (“Parent”), Grand Prix Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and Rally Software Development Corp., a Delaware corporation (the “Company”). All capitalized terms that are used in this Agreement but not defined herein shall have the respective meanings ascribed thereto in Annex A.

W I T N E S S E T H:

WHEREAS, Parent desires to acquire the Company on the terms and subject to the conditions set forth in this Agreement.

WHEREAS, in order to effect the foregoing acquisition, Parent and the Company have agreed that Merger Sub shall commence a tender offer (the “Offer”) to acquire all of the outstanding Company Shares at a price of Nineteen Dollars and Fifty Cents ($19.50) per Company Share, net to the holder thereof in cash, without interest (such amount, or any higher amount per Company Share that may be paid pursuant to the Offer, being hereinafter referred to as the “Offer Price”), all upon the terms and subject to the conditions set forth herein.

WHEREAS, in order to complete the foregoing acquisition, following the completion of the Offer, Merger Sub will be merged with and into the Company, each Company Share (other than Cancelled Company Shares or Dissenting Company Shares) that is then outstanding will thereupon be cancelled and converted into the right to receive cash in an amount equal to the Offer Price, and the Company will survive the foregoing merger as a wholly-owned subsidiary of Parent, all upon the terms and subject to the conditions set forth herein.

WHEREAS, Parent and the Company acknowledge and agree that the Merger will be governed by Section 251(h) of the DGCL and will be effected as soon as practicable following the consummation of the Offer upon the terms and subject to the conditions set forth herein.

WHEREAS, each of the respective Boards of Directors of Parent and Merger Sub has approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger, all upon the terms and subject to the conditions set forth herein.

WHEREAS, the Board of Directors of the Company has unanimously (i) determined that this Agreement is advisable, (ii) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, taken together, are at a price and on terms that are fair to, and in the best interests of the Company and the Company Stockholders (iii) approved the execution, delivery and performance by the Company of this Agreement and the transactions contemplated hereby, including the Offer and the Merger, (iv) agreed that the Merger shall be governed by Section 251(h) of the DGCL, and (v) resolved to recommend that the Company Stockholders tender their shares to Merger Sub pursuant to the Offer, all upon the terms and subject to the conditions set forth herein.

WHEREAS, concurrently with the execution and delivery of this Agreement, as a condition and inducement to the willingness of Parent and Merger Sub to enter into this

 

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Agreement, certain stockholders of the Company, in their respective capacities as stockholders of the Company, are entering into Support Agreements with Parent (each, a “Support Agreement” and collectively, the “Support Agreements”) pursuant to which the signatories thereto are agreeing to tender their Company Shares into the Offer and to take (and refrain from taking) certain other actions in connection with the transactions contemplated by this Agreement.

WHEREAS, concurrently with the execution and delivery of this Agreement, as a condition and inducement to the willingness of Parent and Merger Sub to enter into this Agreement, certain of the Key Employees has entered into a letter of employment with Parent (each, an “Employment Offer Letter” and collectively, the “Employment Offer Letters”), which will become effective upon the consummation of the Offer.

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

THE OFFER

1.1 The Offer.

(a) Offer Commencement. Provided that (x) this Agreement shall not have been terminated pursuant to Article VII, (y) none of the events set forth in clauses (iii), (iv) or (v) of Section 1.1(b) shall have occurred and be continuing, and (z) the Company shall have complied with its obligations under Section 1.2, Merger Sub shall (and Parent shall cause Merger Sub to) commence the Offer (within the meaning of Rule 14d-2 under the Exchange Act) to purchase all of the Company Shares at a price per Company Share equal to the Offer Price (subject to the terms of Section 1.1(d)) as promptly as practicable (but in no event more than ten (10) Business Days) after the date hereof.

(b) Offer Conditions. Subject to the rights and obligations of Merger Sub to extend and/or amend the Offer in accordance with the terms and conditions of the Agreement, Merger Sub shall not be required to (and Parent shall not be required to cause Merger Sub to) accept for payment or, subject to any applicable rules and regulations of the SEC (including Rule 14e-1(c) under the Exchange Act), pay for any tendered Company Shares, and Merger Sub may (and Parent may cause Merger Sub to) delay the acceptance for payment of or, subject to any applicable rules and regulations of the SEC (including Rule 14e-1(c) under the Exchange Act) the payment for, any Company Shares that are validly tendered in the Offer (and not validly withdrawn) prior to the scheduled expiration of the Offer, in the event that:

(i) at the scheduled expiration of the Offer, there shall not have been validly tendered in accordance with the terms of the Offer (after giving effect to any withdrawals of previously tendered Company Shares) a number of Company Shares that, taken together with any Company Shares then owned by Parent and Merger Sub, represent a majority of all then outstanding Company

 

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Shares (excluding Company Shares tendered pursuant to guaranteed delivery procedures that have not yet been “received,” as such term is defined in Section 251(h) of the DGCL, by the depositary for the Offer pursuant to such procedures) (the “Minimum Condition”); or

(ii) at the scheduled expiration of the Offer the waiting period (and any extensions thereof) applicable to the transactions contemplated by the Agreement (including the Offer and the Merger) under the HSR Act shall not have expired or been terminated (the “Regulatory Condition”); or

(iii) the Company shall have breached or failed to perform in any material respect any of its covenants under the Agreement to be performed prior to the scheduled expiration of the Offer; or

(iv) (A) any of the representations and warranties set forth in Section 3.1 (Organization and Good Standing), Section 3.2 (Authorization and Enforceability), Section 3.11(a) (Absence of Certain Changes – Company Material Adverse Effect), and Section 3.29 (Brokers) (collectively, the “Fundamental Representations”), shall not have been true and correct as of the date of the Agreement or shall not be true and correct as of immediately prior to the scheduled expiration of the Offer with the same force and effect as if made on and as of such time (other than any such representation or warranty that is made only as of a specified date, which need only to be true and correct as of such specified date); (B) the representations and warranties set forth in Section 3.5 (Capitalization) (the “Capitalization Representation”) shall not have been true and correct as of the date of the Agreement or shall not be true and correct as of immediately prior to the scheduled expiration of the Offer with the same force and effect as if made on and as of such time (other than any such representation or warranty that is made only as of a specified date, which need only to be true and correct as of such specified date), except where the failure to be true and correct would not reasonably be expected to result in additional cost, expense or liability to the Company, Parent and their Affiliates, individually or in the aggregate, of more than $2.5 million; and (C) any of the representations and warranties of the Company set forth in the Agreement (other than the Fundamental Representations and the Capitalization Representation), disregarding any “materiality,” “Company Material Adverse Effect” or other similar qualifications set forth in all such representations or warranties, shall not have been true and correct as of the date of the Agreement or shall not be true and correct as of immediately prior to the scheduled expiration of the Offer with the same force and effect as if made on and as of such time (other than any such representation or warranty that is made only as of a specified date, which need only to be true and correct as of such specified date), except in the case of this clause (C), to the extent that the facts and circumstances causing or resulting in any such representations and warranties not to be true and correct as of the date hereof or as of immediately prior to the scheduled expiration of the Offer (or as of the date specified in the representation or warranty) have not had and would not reasonably be expected have, individually or in the aggregate, a Company Material Adverse Effect; or

 

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(v) any Company Material Adverse Effect shall have occurred on or prior to, and shall be continuing on the date of, the scheduled expiration of the Offer; or

(vi) the Company shall not have delivered to Parent and Merger Sub a certificate dated as of the date of the scheduled expiration of the Offer signed on its behalf by the Chief Executive Officer or Chief Financial Officer of the Company to the effect that the conditions set forth in clauses (iii), (iv) and (v) of this Section 1.1(b) have been satisfied; or

(vii) any Governmental Authority shall have (A) enacted, issued, promulgated, entered, enforced or deemed applicable to any of the transactions contemplated by the Agreement (including the Offer or the Merger) any applicable Law that has the effect of making the consummation of any of the transactions contemplated by the Agreement (including the Offer and the Merger) illegal or prohibiting or otherwise preventing the consummation of any of the transactions contemplated by the Agreement (including the Offer and the Merger), or (B) issued or granted any Order that remains in effect and has the effect of making any of the transactions contemplated by the Agreement (including the Offer and the Merger) illegal or which has the effect of prohibiting or otherwise preventing the consummation of any of the transactions contemplated by the Agreement (including the Offer and the Merger); or

(viii) there shall be pending any Legal Proceeding brought by any Governmental Authority against Parent, Merger Sub, the Company or any of their respective Affiliates (A) seeking to enjoin the acquisition by Merger Sub (or Parent on Merger Sub’s behalf) of any Company Shares pursuant to the Offer or, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by the Agreement or the Support Agreements (including the voting provisions thereunder), (B) seeking to impose limitations on the ability of Merger Sub (or Parent on Merger Sub’s behalf), or render Merger Sub (or Parent on Merger Sub’s behalf) unable, to (1) accept for payment, pay for or purchase some or all of the Company Shares pursuant to the Offer and the Merger or (2) exercise full rights of ownership of the Company Shares, including the right to vote the Company Shares purchased by it on all matters properly presented to the Company Stockholders, (C) seeking to (1) compel Parent or any of its Subsidiaries to sell, license, assign, transfer, divest, hold separate or otherwise dispose of any assets, business or portion of business of the Company, the Surviving Corporation, Parent, Merger Sub or any of their respective Subsidiaries, (2) compel Parent or any of its Subsidiaries to conduct, restrict, operate, invest or otherwise change the assets, business or portion of business of the Company, the Surviving Corporation, Parent, Merger Sub or any of their respective Subsidiaries in any manner, or (3) impose any restriction, requirement or limitation on the operation of the business or portion of the business of the Company, the Surviving Corporation, Parent, Merger Sub or any of their respective Subsidiaries, or (D) which otherwise would be reasonably expected to have a Company Material Adverse Effect; or

 

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(ix) the Agreement shall have been terminated in accordance with its terms (the conditions set forth in the preceding clauses (i) – (ix), inclusive, of this Section 1.1(b) being referred to herein, collectively, as the “Offer Conditions”).

(c) Waiver of Offer Conditions.

(i) Neither Parent nor Merger Sub may waive the Minimum Condition without the prior written consent of the Company.

(ii) Other than the Minimum Condition, the Offer Conditions are for the sole benefit of Parent and Merger Sub and, accordingly, Parent and Merger Sub may waive any such Offer Conditions, in whole or in part, at any time and from time to time prior to the expiration of the Offer, in their sole and absolute discretion. The failure by Parent and Merger Sub at any time to exercise the foregoing right to waive any Offer Condition (other than the Minimum Condition) shall not be deemed a waiver of any such right, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

(d) Amendment of Offer Terms and Conditions.

(i) Parent and Merger Sub may, and hereby expressly reserve the right to, increase the Offer Price or otherwise amend, modify or make changes to the terms and conditions of the Offer; provided, however, that unless otherwise provided by this Agreement or previously approved by the Company in writing, neither Parent nor Merger Sub may make any change to the terms and conditions of the Offer that:

(A) decreases the Offer Price;

(B) changes the form of consideration to be paid in the Offer;

(C) reduces the number of Company Shares sought to be purchased in the Offer;

(D) waives, amends, modifies or otherwise changes the Minimum Condition;

(E) amends, modifies or otherwise changes any Offer Conditions (other than the Minimum Condition) in a manner that adversely impacts or reasonably could adversely impact the Company Stockholders in any material respect;

 

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(F) imposes conditions to the Offer that are in addition to the Offer Conditions set forth in Section 1.1(b);

(G) extends or otherwise changes the Expiration Date in a manner other than as required or permitted by this Agreement; or

(H) provides any “subsequent offering period” within the meaning of Rule 14d-11 promulgated under the Exchange Act.

(ii) The Offer Price shall be automatically adjusted to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Company Shares), cash dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Company Shares occurring on or after the date hereof and prior to Merger Sub’s acceptance for payment of, and payment for, Company Shares tendered pursuant to the Offer.

(e) Expiration and Extension of Offer. On the terms and subject to the conditions of this Agreement and the Offer, the Offer shall initially be scheduled to expire at 12:01 a.m., Eastern Time, on the twenty-first (21st) business day following the date the Offer is first commenced, determined in accordance with Rule 14d-1(g)(3) and Rule 14e-1(a) under the Exchange Act (unless otherwise agreed to in writing by Parent and the Company) (the “Initial Expiration Date,” and such date or such subsequent date to which the expiration of the Offer is extended in accordance with the terms of this Agreement, the “Expiration Date”); provided, however, that notwithstanding the foregoing or anything to the contrary set forth in this Agreement:

(i) Merger Sub shall (and Parent shall cause Merger Sub to) extend the Offer for any period required by any rule, regulation or other requirement of the SEC (or its staff) that is applicable to the Offer or any NYSE Rule that is applicable to the Offer;

(ii) in the event that the Regulatory Condition is not satisfied or waived as of any scheduled Expiration Date, Merger Sub shall (and Parent shall cause Merger Sub to) extend the Offer for successive extension periods of ten (10) Business Days each in order to further seek to satisfy the Regulatory Condition; and

(iii) in the event that any of the Offer Conditions are not satisfied or waived as of any scheduled Expiration Date, Merger Sub may (but shall not be required to) extend the Offer for one (1) or more successive extension periods of up to ten (10) Business Days each in order to further seek to satisfy the Offer Conditions;

provided, however, that notwithstanding the foregoing clauses (i) - (iii) of this Section 1.1(e), inclusive, in no event shall Merger Sub be required to (or permitted to, without the prior written consent of the Company) extend the Offer beyond the Termination Date; and provided further, that the foregoing clauses (i) - (iii) of this Section 1.1(e), inclusive, shall not be deemed to

 

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impair, limit or otherwise restrict in any manner the right of Parent to terminate this Agreement pursuant to the terms of Article VII; and provided, further, that Merger Sub shall not withdraw or terminate the Offer prior to any scheduled Expiration Date without the prior written consent of the Company except in the event that this Agreement is terminated pursuant to the terms of Article VII.)

(f) Payment for Company Shares. On the terms and subject to the conditions of this Agreement and the Offer, promptly after the Expiration Date, Merger Sub shall (and Parent shall cause Merger Sub to) accept for payment (such time of the acceptance, the “Acceptance Time”) and pay for all Company Shares that are validly tendered pursuant to the Offer and not validly withdrawn prior to the expiration of the Offer. The Offer Price payable in respect of each Company Share that are validly tendered and not validly withdrawn pursuant to the Offer shall be paid without interest, net to the holder thereof in cash, and subject to reduction for any applicable U.S. federal withholding, back-up withholding or other applicable Tax withholdings. In the event that this Agreement is terminated pursuant to Article VII, Merger Sub shall (and Parent shall cause Merger Sub to) promptly (and, in any event, within twenty-four (24) hours of such termination), irrevocably and unconditionally terminate the Offer, and Merger Sub shall not acquire any Company Shares pursuant to the Offer. If the Offer is terminated or withdrawn by Merger Sub, Merger Sub shall promptly return, and shall cause any depository acting on behalf of Merger Sub to return, in accordance with applicable Law, all tendered Company Shares to the registered holders thereof.

(g) Schedule TO and Offer Documents. As soon as practicable on the date the Offer is commenced (within the meaning of Rule 14d-2 under the Exchange Act), Parent and Merger Sub shall (i) file with the SEC a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, and including all exhibits thereto, the “Schedule TO”) with respect to the Offer, which shall contain as an exhibit or incorporate by reference an offer to purchase and the related forms of the letter of transmittal and summary advertisement, if any, and any other ancillary Offer documents and instruments pursuant to which the Offer will be made (collectively, with any supplements or amendments thereto, the “Offer Documents”), and (ii) mail (or cause to be mailed) the Offer Documents to all Company Stockholders. Subject to the provisions of Section 1.2(b), the Schedule TO and the Offer Documents may include a description of the determinations and approvals of the Company Board set forth in Section 3.2(c) and the Company Board Recommendation. The Company shall promptly furnish to Parent and Merger Sub in writing all information concerning the Company that either is (i) required by applicable securities Laws to be included in the Schedule TO or the Offer Documents, or (ii) reasonably requested by Parent and Merger Sub for inclusion in the Schedule TO or the Offer Documents. Parent and Merger Sub shall ensure that the Offer Documents, when filed with the SEC, complies in all material respects with the applicable requirements of the Exchange Act and, on the date first published, sent or given to the Company Stockholders, does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company shall ensure that the information supplied by the Company or its officers, directors, representatives, agents or employees expressly for inclusion in Offer Documents does not, on the date the Offer Documents are first sent to the Company Stockholders and at the expiration date of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make

 

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the statements therein, in light of the circumstances under which they are made, not misleading. Each of Parent and Merger Sub, on the one hand, and the Company, on the other hand, shall promptly correct or supplement any information provided by it for use in the Schedule TO or the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect. Parent and Merger Sub shall take all steps necessary to cause the Schedule TO and the Offer Documents, as so corrected, to be filed with the SEC and the other Offer Documents, as so corrected, to be disseminated to the Company Stockholders, in each case as and to the extent required by applicable federal securities Laws. Parent and Merger Sub shall provide the Company and its counsel a reasonable opportunity to review and comment on the Schedule TO and the Offer Documents prior to the filing thereof with the SEC. Parent and Merger Sub shall (i) provide to the Company and its counsel any and all written comments that Parent, Merger Sub or their counsel may receive in writing from the SEC or its staff with respect to the Schedule TO and the Offer Documents promptly after receipt thereof, and (ii) provide the Company and its counsel a reasonable opportunity to participate in the formulation of any written response to any such written comments of the SEC or its staff.

(h) Funds. Without limiting the generality of Section 6.15, Parent shall cause to be provided to Merger Sub all of the funds necessary to purchase any Company Shares that Merger Sub becomes obligated to purchase pursuant to the Offer, and shall cause Merger Sub to perform, on a timely basis, all of Merger Sub’s obligations under this Agreement. Parent and Merger Sub shall, and each of Parent and Merger Sub shall ensure that all of their respective controlled Affiliates shall, tender any Company Shares held by them into the Offer.

1.2 Company Offer Support.

(a) Schedule 14D-9. Concurrently with the filing of the Schedule TO with the SEC and mailing the Offer Documents to the Company Stockholders, the Company shall (i) file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, and including all exhibits thereto, the “Schedule 14D-9”), (ii) cause the Schedule 14D-9 to be mailed to the Company Stockholders along with the Offer Documents and (iii) set the mailing date of the Schedule 14D-9 as the record date for the purpose of receiving the notice required by Section 262(d) of the DGCL. Subject to the provisions of Section 1.2(b), the Schedule 14D-9 shall include (i) a description of the determinations and approvals set forth in Section 3.2(c) and the Company Board Recommendation, (ii) the fairness opinion of the Company’s financial advisor referenced in Section 3.2(d) and a summary of the related material financial analysis consistent with such financial advisor’s standard practices, and (iii) the notice and other information required by Section 262(d) of the DGCL. Each of Parent and Merger Sub shall promptly furnish to the Company in writing all information concerning Parent and Merger Sub that may be required by applicable securities Laws or reasonably requested by the Company for inclusion in the Schedule 14D-9. The Company shall ensure that the Schedule 14D-9, when filed with the SEC, complies in all material respects with the applicable requirements of the Exchange Act and, on the date first published, sent or given to the Company Stockholders, does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Parent and

 

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Merger Sub shall ensure that the information supplied by Parent, Merger Sub or their officers, directors, representatives, agents or employees expressly for inclusion in the Schedule 14D-9 does not, on the date the Schedule 14D-9 is first sent to the Company Stockholders or at the expiration date of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Each of the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall promptly correct or supplement any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect. The Company shall take all steps necessary to cause the Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to the Company Stockholders, in each case as and to the extent required by applicable federal securities Laws. The Company shall provide Parent, Merger Sub and their counsel reasonable opportunity to review and comment on the Schedule 14D-9 prior to the filing thereof with the SEC. The Company shall provide in writing to Parent, Merger Sub and their counsel any written comments the Company or its counsel may receive in writing from the SEC or its staff with respect to the Schedule 14D-9 promptly upon receipt thereof, and the Company shall provide Parent, Merger Sub and their counsel a reasonable opportunity to participate in the formulation of any written response to any such written comments of the SEC or its staff.

(b) Company Board Recommendation.

(i) The Company hereby approves and consents to the Offer. Subject to the terms of this Section 1.2(b), the Company Board shall (A) unanimously recommend that the Company Stockholders accept the Offer and tender their Company Shares to Merger Sub pursuant to the Offer (the “Company Board Recommendation”) and (B) include the Company Board Recommendation (with respect to the Offer) in the Schedule 14D-9 and (C) permit Parent and Merger Sub to include a description of the Company Board Recommendation in the Offer Documents if and to the extent that the Company Board Recommendation is not withheld, withdrawn, amended or modified in accordance with this Section 1.2(b).

(ii) Subject to the terms of this Section 1.2(b), neither the Company Board nor any committee thereof shall (A) fail to make, withhold, withdraw, amend, qualify or modify, or publicly propose to refuse to make, withhold, withdraw, amend, qualify or modify, the Company Board Recommendation, (B) approve, endorse or recommend an Acquisition Proposal, or fail to publicly recommend against any such Acquisition Proposal that is a tender offer or exchange offer for Company Shares within ten (10) Business Days after commencement of such offer (and at all times thereafter during which any such tender offer or exchange offer is pending) and reaffirm the Company Board Recommendation within such ten (10) Business Day-period (and at all times thereafter during which any such tender offer or exchange offer is pending), (C) fail to include the Company Board Recommendation in the Schedule 14D-9, (D) fail to reaffirm the Company Board Recommendation within five (5) Business

 

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days of a written request to do so by Parent (which such request, in the case of an Acquisition Proposal which has not been made publicly known, Parent shall be limited to making no more than once every fifteen (15) days), or (E) resolve, agree or publicly propose to take any of the foregoing actions (any action described in the preceding clauses (A) – (E) being referred to herein as a “Company Board Recommendation Change”); provided, however, that notwithstanding the foregoing, a “stop, look and listen” communication by the Company Board pursuant to and in compliance with Rule 14d9-(f) of the Exchange Act shall not be deemed to be a Company Board Recommendation Change and shall not require compliance with the procedures set forth in this Section 1.2(b). For avoidance of doubt, a termination of this Agreement by the Company pursuant to Section 7.1(h) shall not constitute a Company Board Recommendation Change, and any Company Board Recommendation Change effected simultaneously with such termination shall not require a separate notice period under Section 1.2(b)(iii) below.

(iii) Notwithstanding the limitations set forth in Section 1.2(b)(ii), the Company Board may effect a Company Board Recommendation Change at any time prior to the Acceptance Time, if (A) the Company Board has received an unsolicited, bona fide, written Acquisition Proposal and after consultation with a financial advisor of nationally recognized standing and outside legal counsel, the Company’s Board of Directors shall have determined, in good faith, that such Acquisition Proposal constitutes a Superior Proposal, (B) such Acquisition Proposal did not arise out of a breach of the provisions of this Section 1.2(b) or Section 6.1, (C) the Company Board has determined in good faith (after consultation with outside legal counsel and after considering in good faith any counter-offer or proposal made by Parent pursuant to clause (E) below), that, in light of the foregoing Superior Proposal, the Company Board is reasonably required to effect a Company Board Recommendation Change in order to comply with its fiduciary duties to the Company Stockholders under Delaware Law, (D) prior to effecting such Company Board Recommendation Change, the Company Board shall have given Parent at least four (4) Business Days prior written notice thereof (a “Determination Notice”) (which Determination Notice shall not constitute a Company Board Recommendation Change), which Determination Notice shall attach such Superior Proposal and set forth the identity of the Person making such Superior Proposal and all the material terms and conditions of such Superior Proposal in reasonable detail, and the opportunity to meet with the Company Board and its outside legal counsel, all with the purpose and intent of enabling Parent and the Company to discuss in good faith a modification of the terms and conditions of this Agreement so that the transactions contemplated hereby may be effected and (E) Parent shall not have made, within four (4) Business Days after receipt of the Company’s Determination Notice of its intention to effect a Company Board Recommendation Change, a counter-offer or proposal of a nature such that the Company Board shall have determined in good faith (after consultation with a financial advisor of nationally recognized standing and its outside legal counsel) that the Acquisition Proposal no longer constitutes a

 

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Superior Proposal and after consultation with outside legal counsel the Company Board is no longer reasonably required to effect a Company Board Recommendation Change in order to comply with its fiduciary duties to the Company Stockholders under Delaware Law. The Company shall keep confidential any such counter-offers or proposals made by Parent to revise the terms of this Agreement, whether pursuant to this Section 1.2(b), Section 7.1(h) or otherwise, other than in the event of any amendment to this Agreement and to the extent required to be disclosed in any SEC Reports. The provisions of this Section 1.2(b)(iii) shall also apply to any material amendment to any Acquisition Proposal and require a new Determination Notice, except that the references to four (4) business days shall be deemed to be two (2) business days.

(iv) Notwithstanding the limitations set forth in Section 1.2(b)(ii), the Company Board may effect a Company Board Recommendation Change at any time prior to the Acceptance Time in response to an Intervening Event if (A) the Company Board shall have determined in good faith (after consultation with outside legal counsel) that, in light of such Intervening Event, the Company Board is reasonably required to effect a Company Board Recommendation Change in order to comply with its fiduciary duties to the Company Stockholders under Delaware Law, (B) prior to effecting such Company Board Recommendation Change, the Company Board shall have given Parent a Determination Notice at least four (4) Business Days prior written notice thereof, which Determination Notice shall specify in reasonable detail the facts underlying the Company Board’s determination that an Intervening Event has occurred and the rationale and basis for such Company Board Recommendation Change and the opportunity to meet with the Company Board and its outside legal counsel, all with the purpose and intent of enabling Parent and the Company to discuss in good faith a modification of the terms and conditions of this Agreement so as to obviate the need to effect a Company Board Recommendation Change on the basis of such Intervening Event so that the transactions contemplated hereby may be effected, and (C) following the expiration of such four (4)-Business Day period, the Company Board shall have determined in good faith (after consultation with outside legal counsel) and after giving good faith consideration to any offer or proposal from Parent, that, in light of such Intervening Event, the Company Board is reasonably required to effect a Company Board Recommendation Change in order to comply with its fiduciary duties to the Company Stockholders under Delaware Law.

(v) Nothing in this Agreement shall prohibit the Company Board from taking and disclosing to the Company Stockholders a position contemplated by Rule 14e-2(a) under the Exchange Act or complying with the provisions of Rule 14d-9 promulgated under the Exchange Act, provided, however, that any statement(s) made by the Company Board pursuant to Rule 14e-2(a) under the Exchange Act or Rule 14d-9 under the Exchange Act shall be deemed to be a Company Board Recommendation Change unless accompanied by a clear, unqualified and unconditional reaffirmation of the Company Board Recommendation.

 

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(c) Company Information. In connection with the Offer, the Company shall, or shall cause its transfer agent to, promptly furnish Parent with such information, including a list of the Company Stockholders as of the most recent practicable date, mailing labels and any available listing or computer files containing the names and addresses of all record and non-objecting beneficial Company Stockholders as of the most recent practicable date, and lists of security positions of Company Shares held in stock depositories (including updated lists of stockholders, mailing labels, listings or files of securities positions as requested by Parent from time to time), and with such assistance as Parent, Merger Sub or their respective agents may reasonably request, in order to mail, disseminate and otherwise communicate the Offer to the record and non-objecting beneficial Company Stockholders. Subject to any and all applicable Laws, Parent and Merger Sub and their agents shall (i) hold in confidence the information contained in any such lists of stockholders, mailing labels and listings or files of securities positions, (ii) use such information only in connection with the Offer and the Merger, and (iii) if Parent and Merger Sub shall withdraw the Offer or the Offer shall otherwise expire or terminate in accordance with the terms hereof without Merger Sub (or Parent on Merger Sub’s behalf) having accepted for payment any Company Shares pursuant to the Offer, and/or this Agreement shall be terminated pursuant to Article VIII, Parent and Merger Sub shall either, in Parent’s sole discretion, (A) destroy any and all copies and any extracts or summaries from such information then in their possession or control (and if requested by the Company, certify in writing to such destruction) or (B) deliver (and shall cause their agents to deliver) to the Company, any and all copies and any extracts or summaries from such information then in their possession or control.

(d) Rights of First Refusal. Solely in connection with, and subject to (i) the consummation of the tender and purchase of Company Shares pursuant to the Offer and (ii) the consummation of the Merger, the Company hereby waives any and all rights of first refusal it may have with respect to Company Shares owned by, or issuable to, any Person, other than rights to repurchase unvested shares, if any, that may be held by Persons pursuant to the grant of restricted stock purchase rights or following exercise of employee stock options.

ARTICLE II

THE MERGER

2.1 The Merger.

Upon the terms and subject to the conditions set forth in this Agreement and the applicable provisions of Delaware Law, on the Closing Date, Parent, Merger Sub and the Company shall cause Merger Sub to be merged with and into the Company (the “Merger”), whereupon the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger and a wholly owned subsidiary of Parent. The Merger shall be governed by Section 251(h) of the DGCL. The Company, as the surviving corporation of the Merger, is sometimes referred to herein as the “Surviving Corporation.” Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, Parent, Merger Sub and the Company shall cause the Merger to be consummated under Delaware Law by filing a certificate of merger (or a certificate of ownership and merger, as applicable) in customary form and substance (the “Certificate of Merger”) with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”) in accordance with the applicable provisions of Delaware Law. The time of such filing and acceptance by the Delaware Secretary

 

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of State, or such later time as may be mutually agreed in writing by Parent, Merger Sub and the Company and specified in the Certificate of Merger, is referred to herein as the “Effective Time.”

2.2 The Closing.

(a) Closing Date and Location. Parent, Merger Sub and the Company shall consummate the Merger at a closing (the “Closing”) to occur at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, One Market Plaza, Spear Tower, Suite 3300, San Francisco, California 94105, as soon as practicable following the Acceptance Time, without a meeting of the stockholders of the Company, in accordance with Section 251(h) of the DGCL, and in any event no later than the second (2nd) Business Day after the satisfaction or waiver (to the extent permitted hereunder) of the last to be satisfied or waived of the conditions set forth in Section 2.2(b) (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted hereunder) of such conditions), or at such other location, date and time as Parent and the Company shall mutually agree in writing. The date upon which the Closing shall actually occur pursuant hereto shall be referred to herein as the “Closing Date.”

(b) Closing Conditions.

The respective obligations of Parent, Merger Sub and the Company to consummate the Merger shall be subject to the satisfaction or mutual waiver by Parent and the Company (where permissible under applicable Law) prior to the Effective Time, of each of the following conditions:

(i) Tender Offer Closing. Merger Sub (or Parent on Merger Sub’s behalf) shall have accepted for payment all of the Company Shares validly tendered pursuant to the Offer and not validly withdrawn.

(ii) No Governmental Restraints. No Governmental Authority shall have (i) enacted, issued, promulgated, entered, enforced or deemed applicable to the Merger any Law that has the effect of making the Merger illegal or which has the effect of prohibiting or otherwise preventing the consummation of the Merger, or (ii) issued or granted any judgment, decree, injunction or other Order (whether temporary, preliminary or permanent) that, as of immediately prior to the Effective Time, remains in effect and has the effect of making the Merger illegal or prohibiting or otherwise preventing the consummation of the Merger.

2.3 The Surviving Corporation.

(a) Certificate of Incorporation and Bylaws.

(i) Certificate of Incorporation. At the Effective Time, the Certificate of Incorporation of the Company shall be amended and restated in its

 

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entirety to read identically to the Certificate of Incorporation of Merger Sub, as in effect immediately prior to the Effective Time, and such amended and restated Certificate of Incorporation shall become the Certificate of Incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of Delaware Law and such Certificate of Incorporation; provided, however, that at the Effective Time the Certificate of Incorporation of the Surviving Corporation shall be amended so that the name of the Surviving Corporation shall be “Rally Software Development Corp.”

(ii) Bylaws. At the Effective Time, the Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall become the Bylaws of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of Delaware Law, the Certificate of Incorporation of the Surviving Corporation and such Bylaws.

(b) Directors and Officers.

(i) Directors. At the Effective Time, the initial directors of the Surviving Corporation shall be the directors of Merger Sub immediately prior to the Effective Time, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified.

(ii) Officers. At the Effective Time, the initial officers of the Surviving Corporation shall be the officers of Merger Sub immediately prior to the Effective Time, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation until their respective successors are duly appointed.

2.4 General Effects of the Merger.

At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

2.5 Effect of the Merger on Capital Stock of the Constituent Corporations.

(a) Capital Stock of Merger Sub. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities, each share of common stock, par value $0.01 per share, of Merger Sub that

 

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is issued and outstanding immediately prior to the Effective Time shall be converted into one (1) validly issued, fully paid and non-assessable share of common stock of the Surviving Corporation. Each certificate evidencing ownership of such shares of common stock of Merger Sub shall thereafter evidence ownership of shares of common stock of the Surviving Corporation.

(b) Capital Stock of the Company.

(i) Company Shares. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities, the following shall occur: each Company Share issued and outstanding immediately prior to the Effective Time (other than Canceled Company Shares and Dissenting Company Shares) shall be canceled and extinguished and automatically converted into the right to receive cash in an amount equal to the Offer Price, without interest thereon (the “Merger Consideration”); provided, however, that the Merger Consideration shall be automatically adjusted to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Company Shares), cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Company Shares occurring on or after the date hereof and prior to the Effective Time. From and after the Effective Time, all Company Shares shall no longer be outstanding and shall automatically be cancelled, extinguished and cease to exist, and each holder of a Certificate or Book-Entry Share theretofore representing any Company Shares (other than Dissenting Company Shares) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration payable therefor upon the surrender or transfer thereof in accordance with the provisions of Section 2.6. The Merger Consideration paid in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to such Company Shares. From and after the Effective Time, there shall be no further registration of transfers on the records of the Surviving Corporation of Company Shares that were issued and outstanding immediately prior to the Effective Time, other than transfers to reflect, in accordance with customary settlement procedures, trades effected prior to the Effective Time, and if, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II.

(ii) Canceled Company Shares. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities, each Company Share that is owned by Parent, Merger Sub or the Company, or by any direct or indirect wholly-owned Subsidiary of Parent, Merger Sub or the Company, in each case immediately prior to the Effective Time (whether pursuant to the Offer or otherwise) (“Canceled Company Shares”) shall be cancelled and extinguished without any conversion thereof or consideration paid therefor.

 

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(iii) Dissenting Company Shares.

(A) Notwithstanding anything to the contrary set forth in this Agreement, all Company Shares that are issued and outstanding immediately prior to the Effective Time and held by stockholders who shall have properly and validly exercised their statutory rights of appraisal in respect of such Company Shares in accordance with Section 262 of the DGCL (collectively, “Dissenting Company Shares”) shall not be converted into, or represent the right to receive, the Merger Consideration pursuant to this Section 2.5. Such stockholders shall be entitled to receive payment of the appraised value of such Dissenting Company Shares in accordance with the provisions of Section 262 of the DGCL, except that all Dissenting Company Shares held by stockholders who shall have failed to perfect or who shall have effectively withdrawn or lost their rights to appraisal of such Dissenting Company Shares under such Section 262 of the DGCL shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without any interest thereon, upon surrender of the certificate or certificates that formerly evidenced such Company Shares in the manner provided in Section 2.6.

(B) The Company shall give Parent (1) prompt notice of any demands for appraisal received by the Company, withdrawals of such demands, and any other instruments served pursuant to Delaware Law and received by the Company in respect of Dissenting Company Shares and (2) the opportunity and right (at Parent’s election) to direct and control all negotiations and proceedings with respect to demands for appraisal under Delaware Law in respect of Dissenting Company Shares. The Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisal or settle or offer to settle any such demands for payment in respect of Dissenting Company Shares.

2.6 Payment of Merger Consideration.

(a) Payment Agent. Prior to the Effective Time, Parent shall select a bank or trust company reasonably acceptable to the Company to act as the payment agent for the Merger (the “Payment Agent”).

(b) Exchange Fund. Promptly following the Effective Time, Parent shall deposit (or cause to be deposited) the aggregate Merger Consideration with the Payment Agent, for payment to the Company Stockholders pursuant to the provisions of this Article II (such cash amount being referred to herein as the “Exchange Fund”).

 

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(c) Payment Procedures. Promptly following the Effective Time (but in no event later than five (5) business days thereafter), Parent and Merger Sub shall cause the Payment Agent to mail to each holder of record (as of immediately prior to the Effective Time) of a certificate or certificates (the “Certificates”) or non-certificated Company Shares represented by book-entry (“Book-Entry Shares”), which immediately prior to the Effective Time represented outstanding Company Shares (other than Canceled Company Shares and Dissenting Company Shares) (i) a letter of transmittal in customary form (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates or transfer of the Book-Entry Shares to the Payment Agent) and (ii) instructions for use in effecting the surrender of the Certificates or transfer of Book-Entry Shares in exchange for the Merger Consideration payable in respect thereof pursuant to the provisions of this Article II. Upon (i) surrender of Certificates for cancellation to the Payment Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, or (ii) receipt of an “agent’s message” by the Payment Agent (or such other evidence, if any, of the transfer as the Payment Agent may reasonably request) in the case of a transfer of Book-Entry Shares, the holders of such Certificates or Book-Entry Shares shall be entitled to receive in exchange therefor the Merger Consideration payable in respect thereof pursuant to the provisions of this Article II, and the Certificates so surrendered or Book-Entry Shares so transferred shall forthwith be canceled. The Payment Agent shall accept such Certificates or Book-Entry Shares upon compliance with such reasonable terms and conditions as the Payment Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. No interest shall be paid or accrued for the benefit of holders of the Certificates or Book-Entry Shares on the Merger Consideration payable upon the surrender of such Certificates or transfer of Book-Entry Shares pursuant to this Section 2.6. Until so surrendered or transferred, outstanding Certificates or Book-Entry Shares shall be deemed from and after the Effective Time, to evidence only the right to receive the Merger Consideration payable in respect thereof pursuant to the provisions of this Article II.

(d) Transfers of Ownership. In the event that a transfer of ownership of Company Shares is not registered in the stock transfer books or ledger of the Company, or if Merger Consideration is to be paid in a name other than that in which the surrendered Certificate or transferred Book-Entry Shares are registered in the stock transfer books or ledger of the Company, the Merger Consideration may be paid to a Person other than the Person in whose name the surrendered Certificate or transferred Book-Entry Shares are registered in the stock transfer books or ledger of the Company only if such Certificate is properly endorsed and otherwise in proper form for surrender and transfer or such Book-Entry Shares are properly transferred and the Person requesting such payment has paid to Parent (or any agent designated by Parent) any transfer or other Taxes required by reason of the payment of Merger Consideration to a Person other than the registered holder of such Certificate or Book-Entry Share, or established to the satisfaction of Parent (or any agent designated by Parent) that such transfer or other Taxes have been paid or are otherwise not payable.

 

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(e) Lost, Stolen or Destroyed Certificates. In the event that any Certificates shall have been lost, stolen or destroyed, the Payment Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the Merger Consideration payable in respect thereof pursuant to this Article II; provided, however, that Parent may, in its discretion and as a condition precedent to the payment of such Merger Consideration, require the owners of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Payment Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

(f) Required Withholding. Each of the Payment Agent, Merger Sub, Parent and the Surviving Corporation shall be entitled to deduct and withhold from any amounts payable pursuant to this Agreement such amounts as are required to be deducted or withheld therefrom under applicable Law. To the extent that such amounts are so deducted or withheld and properly remitted to the appropriate Governmental Authority in accordance with applicable Law, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

(g) No Liability. Notwithstanding anything to the contrary set forth in this Agreement, none of the Payment Agent, Parent, the Surviving Corporation or any other party hereto shall be liable to a holder of Company Shares for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(h) Distribution of Exchange Fund to Parent. Any portion of the Exchange Fund that remains undistributed to the holders of the Certificates or Book-Entry Shares on the date that is twelve (12) months after the Effective Time shall be delivered to Parent (or its designee) upon demand, and any Company Stockholders who have not theretofore surrendered their Certificates or transferred their Book-Entry Shares evidencing such Company Shares for exchange pursuant to the provisions of this Section 2.6 shall thereafter look for payment of the Merger Consideration payable in respect of the Company Shares evidenced by such Certificates or Book-Entry Shares solely to Parent, as general creditors thereof, for any claim to the applicable Merger Consideration to which such holders may be entitled pursuant to the provisions of this Article II.

2.7 Necessary Further Action.

In the event that, at any time from and after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the directors and officers of the Surviving Corporation shall take all such lawful and necessary action on behalf of the Company and Merger Sub to accomplish the foregoing. From and after the Effective Time, the directors and officers of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of the Company or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE COMPANY

Except as (a) expressly set forth in the disclosure schedule delivered by the Company to Parent on the date of this Agreement prior to the execution hereof (the “Company Disclosure Schedule”), which disclosure shall be deemed to qualify or provide disclosure in response to (i) the specific section or subsection of this Article III that specifically corresponds to the section of subsection of the Company Disclosure Schedule in which any such disclosure is set forth, and/or (ii) any other section or subsection of this Article III solely to the extent that it is readily apparent from the text of such disclosure (without reference to the underlying documents referenced therein and without assuming any knowledge of the matters disclosed) that such disclosure is applicable to such other section or subsection of this Article III or (b) as disclosed in the Company’s Annual Reports on Form 10-K for the fiscal years ended January 31, 2014 (the “2014 10-K”) and January 31, 2015 (the “2015 10-K” and, together with the 2014 10-K, the “10-Ks”), the Company’s proxy statements on Schedule 14A for its 2014 and 2015 annual stockholder meetings, and any Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed subsequent to the 2015 10-K and prior to the date of this Agreement (other than any information in the “Risk Factors” or “Forward-Looking Statements” sections of such Company SEC Documents or other forward-looking statements in such Company SEC Documents), the Company hereby represents and warrants to Parent and Merger Sub as follows:

3.1 Organization and Good Standing.

The Company is a corporation duly organized, validly existing and in good standing under Delaware Law. The Company has the requisite power and authority to carry on its respective business as it is presently being conducted and to own, lease or operate its respective properties and assets. The Company is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States), except where the failure to be so qualified would not, individually or in the aggregate, have or reasonably be expected to have a Company Material Adverse Effect. The Company has delivered or made available to Parent true, correct and complete copies of (x) the certificates of incorporation and bylaws or other constituent documents, as amended to date, of the Company, and (y) the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings, and any action taken by written consent, of the Company Stockholders, the Company Board and each committee of the Company Board, in each case occurring at any time during the five years prior to the date of this Agreement. The Company is not in violation of its certificate of incorporation or bylaws, except for such violations that would not be material to the Company and its Subsidiaries, taken as a whole.

 

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3.2 Authorization and Enforceability.

(a) The Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to perform its obligations hereunder.

(b) The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including the Offer and the Merger) have been duly authorized by all necessary corporate action on the part of the Company and no additional corporate proceedings on the part of the Company are necessary to authorize this Agreement or the consummation of the transactions contemplated hereby (including the Offer and the Merger). The affirmative vote of the holders of a majority of the issued and outstanding Company Shares is the only vote of the holders of any class or series of Company capital stock that, absent Section 251(h) of the DGCL, would have been necessary under applicable Law and the Company’s certificate of incorporation and bylaws to adopt, approve or authorize this Agreement and consummate the Merger.

(c) At a meeting duly called and held prior to the execution of this Agreement, the Company Board has, upon the terms and subject to the conditions set forth herein, (i) unanimously determined that this Agreement is advisable, (ii) unanimously determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, taken together, are at a price and on terms that are fair to, and in the best interests of the Company and the Company Stockholders, (iii) unanimously approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger, and the Support Agreements, and (iv) resolved to make the Company Board Recommendation.

(d) The Company Board has received the opinion of Deutsche Bank Securities Inc. to the effect that, as of the date of this Agreement and based upon and subject to the assumptions, limitations and qualifications set forth therein, the cash consideration to be received in the Offer and the Merger, taken together as an integrated transaction, is fair, from a financial point of view, to the holders of Company Shares (other than Parent, Merger Sub and their respective Affiliates). It is agreed and understood that such opinion is for the benefit of the Company’s Board of Directors and may not be relied upon by Parent or Merger Sub. The Company shall deliver or make available to Parent solely for informational purposes a copy of the signed opinion as soon as possible following the date of this Agreement.

(e) Assuming that the representations of Parent and Merger Sub set forth in Section 4.6 are accurate, the Company Board has taken all necessary actions so that the restrictions on business combinations set forth in Section 203 of the DGCL and any other similar applicable Law are not applicable to this Agreement and the transactions contemplated hereby (including the Offer and the Merger) or the Support Agreements or the transactions contemplated thereby. No other state takeover statute or similar statute or regulation applies to or purports to apply to the Offer, the Merger, the Support Agreements or the transactions contemplated hereby or thereby.

(f) At a meeting duly called and held at which all members of the Compensation Committee of the Company Board (the “Compensation Committee”) were

 

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present, the Compensation Committee (i) duly and unanimously adopted resolutions approving as an “employment compensation, severance or other employee benefit arrangement” within the meaning of Rule 14d-10(d)(1) under the Exchange Act, (A) each Company Stock Plan, (B) the treatment of Company Options, Company RSUs, and Company Phantom Stock Rights in accordance with the terms set forth in this Agreement, the applicable Company Stock Plan and any applicable Employee Plan, (C) the terms of Section 6.9 and 6.10, and (D) each other Employee Plan that under the terms of this Agreement is required to be set forth in Sections 3.17(a)(i) and 3.17(a)(ii) of the Company Disclosure Schedule which resolutions have not been rescinded, modified or withdrawn in any way, and (ii) has taken all other actions necessary to satisfy the requirements of the no-exclusive safe harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to the foregoing arrangements. A true and complete copy of the resolutions of the Compensation Committee reflecting any approvals and actions referred to in the preceding sentence has been provided to Parent and Merger Sub prior to execution of this Agreement. Each member of the Compensation Committee is an “independent director” within the meaning of the requirements of Rule 14d-10(d) under the Exchange Act.

(g) This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting or relating to creditors’ rights generally and (ii) is subject to rules of law governing specific performance, injunctive relief and other equitable remedies and general principles of equity.

3.3 Required Governmental Consents.

No consent, approval, Order or authorization of, or filing or registration with, or notification to (any of the foregoing being a “Consent”), any Governmental Authority is required on the part of the Company or any of its Subsidiaries in connection with the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby (including the Offer and the Merger), except (a) the filing and recordation of the Certificate of Merger with the Secretary of State of the State of Delaware and such filings with Governmental Authorities to satisfy the Laws of states in which the Company and its Subsidiaries are qualified to do business, (b) such filings and approvals as may be required by any federal or state securities laws, including compliance with any applicable requirements of the Exchange Act, (c) compliance with any applicable requirements of the HSR Act and other applicable Antitrust Laws and (d) such other Consents, the failure of which to obtain would not be material to the Company and its Subsidiaries, taken as a whole. The Company has not opted out of Section 251(h) of the DGCL in the Company Certificate or taken any other action to preclude the Merger from being effected in accordance with Section 251(h) of the DGCL.

3.4 Conflicts.

The execution, delivery or performance by the Company of this Agreement, the consummation by the Company of the transactions contemplated hereby (including the Offer and the Merger) and the compliance by the Company with any of the provisions hereof do not and

 

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will not (a) violate or conflict with any provision of the certificates of incorporation or bylaws or other constituent documents of the Company or any of its Subsidiaries, (b) subject to obtaining such Consents set forth in Section 3.4(b) of the Company Disclosure Schedule, violate, conflict with, or result in the breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, any Contract to which the Company or any of its Subsidiaries is a party, or by which the Company, any of its Subsidiaries or any of their properties or assets may be bound, or any Permits held by the Company or any of its Subsidiaries, (c) assuming compliance with the matters referred to in Section 3.3, violate or conflict with any applicable Law or Order applicable to the Company or any of its Subsidiaries or by which any of their properties or assets are bound or (d) result in the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries, except in the case of each of clauses (b), (c) and (d) above, for such violations, conflicts, or Liens which would not be material to the Company and its Subsidiaries, taken as a whole.

3.5 Capitalization.

(a) The authorized capital stock of the Company consists of (i) 200,000,000 Company Shares and (ii) 10,000,000 shares of Company Preferred Stock. As of the close of business on May 26, 2015 (the “Capitalization Date”), (A) 25,647,582 Company Shares were issued and outstanding, (B) no shares of Company Preferred Stock were issued and outstanding, and (C) no shares of Company Capital Stock were held by the Company as treasury shares. All outstanding Company Shares are validly issued, fully paid, non-assessable and free of any preemptive rights. Since the close of business on the Capitalization Date, the Company has not issued any shares of Company Capital Stock other than pursuant to the exercise of Company Options, Company Warrants or the settlement of Company RSUs granted under a Company Stock Plan.

(b) Section 3.5(b)(i) of the Company Disclosure Schedule sets forth a listing of all equity plans of the Company. Section 3.5(b)(ii) of the Company Disclosure Schedule sets forth, with respect to each outstanding Company Option and Company Warrant as of the close of business on the Capitalization Date, the name of the holder of such option or warrant, the number of Company Shares issuable upon the exercise of such option or warrant, the exercise price of such option or warrant, the date on which such option was granted or such warrant was issued, the vesting schedule for such option (including any acceleration provisions with respect thereto and any performance-based vesting terms and conditions), including the extent unvested and vested as of the close of business on the Capitalization Date whether such option is intended to qualify as an incentive stock option as defined in Section 422 of the Code, and whether such option is subject to Section 409A of the Code. Section 3.5(b)(iii) of the Company Disclosure Schedule sets forth, with respect to each outstanding Company RSU as of the close of business on Capitalization Date, the name of the holder of such award, the number of Company Shares subject to such award, the date of grant of such award, the applicable vesting and/or settlement schedule (including any acceleration provisions with respect thereto and any performance-based vesting terms and conditions), and whether such Company RSU is subject to Section 409A of the

 

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Code). As of the close of business on the Capitalization Date, 3,137,966 Company Shares were reserved for future issuance pursuant to stock awards not yet granted under the Company Stock Plans and, since such date, the Company has not granted, committed to grant or otherwise created or assumed any obligation with respect to any Company Options, other than as permitted by Section 5.2(b). True, correct and complete copies of all of the forms of equity award agreements under the Company Stock Plans, and all individual agreements containing material deviations from such forms have been delivered or made available by the Company to Parent. No Company Options or Company RSUs have been granted or are outstanding except under and pursuant to a Company Stock Plan.

(c) Except as set forth in Section 3.5(a) and (b), there are (i) no outstanding shares of capital stock of, or other equity or voting interest in, the Company, (ii) no outstanding securities of the Company convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, the Company, (iii) no outstanding options, phantom stock, phantom units, stock appreciation rights, restricted stock, performance shares, performance share units, performance units, profits interest, profit participation rights, warrants, rights or other commitments or agreements to acquire from the Company, or that obligates the Company to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, the Company, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interest (including any voting debt) in, the Company (the items in clauses (i), (ii), (iii) and (iv), together with the capital stock of the Company, being referred to collectively as “Company Securities”) or (v) no other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of the Company Securities. There are no outstanding Contracts of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.

(d) Neither the Company nor any of its Subsidiaries is a party to any Contracts restricting the transfer of, relating to the voting of, requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or similar rights with respect to any securities of the Company.

3.6 Subsidiaries.

(a) Section 3.6(a) of the Company Disclosure Schedule contains a complete and accurate list of the name, jurisdiction of organization of each Subsidiary of the Company. Except for the Subsidiaries, the Company does not own, directly or indirectly, any capital stock of, or other equity or voting interest in, any Person.

(b) Each of the Company’s Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its respective organization (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States). Each of the Company’s Subsidiaries has the requisite power and authority to carry on its respective business as it is presently being conducted and to own, lease or operate its respective

 

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properties and assets. Each of the Company’s Subsidiaries is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States), except where the failure to be so qualified would not, individually or in the aggregate, have or reasonably be expected to have a Company Material Adverse Effect. The Company has delivered or made available to Parent true, correct and complete copies of (x) the certificates of incorporation and bylaws or other constituent documents, as amended to date, of each of the Company’s Subsidiaries and (y) the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings, and any action taken by written consent, of the stockholders and board of directors (or analogous governing body) and committee thereof of each of the Company’s Subsidiaries, in each case occurring at any time during the two years prior to the date of this Agreement. None of the Company’s Subsidiaries is in violation of its certificate of incorporation, bylaws or other applicable constituent documents, except for such violations that would not be material to the Company and its Subsidiaries, taken as a whole.

(c) All of the outstanding capital stock of, or other equity or voting interest in, each Subsidiary of the Company (i) have been duly authorized, validly issued and are fully paid, non-assessable and are free of preemptive rights and (ii) are owned, directly or indirectly, by the Company, free and clear of all Liens and free of any other restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity or voting interest) that would prevent the operation by the Surviving Corporation of such Subsidiary’s business as presently conducted.

(d) There are no outstanding (i) securities of the Company, or any of its Subsidiaries convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, any Subsidiary of the Company, (ii) options, warrants, rights or other commitments or agreements to acquire from the Company or any of its Subsidiaries, or that obligate the Company or any of its Subsidiaries to issue, any capital stock of, or other equity or voting interest in, or any of its Subsidiaries to issue, any capital stock of, or other equity or voting interest in, any Subsidiary of the Company, (iii) obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interest (including any voting debt) in, any Subsidiary of the Company (the items in clauses (i), (ii) and (iii), together with the capital stock of the Subsidiaries of the Company, being referred to collectively as “Subsidiary Securities”) or (iv) other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any Subsidiary Securities. There are no Contracts of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.

3.7 SEC Reports.

The Company has filed or furnished (as applicable) all forms, reports and documents with the SEC that have been required to be so filed or furnished (as applicable) by it under applicable Law prior to the date hereof, and, after the date of this Agreement and until the Acceptance Time, the Company will timely file or furnish (as applicable) all forms, reports and documents with the SEC that are required to be filed or furnished (as applicable) by it under

 

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applicable Law (all such forms, reports and documents, together with any other forms, reports or other documents filed or furnished (as applicable) by the Company with the SEC on or prior to the expiration date of the Offer that are not required to be so filed or furnished (the “SEC Reports”). Each SEC Report complied, or will comply, as the case may be, as of its filing date, as to form, in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, and with all applicable provisions of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), each as in effect on the date such SEC Report was, or will be, filed. True, correct and complete copies of all SEC Reports filed prior to the date hereof, whether or not required under applicable Law, have been made available to Parent or are publicly available in the Electronic Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC. As of its filing date, (or, if revised, amended, modified or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), each SEC Report did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the SEC Reports. To the knowledge of the Company, none of the SEC Reports is the subject of ongoing SEC review and there are no inquiries or investigations by the SEC or any internal investigations pending or threatened, in each case regarding any accounting practices of the Company. None of the Company’s Subsidiaries is required to file any forms, reports or other documents with the SEC. No executive officer of the Company has failed to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any SEC Report. Neither the Company nor any of its executive officers has received notice from any Governmental Authority challenging or questioning the accuracy, completeness, form or manner of filing of such certifications. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act.

3.8 Financial Statements and Controls.

(a) The consolidated financial statements of the Company and its Subsidiaries filed in or furnished with the SEC Reports have been or will be, as the case may be, prepared in accordance with GAAP consistently applied by the Company during the periods and at the dates involved (except as may be indicated in the notes thereto or as permitted by Regulation S-X, or, in the case of unaudited financial statements, as permitted by Form 10-Q, Form 8-K or any successor form under the Exchange Act)), and fairly present in all material respects, or will present in all material respects, as the case may be, the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of operations and cash flows for the periods then ended (subject, in the case of the unaudited financial statements, to normal and recurring year-end adjustments that are not, individually or in the aggregate, material).

(b) The Company has established and maintains, adheres to and enforces a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) which is designed to provide reasonable assurance regarding the

 

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reliability of financial reporting and the preparation of financial statements in accordance with GAAP, including policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with appropriate authorizations of management and the Company Board and (iii) provide assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries. Neither the Company nor the Company’s independent auditors has identified or been made aware of (A) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and its Subsidiaries, (B) any fraud (including violations of the Foreign Corrupt Practices Act of 1977, as amended), whether or not material, that involves the Company’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company and its Subsidiaries or (C) any claim or allegation regarding any of the foregoing.

(c) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, partnership agreement or any similar Contract (including any Contract relating to any transaction, arrangement or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand (such as any arrangement described in Section 303(a)(4) of Regulation S-K of the SEC)) where the purpose or effect of such arrangement is to avoid disclosure of any material transaction involving the Company or any its Subsidiaries in the Company’s consolidated financial statements.

(d) Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any director, officer, employee, auditor, accountant, consultant or representative of the Company or any of its Subsidiaries has received or otherwise had or obtained Knowledge of any substantive complaint, allegation, assertion or claim, whether written or oral, that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices. No current or former attorney representing the Company or any of its Subsidiaries has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Company Board or any committee thereof or to any director or executive officer of the Company.

(e) To the Company’s Knowledge, no employee of the Company or any of its Subsidiaries has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any Laws of the type described in Section 806 of the Sarbanes-Oxley Act by the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any director, officer, employee, contractor, subcontractor or agent of the Company or any such Subsidiary has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of the Company or any of its Subsidiaries in the terms and conditions of employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act.

 

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(f) The Company is in compliance in all material respects with all applicable and effective provisions of the Sarbanes-Oxley Act and the Dodd-Frank Act.

(g) The Company has provided to Parent copies of all SAB 99 memoranda, reports, white papers or similar documents prepared by, on behalf of or for the benefit of the Company since the initial public offering of the Company Shares.

3.9 Schedule 14D-9; Offer Documents.

(a) The Schedule 14D-9, when filed with the SEC, will comply as to form in all material respects with the applicable requirements of the Exchange Act and, on the date first published, sent or given to the Company Stockholders, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that notwithstanding the foregoing, no representation or warranty is made by the Company with respect to information supplied by Parent or Merger Sub or any of their officers, directors, representatives, agents or employees in writing specifically for inclusion or incorporation by reference in the Schedule 14D-9.

(b) None of the information supplied by the Company or its officers, directors, representatives, agents or employees expressly for inclusion in Offer Documents will, on the date the Offer Documents are first sent to the Company Stockholders and at the expiration date of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

3.10 No Undisclosed Liabilities.

Neither the Company nor any of its Subsidiaries has any Liabilities other than (a) Liabilities reflected or otherwise reserved against in the Balance Sheet or in the consolidated financial statements of the Company and its Subsidiaries included in the SEC Reports filed prior to the date of this Agreement, (b) Liabilities under this Agreement, (c) Liabilities incurred in connection with the transactions contemplated by this Agreement (including the Offer and the Merger), (d) Liabilities for performance of obligations of the Company under Contracts binding upon the Company (other than resulting from any breach or acceleration thereof) either delivered or made available to Parent or Parent’s Representatives prior to the date of this Agreement or entered into in the ordinary course of business, and (e) other Liabilities that are not material to the Company and its Subsidiaries, taken as a whole.

3.11 Absence of Certain Changes.

Since the date of the Balance Sheet, except for actions expressly contemplated or expressly required by this Agreement, and except for discussions, negotiations and transactions related to this Agreement or other potential strategic transactions, the business of the Company and its Subsidiaries has been conducted, in all material respects, in the ordinary course consistent with past practice, and there has not been or occurred or there does not exist, as the case may be:

 

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(a) any Company Material Adverse Effect;

(b) other than cash dividends made by any wholly owned Subsidiary of the Company to the Company or one of its Subsidiaries, any split, combination or reclassification of any shares of capital stock, declaration, setting aside or paying of any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock of the Company or any Subsidiary;

(c) any damage, destruction or other casualty loss (whether or not covered by insurance) with respect to any Leased Real Property or Assets that, individually or in the aggregate, results in an uninsured loss of greater than $50,000;

(d) any change in any method of accounting or accounting principles or practice by the Company or any of its Subsidiaries, except for any such change required by reason of a change in GAAP or regulatory accounting principles;

(e) any making of or change in a material Tax election, settlement or compromise of any material Tax liability by the Company or any of its Subsidiaries, adoption of or change in any Tax accounting method or consent to any extension or waiver of any limitation period with respect to any material claim or assessment for Taxes;

(f) any amendment of the Company’s certificate of incorporation or bylaws;

(g) any acquisition, redemption or amendment of any Company Securities or Subsidiary Securities;

(h) (i) any incurrence or assumption of any long-term or short-term debt or issuance of any debt securities by the Company or any of its Subsidiaries except for short-term debt incurred to fund operations of the business or owed to the Company or any of its wholly-owned Subsidiaries, in each case, in the ordinary course of business consistent with past practice, (ii) any assumption, guarantee or endorsement of the obligations of any other Person (except direct or indirect wholly-owned Subsidiaries of the Company) by the Company or any of its Subsidiaries, (iii) any loan, advance or capital contribution to, or other investment in, any other Person by the Company or any of its Subsidiaries (other than customary loans or advances to employees or direct or indirect wholly-owned Subsidiaries, in each case in the ordinary course of business consistent with past practice) or (iv) any mortgage or pledge of the Company’s or any of its Subsidiaries’ assets, tangible or intangible, or any creation of any Lien thereupon (other than Permitted Encumbrances);

(i) any plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger);

(j) any grant of severance or termination pay or rights (in cash or otherwise) to any Employee, including any officer, of the Company or its Subsidiaries;

(k) any payment or agreement to pay any special bonus or special remuneration (including but not limited to (A) grants of Company Options and/or Company

 

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RSUs or (B) or grants of retention and/or change of control bonuses) to any Employee, or increase or agreement to increase the salaries, wage rates, or other compensation or benefits of any Employee (or make any commitment or agreement to do any of the foregoing);

(l) any waiver of any stock repurchase rights or right of first refusal, or acceleration, amendment or change in the period of exercisability, as applicable, of Company Options and/or Company RSUs or any other equity or other incentive awards (including without limitation any long-term incentive awards), or re-pricing of stock options or authorizing cash payments or equity in exchange for any stock options granted under any of such plans;

(m) any increase or decrease to the salaries, wage rates, or other compensation or benefits of any executive officer or Key Employee (or make any commitment or agreement to do any of the foregoing);

(n) any adoption, termination or non-material amendment of an Employee Plan; or

(o) any promotion, demotion, or other change to the employment status or title of any executive officer of the Company or Key Employee.

3.12 Material Contracts.

(a) For purposes of this Agreement, a “Material Contract” shall mean each of the following:

(i) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC, other than those agreements and arrangements described in Item 601(b)(10)(iii)) with respect to the Company and its Subsidiaries;

(ii) any employment or consulting Contract (in each case, under which the Company or any of its Subsidiaries has continuing obligations as of the date hereof) with any Employee or member of the Company Board providing for an annual compensation in excess of $100,000 that is not terminable upon notice by the Company or any of its Subsidiaries, without cost or other Liability, except for amounts earned prior to the time of termination;

(iii) any Contract or plan, including any stock option plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the consummation of the transactions contemplated hereby (including the Offer and the Merger) or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement (including the Offer and the Merger);

 

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(iv) any Contract providing for indemnification, contribution or any guaranty (in each case, under which the Company or any of its Subsidiaries has continuing obligations as of the date hereof), other than any guaranty by the Company of any of its Subsidiaries’ obligations, or any Contract providing for indemnification or contribution entered into in connection with the distribution, sale or license of Company Products in the ordinary course of business, which indemnification or contribution does not materially differ from the provisions embedded in Company’s standard forms customer agreements as provided or made available to Parent;

(v) any Contract pursuant to which (A) the Company’s and its Subsidiaries’ potential liability is not expressly limited to an amount less than or equal to the amount actually received by the Company and its Subsidiaries under such Contract or (B) the Company or any of its Subsidiaries does not expressly disclaim indirect, incidental, consequential, special, punitive, and exemplary damages, in each case except where any such provision in any such Contract does not materially differ from the provisions embedded in the Company’s standard forms of customer agreements as provided or made available to Parent;

(vi) any Contract containing any covenant, commitment or other obligation (A) limiting the right of the Company or any of its Subsidiaries to engage in any line of business, to make use of any Company Intellectual Property or to compete with any Person in any line of business, (B) granting any exclusive rights, (C) containing a “most favored nation” or similar provision, (D) including any “take or pay” or “requirements” obligation, (E) prohibiting the Company or any of its Subsidiaries (or, after the Effective Time, Parent) from engaging in business with any Person or levying a fine, charge or other payment for doing so or (F) otherwise prohibiting or limiting the right of the Company or its Subsidiaries to sell, distribute or manufacture any products or services or to purchase or otherwise obtain any software, components, parts or subassemblies;

(vii) any IP Contracts listed on Sections 3.21(i) or 3.21(j) of the Company Disclosure Schedule;

(viii) any Contract that is royalty-bearing;

(ix) any Contract (A) relating to the disposition or acquisition by the Company or any of its Subsidiaries after the date of this Agreement of Assets that, individually or in the aggregate, have a value greater than $50,000, other than sales of Company Products in the ordinary course of business, or (B) pursuant to which the Company or any of its Subsidiaries will acquire any material ownership interest in any other Person or other business enterprise other than the Company’s Subsidiaries;

(x) the top twenty-five (25) Contracts in each of the following categories: (i) end-user or customer contracts or licenses, (ii) value added reseller contracts or (iii) distributor contracts (in each case, as measured by aggregate revenues received by the Company or its Subsidiaries for the fiscal year ended January 31, 2015);

 

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(xi) the top twenty-five (25) Contracts in each of the following categories: (i) supplier contracts, (ii) OEM contracts and (iii) development contracts (in each case, as measured by aggregate payments made by the Company or its Subsidiaries for the fiscal year ended January 31, 2015);

(xii) any Contract with any Material Customer, Material Supplier or Material Distributor;

(xiii) any Contract under which the Company or any of its Subsidiaries has provided, or may be obligated to provide, Source Code to any third party for any Company Product or Technology, including any Contract to put such Source Code in escrow with a third party on behalf of a licensee or contracting party;

(xiv) any Contract (A) containing any financial penalty for the failure by the Company or any of its Subsidiaries to comply with any support or maintenance obligation or (B) containing any obligation to provide support or maintenance for the Company Products for any period in excess of twelve (12) months;

(xv) any Contract authorizing another Person to provide support or maintenance to the Company’s customers on behalf of the Company, including distributors or resellers that are obligated to provide such support or maintenance;

(xvi) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of money or extension of credit, in each case in excess of $50,000, other than loans to direct or indirect wholly-owned Subsidiaries, in each case in the ordinary course of business consistent with past practice;

(xvii) any settlement Contract other than (A) releases immaterial in nature or amount entered into with former employees or independent contractors of the Company in the ordinary course of business (which for purposes of clarity will not include such settlement Contract if the amount of such settlement Contract is not in excess of $50,000 and is solely for a cash payment) or (B) settlement agreements for cash only (which has been paid) and does not exceed $50,000 as to such settlement;

(xviii) any other Contract that provides for continuing payment obligations by the Company or any of its Subsidiaries of $150,000 or more in any individual case in any fiscal year and is not disclosed pursuant to clauses (i) through (xvii) above;

(xix) any Leases; and

 

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(xx) any Contract, or group of Contracts with a Person (or group of affiliated Persons), the termination or breach of which would be reasonably expected to have a material adverse effect on any Company Product or otherwise is material to business, operations or financial condition of the Company and its Subsidiaries, taken together as a whole, and is not disclosed pursuant to clauses (i) through (xx) above.

(b) Section 3.12(b) of the Company Disclosure Schedule contains a complete and accurate list of all Material Contracts to or by which the Company or any of its Subsidiaries is a party or is bound, and identifies each subsection of Section 3.12(a) that describes such Material Contract;

(c) Each Material Contract is valid and binding on the Company (and/or each such Subsidiary of the Company party thereto) and is in full force and effect, and neither the Company nor any of its Subsidiaries party thereto, nor, to the Knowledge of the Company, any other party thereto, is in breach of, or default under, any such Material Contract, and no event has occurred that with notice or lapse of time or both would constitute such a breach or default thereunder by the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any other party thereto, except for such breaches and defaults that would not be material to the Company and its Subsidiaries, taken as a whole.

(d) Neither the Company nor any of its Subsidiaries, nor any of their respective directors or officers, has been debarred, suspended, proposed for debarment, or excluded from participation in the bidding for or award of a Government Contract. To the Company’s Knowledge, each Government Contract was legally awarded, is binding on the parties thereto, and is in full force and effect in accordance with its terms. As of the date hereof, there is no criminal or civil action, suit, claim or proceeding pending or, to the Company’s Knowledge, threatened in writing against the Company or any of its Subsidiaries, under the United States False Claims Act, the United States Procurement Integrity Act, the United States Truth in Negotiations Act, the United States Contract Disputes Act or any other similar federal Law. To the Company’s Knowledge, there is no qui tam suit pending against the Company or any of its Subsidiaries. As of the date hereof, neither the Company nor any of its Subsidiaries is being audited or investigated by a Governmental Authority, or, to the Company’s Knowledge, is such an audit or investigation by a Governmental Authority currently threatened, in connection with any Government Contract. As of the date hereof, to the Company’s Knowledge, no cost or charge pertaining to any Government Contract is the subject of any audit or investigation, or has been disallowed, by any Governmental Authority. The Company and its Subsidiaries have not received any written notice of termination, “show cause” or cure notice pertaining to any Government Contract. No payment due to the Company or any of its Subsidiaries pertaining to a Government Contract has been withheld or set off, and the Company and the Subsidiaries are entitled to all progress or other payments received to date with respect thereto, except any payment or claim that, individually or in the aggregate, is not reasonably likely to have a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received written notice of any outstanding material claims (including claims relating to bid or award protest proceedings) against the Company or any of its Subsidiaries, either by any Governmental Authority or by any prime contractor, subcontractor, vendor or other person, arising under or relating to any Government Contract. The Company and its Subsidiaries are in

 

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compliance in all respects with all material representations and certifications made to Governmental Authorities in response to requests for proposals pursuant to which the Government Contracts were awarded. The Company has no Knowledge as of the date hereof of any pending revocation of any security clearance of the Company, any Subsidiary or any Employee of the Company or any Subsidiary. The Company and each of its Subsidiaries is in compliance with all applicable Laws relating to its safeguarding of, and access to, classified information obtained in connection with Government Contracts.

3.13 Permits.

The Company and its Subsidiaries have, and are in compliance with the terms of, all permits, licenses, authorizations, consents, approvals and franchises from Governmental Authorities required to occupy and operate each Leased Real Property and to conduct their businesses as currently conducted (“Permits”), and no suspension or cancellation of any such Permits is pending or, to the Knowledge of the Company, threatened, except for such noncompliance, suspensions or cancellations that would not be material to the Company and its Subsidiaries, taken as a whole. All such Permits are in full force and effect.

3.14 Litigation.

There is no Legal Proceeding pending or, to the Knowledge of the Company, threatened (a) against the Company, any of its Subsidiaries or any of the respective properties of the Company or any of its Subsidiaries, that (i) involves an amount in controversy in excess of $50,000, (ii) seeks material injunctive relief, (iii) seeks to impose any legal restraint on or prohibition against or limit the Surviving Corporation’s ability to operate the business of the Company and its Subsidiaries substantially as it was operated immediately prior to the date of this Agreement, or (iv) that would otherwise be material to the Company and its Subsidiaries, taken as a whole. Neither the Company nor any of its Subsidiaries nor any of their respective properties is subject to any outstanding Order that would be material to the Company and its Subsidiaries, taken as a whole.

3.15 Taxes.

(a) Each of the Company and its Subsidiaries has prepared and timely filed all income and franchise Tax Returns and all other Tax Returns required to be filed relating to any and all Taxes concerning or attributable to the Company, any of its Subsidiaries or their respective operations, and such Tax Returns in all respects are true, correct and complete in accordance with applicable Law, except for such failures to prepare and timely file or failures to be true, correct and complete in accordance with applicable Law as would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(b) Each of the Company and its Subsidiaries has (i) timely paid all Taxes it is required to pay, and (ii) timely paid or withheld (and timely paid over any withheld amounts to the appropriate Governmental Authority) all income Taxes, Federal Insurance Contribution Act and Federal Unemployment Tax Act amounts, and other Taxes required to be withheld, except for failures to pay or withhold as would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

 

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(c) Neither the Company nor any of its Subsidiaries had any liabilities for unpaid Taxes as of the date of the Balance Sheet that had not been accrued or reserved on the Balance Sheet in accordance with GAAP, and neither the Company nor any of its Subsidiaries has incurred any liability for Taxes since the date of the Balance Sheet other than in the ordinary course of business, except to the extent such liabilities would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(d) Neither the Company nor any of its Subsidiaries has executed any outstanding waiver of any statute of limitations on or extension of the period for the assessment or collection of any Tax that has not expired, and no power of attorney with respect to any Taxes has been executed or filed with any Governmental Authority by or on behalf of the Company or any of its Subsidiaries.

(e) No audit or other examination of any Tax Return of the Company or any of its Subsidiaries is presently in progress, nor has the Company or any of its Subsidiaries been notified in writing of any proposed audit or other examination. No adjustment relating to any Tax Return filed by the Company has been proposed by any Governmental Authority. No written claim has ever been made by any Governmental Authority in a jurisdiction where the Company and its Subsidiaries do not file Tax Returns that any of them is or may be subject to taxation by that jurisdiction.

(f) There are (and immediately following the Effective Time there will be) no Liens on the assets of the Company or any of its Subsidiaries relating or attributable to Taxes, other than Permitted Encumbrances.

(g) The Company is not, nor has been at any time since January 1, 2010, a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code.

(h) Neither the Company nor any of its Subsidiaries has (a) ever been a member of an affiliated, consolidated, combined, aggregate or unitary group (including within the meaning of Code §1504(a)) filing a consolidated Tax Return (other than a group the common parent of which was the Company), (b) ever been a party to any Tax sharing, indemnification or allocation agreement (other than pursuant to commercial Contracts with customary terms entered into in the ordinary course of business the principal purposes of which is unrelated to Taxes), nor does the Company or any of its Subsidiaries owe any amount under any such agreement, (c) any material liability for the Taxes of any person under Treas. Reg. § 1.1502-6 (or any similar provision of state, local or non-U.S. applicable Law, including any arrangement for group or consortium relief or similar arrangement), as a transferee or successor, by Contract, by operation of applicable Law or otherwise and (d) ever been a party to any joint venture, partnership or other agreement that would reasonably be treated as a partnership for Tax purposes.

(i) Neither the Company nor any of its Subsidiaries will be required to include any material item of income or gain or exclude any material item of deduction or loss

 

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from Taxable income for any period or portion thereof after the Effective Time as a result of any (a) change in method of accounting made prior to the Effective Time, (b) closing agreement under Section 7121 of the Code entered into prior to the Effective Time, (c) deferred intercompany gain or excess loss account under Section 1502 of the Code attributable to transactions occurring prior to the Effective Time, (d) income deferred under Section 108(i) of the Code (or in the case of (b), (c) and (d), under any similar provision of applicable Law), (e) installment sale or open transaction disposition made prior to the Effective Time or (f) prepaid amount received prior to the Effective Time outside the ordinary course of business.

(j) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

(k) Neither the Company nor any of its Subsidiaries has engaged in a “listed transaction,” within the meaning of Treas. Reg. § 1.6011-4(b)(2).

(l) The Company and each of its subsidiaries is in compliance in all respects with all terms and conditions of any Tax exemption, Tax holiday or other Tax reduction agreement or order, except where the failure to be in compliance has not been and would not reasonably expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(m) Neither the Company nor any of its Subsidiaries is subject to Tax in any jurisdiction other than its country of incorporation or formation and does not have and has not at any time had a branch, agency or permanent establishment outside the country in which it is incorporated or itself constituted an agent or permanent establishment of any person for any Tax purpose.

(n) Section 3.15(n) of the Company Disclosure Schedule lists all Employees who are “disqualified individuals” (within the meaning of Section 280G of the Code) as determined as of the date hereof. The transactions contemplated by this Agreement (including the Offer and the Merger) will not result in the payment or series of payments to any person of a “parachute payment” within the meaning of Section 280G of the Code, or any other similar payment, which is not deductible for federal, state, local or foreign Tax purposes.

(o) The prices for any property or services (or for the use of any property) provided by or to the Company or any of its Subsidiaries are arm’s length prices for purposes of the relevant transfer pricing laws, including Treasury Regulations promulgated under Section 482 of the code.

(p) The Company has made available to Parent or its legal counsel or accountants copies of all income and other material Tax Returns of the Company and each of its Subsidiaries for all periods since February 1, 2011.

(q) Section 3.15(q) of the Company Disclosure Schedule lists each Employee Plan and Contract, agreement or arrangement between the Company or any ERISA Affiliate and any Employee, in each case, that is a “nonqualified deferred compensation plan” (as such term is defined in Section 409A(d)(1) of the Code) subject to Section 409A of the Code (or any state law

 

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equivalent) and the regulations and guidance thereunder (“Section 409A”). Each such nonqualified deferred compensation plan has been administered in operational and documentary compliance with the requirements of Section 409A except where the failure to be in compliance has not been and would not reasonably expected to be, individually or in the aggregate, material to the Company and its Subsidiaries. There is no contract, agreement, plan or arrangement to which the Company or any of its ERISA Affiliates is a party, including the provisions of this Agreement, covering any Employee of the Company, which individually or collectively could require the Company or any of its Affiliates to pay a Tax gross up payment to, or otherwise indemnify or reimburse, any Employee for Tax-related payments under Section 280G of the Code or Section 409A.

3.16 Environmental Matters.

(a) Hazardous Materials. Except as would not reasonably be expected to result in material liability to the Company and its Subsidiaries: (1) the Company and its Subsidiaries have conducted all Hazardous Materials Activities in compliance with all applicable Environmental Laws, and (2) neither the Company nor any Subsidiary is required by Environmental Law to hold any Environmental Permit. Except in compliance with Environmental Laws and as would not reasonably be expected to subject the Company or any of its Subsidiaries to material liability, no Hazardous Materials are present on any Leased Real Property or were present on any other real property formerly owned, operated, or leased by the Company or any of its Subsidiaries at the time it ceased to be owned, operated or leased by the Company or its Subsidiaries.

(b) Environmental Liabilities. To the Knowledge of the Company, there exists no fact or circumstance, which could result in any Liability of the Company or a Subsidiary under any Environmental Law except where such Liabilities would not reasonably be expected to result in material Liability to the Company or any Subsidiary. Neither the Company nor any Subsidiary has entered into any Contract that requires it to guarantee, reimburse, pledge, defend, hold harmless or indemnify any other party with respect to liabilities arising out of Environmental Laws or the Hazardous Materials Activities of the Company or any Subsidiary, except where such commitments would not reasonably be expected to result in material liability to the Company or any of its Subsidiaries.

(c) Reports and Records. The Company has delivered to Parent all environmental assessments (including any monitoring or sampling results or risk assessments) and audits in the Company’s and its Subsidiaries’ possession or reasonable control.

3.17 Employee Benefit Plans.

(a) Section 3.17(a)(i) and Section 3.17(a)(ii) of the Company Disclosure Schedule, respectively, set forth a complete and accurate list of (i) all “employee benefit plans” (as defined in Section 3(3) of ERISA), whether or not subject to ERISA, and (ii) all other employment, consulting and independent contractor agreement, bonus, stock option, stock purchase or other equity-based, benefit, incentive compensation, profit sharing, savings,

 

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retirement (including early retirement and supplemental retirement), disability, insurance, vacation, incentive, deferred compensation, supplemental retirement (including termination indemnities and seniority payments), severance, termination, retention, change of control and other similar fringe, welfare or other employee benefit plans, programs, agreement, contracts, policies or arrangements (whether or not in writing), in each case sponsored, maintained or contributed to for the benefit of or relating to any Employee of the Company or any ERISA Affiliate, or with respect to which the Company or any of its ERISA Affiliates has any Liability (together the “Employee Plans”), other than (x) any employee benefit plan, policy, program, arrangement or employment agreement providing statutory benefits or obligations required by applicable Law in a jurisdiction outside of the United States and (y) any individual employment offer letter for non-officer employees of the Company and its Subsidiaries (provided that such offer letters do not contain severance or change of control payments or benefits and do not materially deviate from the forms provided to Parent as of the date hereof), and any equity grant notices, and related documentation, with respect to employees of the Company and its Subsidiaries (provided that such equity grant notices and related documentation do not contain severance or change of control payments or benefits and do not materially deviate from the forms provided to Parent pursuant to Section 3.5(b) hereof).

(b) With respect to each Employee Plan, the Company has provided or made available to Parent complete and accurate copies of (A) the three most recent annual report on Form 5500 required to have been filed with the IRS for each Employee Plan, including all schedules thereto; (B) the most recent determination letter or opinion letter from the IRS, in each case, for any Employee Plan that is intended to qualify under Section 401(a) of the Code; (C) the plan documents and summary plan descriptions, or a written description of the terms of any Employee Plan that is not in writing; (D) any related trust agreements, insurance contracts, insurance policies or other documents of any funding arrangements; (E) all material Contracts and other material documentation (e.g., actuarial reports) relating to each Employee Plan, including administrative service agreements; (F) all nondiscrimination tests for each Employee Plan for the three most recent plan years; (G) any notices to or from the IRS or any office or representative of the DOL or any similar Governmental Authority in respect of any such Employee Plan; (H) if the Employee Plan is funded, the most recent annual and periodic accounting of Employee Plan assets; (I) with respect to each Employee Plan that is maintained in any non-U.S. jurisdiction (the “International Employee Plans”), to the extent applicable, (x) the most recent annual report or similar compliance documents required to be filed with any Governmental Authority with respect to such plan and (y) any document comparable to the determination letter reference under clause (B) above issued by a Governmental Authority relating to the satisfaction of applicable Law necessary to obtain the most favorable tax treatment and (J) all amendments, modifications or supplements to any such document.

(c) Each Employee Plan has been maintained, operated and administered in compliance in all respects with its terms and with all applicable Law, or any applicable Collective Bargaining Agreement, including the applicable provisions of ERISA, the Code and the codes of practice issued by any Governmental Authority, except where the failure to be in compliance has not been and would not reasonably expected to be, individually or in the aggregate, material to the Company and its Subsidiaries. Except as would not result in any material liability to the Company and its Subsidiaries, to the extent applicable, each International Employee Plan has been approved by the relevant taxation and other Governmental Authorities

 

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so as to enable (i) the Company or any of its Subsidiaries and the participants and beneficiaries under the relevant International Employee Plan, and (ii) in the case of any International Employee Plan under which resources are set aside in advance of the benefits being paid (a “Funded International Employee Plan”), the assets held for the purposes of the Funded International Employee Plans, to enjoy the most favorable taxation status possible and the Company is not aware of any ground on which such approval may cease to apply.

(d) Except as would not result in any material liability to the Company and its Subsidiaries, each Employee Plan that is intended to be “qualified” under Section 401 of the Code has received a favorable determination letter (or opinion letter, if applicable) from the IRS to such effect and, to the Knowledge of the Company, no fact, circumstance or event has occurred or exists since the date of such determination letter that would reasonably be expected to adversely affect the qualified status of any such Employee Plan.

(e) Except as would not result in any material liability to the Company and its Subsidiaries, all contributions, premiums and other payments required to be made with respect to any Employee Plan have been timely made or accrued under applicable Law, any applicable Collective Bargaining Agreement and the terms of such Employee Plan. To the Knowledge of the Company, no event has occurred and there currently exists no condition or set of circumstances in connection with which the Company or any of its Subsidiaries could be subject to any material liability to the Company and its Subsidiaries, under the terms of any Employee Plan, ERISA, the Code or codes of practice issued by any Governmental Authority, Collective Bargaining Agreement or any other applicable Law. Except as required by applicable Law or any applicable Collective Bargaining Agreement, neither the Company nor any of its Subsidiaries has any plan or commitment to amend or establish any new Employee Plan or to continue or increase any benefits under any Employee Plan, or to maintain any such benefits or the level of any such benefits generally for any period.

(f) Except as would not result in any material liability to the Company and its Subsidiaries, there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened on behalf of or against any Employee Plan, the assets of any trust under any Employee Plan, or the plan sponsor, plan administrator or any fiduciary or any Employee Plan with respect to the administration or operation of such plans, other than routine claims for benefits.

(g) Except as would not result in any material liability to the Company and its Subsidiaries, none of the Company, any of its ERISA Affiliates, or, to the Knowledge of the Company, any of their respective directors, officers, employees or agents has, with respect to any Employee Plan, engaged in or been a party to any non-exempt “prohibited transaction,” as such term is defined in Section 4975 of the Code or Section 406 of ERISA, which would reasonably be expected to result in the imposition of a penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, in each case applicable to the Company, any of its Subsidiaries or any Employee Plan or for which the Company or any of its Subsidiaries has any indemnification obligation. Neither the Company nor any ERISA Affiliate is subject to any penalty or Tax with respect to any Employee Plan under Section 502(i) of ERISA or Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code that would result in any material liability to the Company and its Subsidiaries.

 

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(h) Neither the Company nor any ERISA Affiliate has ever maintained, established, sponsored, participated in, or contributed to, any (1) a “defined benefit plan” (as defined in Section 414 of the Code), (2) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (3) a “multiple employer plan” (as defined in Section 4063 or 4064 of ERISA) (in each case under clause (1), (2) or (3) whether or not subject to ERISA), (4) a “funded welfare plan” within the meaning of Section 419 of the Code, (5) employee pension benefit plan subject to Section 302 of ERISA, Section 412 of the Code or Title IV of ERISA, or (6) self-funded employee welfare benefit plan that provides benefits to Employees (including any such plan pursuant to which a stop-loss policy or contract applies), but excluding any Code Section 125 or 129 plan. There does not now exist, nor do any circumstances exist that would reasonably be expected to result in, any Controlled Group Liability that would be a liability (contingent or otherwise) of the Company or any ERISA Affiliate at or after the Effective Time.

(i) No Employee Plan provides, or reflects or represents any liability to provide, post-termination or retiree life insurance, health or other employee welfare benefits to any Employee for any reason, except as may be required by COBRA, and the Company and its Subsidiaries have never represented, promised or contracted (whether in oral or written form) to any Employee (either individually or to Employees as a group) or any other person that such Employee(s) or other person would be provided with life insurance, health or other employee welfare benefits after retirement or termination of services, except to the extent required by COBRA.

(j) Except as provided for in this Agreement and required under applicable Law, neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement (including the Offer or the Merger) will, either alone or in conjunction with any other event, (i) result in any payment or benefit becoming due or payable, or required to be provided, to any director, employee or independent contractor of the Company or any of its Subsidiaries, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee or independent contractor, (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation or (iv) result in any amount to fail to be deductible by reason of Section 280G of the Code.

(k) Except as would not result in any material liability to the Company and its Subsidiaries, the Company and each ERISA Affiliate has complied with COBRA and the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (together, the “Affordable Care Act”), each as amended, and any similar provisions of state Law applicable to Employees, and any state or local mandatory health benefit, contribution, and coverage requirement applicable to Employees. The Company and each ERISA Affiliate does not have unsatisfied obligations to any Employees or qualified beneficiaries pursuant to COBRA, the Affordable Care Act, or any state or local Law governing health care coverage or benefits that would result in any material liability to the Company and its Subsidiaries.

(l) Neither the Company nor any of its ERISA Affiliates has violated Section 402 of the Sarbanes-Oxley Act of 2002 and the execution of this Agreement and the consummation of the transactions contemplated hereby will not, to the Knowledge of the Company, cause such a violation.

 

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(m) All contracts of employment or for services with any employee of the Company or any ERISA Affiliate who provide services outside the United States (“Non-U.S. Employees”), or with any director, independent contractor or consultant of or to the Company or any of its Subsidiaries can be terminated by thirty (30) days’ notice or less given at any time without giving rise to any claim for damages, severance pay, or compensation (other than a statutory redundancy payment applicable by virtue of applicable Law or compensation for unfair dismissal applicable by virtue of Law or any equivalent remedy under applicable local Law) that would result in any material liability to the Company and its Subsidiaries.

(n) No promise has been made to any Non-U.S. Employee that his defined contribution benefits under any Funded International Employee Plan will at any point in the future equate to or not be less than any particular amount. Furthermore, no International Employee Plan has material liabilities, that as of the Closing Date, will not be offset in full by insurance or otherwise be fully accounted for on a basis which complies with International Accounting Standard 19 (IAS 19) (whether or not IAS 19 applies to the Company or, if relevant, any of its Subsidiaries).

(o) Except as required by applicable Law, no condition or term under any relevant Employee Plan exists which would prevent Parent or the Surviving Corporation or any of its Subsidiaries from terminating or amending any Employee Plan or International Employee Plan at any time for any reason without material liability to Parent or the Surviving Corporation or any of its Subsidiaries (other than ordinary administration expenses or routine claims for benefits).

3.18 Labor Matters.

(a) Neither the Company nor any of its Subsidiaries is a party to any Contract or arrangement between or applying to, one or more employees and a trade union, works council, group of employees or any other employee representative body, for collective bargaining or other negotiating or consultation purposes or reflecting the outcome of such collective bargaining or negotiation or consultation with respect to their respective employees with any labor organization, union, group, association, works council or other employee representative body, or is bound by any equivalent national or sectoral agreement (“Collective Bargaining Agreements”). There are no pending served or, to the Knowledge of the Parent or Merger Sub, pending and not served activities or proceedings or, to the Knowledge of the Company, threatened or reasonably anticipated by any labor organization, union, group or association or representative thereof to organize any such employees. There are no lockouts, strikes, slowdowns, concerted refusal to work overtime, work stoppages or, to the Knowledge of the Company, threats thereof by or with respect to any employees of the Company or any of its Subsidiaries, nor have there been any such lockouts, strikes, slowdowns, concerted refusals to work overtime or work stoppages or threats thereof with respect to any employees or the Company or any of its Subsidiaries.

(b) To the Knowledge of the Company, there are no grievances outstanding against the Company or any of its Subsidiaries, nor are there any unfair labor practice complaints pending or threatened against the Company or any of its Subsidiaries before the National Labor Relations Board or any court, tribunal or other Governmental Authority, or any current union representation questions involving employees of the Company or any of its Subsidiaries.

 

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(c) The Company and its Subsidiaries have complied in all material respects with applicable Law, any applicable Collective Bargaining Agreement and Orders relating to employment, employment practices, terms and conditions of employment, worker classification, tax withholding, prohibited discrimination, equal employment, fair employment practices, meal and rest periods, immigration status, employee safety and health, wages (including overtime wages), compensation, and hours of work, and in each case, with respect to employees: (i) has withheld and reported all amounts required by Law or by Contract to be withheld and reported with respect to wages, salaries and other payments to employees, (ii) is not liable for any arrears of wages, severance pay or any taxes or any penalty for failure to comply with any of the foregoing, and (iii) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Authority, with respect to unemployment compensation benefits, social security or other benefits or obligations for employees (other than routine payments to be made in the normal course of business and consistent with past practice). Except as provided in Section 3.18(c) of the Company Disclosure Schedule, the employment of each U.S. employee of the Company and its Subsidiaries is terminable at will without cost or liability to the Company or its Subsidiaries, except for amounts earned prior to the time of termination.

(d) All individuals who are, or were, performing consulting or other services for the Company or any of its Subsidiaries cannot reasonably be deemed to have been misclassified by the Company or its Subsidiaries as either “independent contractors” (or comparable status in the case of a foreign of its Subsidiaries) or “employees” as the case may be, in a way that would result in any material liability to the Company and its Subsidiaries, taken as a whole. Similarly, all individuals who are or were classified as employees as of the Effective Time cannot reasonably be deemed to have been misclassified as exempt or non-exempt, as the case may be, under the Fair Labor Standards Act or other applicable Laws in a way that would result in any material liability to the Company and its Subsidiaries, taken as a whole.

(e) Neither the Company nor any Subsidiary has taken any action with respect to U.S. employees which would constitute a “plant closing” or “mass layoff” within the meaning of the WARN Act or similar foreign, state or local applicable Law, issued any notification of a plant closing or mass layoff required by the WARN Act or similar foreign, state or local applicable Law, or incurred any liability or obligation under WARN or any similar foreign, state or local applicable Law that remains unsatisfied. No terminations prior to the Closing would trigger any notice or other obligations under the WARN Act or similar foreign, state or local applicable Law.

(f) Section 3.18(f) of the Company Disclosure Schedule contains, with respect to U.S. employees of the Company or any of its Subsidiaries, a complete and accurate list of (i) the name of each employee and consultant currently providing services to the Company or any of its Subsidiaries, and (ii) each such person’s position or function, annual base salary or wages or consulting fees, and with respect to employees, vacation entitlement, service date, benefit entitlement and any incentives or bonus arrangement with respect to such person. The Company has made available to Parent a true and correct copy of all written employment or

 

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consulting or independent contractor contracts with each employee and consultant providing services to the Company or any of its Subsidiaries. Such contracts have been made completely anonymous or templates provided for those employees based in jurisdictions where this is required under applicable data privacy/protection Law. As of the date hereof, no such person has terminated or has advised the Company or any of its Subsidiaries of his or her intention to terminate his or her relationship or status as an employee or consultant of the Company or its Subsidiaries for any reason, including because of the consummation of the transactions contemplated hereby, and the Company and its Subsidiaries have no plans or intentions, as of the date hereof, to terminate any such employee or consultant.

3.19 Real Property.

(a) Neither the Company nor any of its Subsidiaries owns or has ever owned any real property, nor is any party to any agreement to purchase or sell any real property.

(b) Section 3.19(b) of the Company Disclosure Schedule contains a complete and accurate list of all real property currently leased, used, or occupied by the Company or any Subsidiary (“Leased Real Property”) and each of the leases, subleases, licenses, or other agreements (collectively, the “Leases”) to which the Company or any Subsidiary is a party, including, with respect to each Lease, the name of the lessor, master and sublessor, the square footage of the premises leased thereunder, the expiration date, and the aggregate annual rental payable to the lessor thereunder. The Company has heretofore made available to Parent true, correct and complete copies of all Leases (including all modifications, amendments, and side letters thereto. Each Lease is in full force and effect in accordance with its terms, and the Company or Subsidiary which is a party thereto. The Company or Subsidiary (as applicable) holds a valid leasehold estate in the Leased Real Property described therein, free and clear of all Liens.

(c) The execution and delivery of this Agreement by the Company does not, and the consummation of the transactions contemplated hereby will not, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or materially impair the rights of the Company or any of its Subsidiaries or alter the rights or obligations of the sublessor, lessor or licensor under, or give to others any rights of termination, amendment, acceleration or cancellation of any Leases, or otherwise adversely affect the continued use and possession of the Leased Real Property for the conduct of business as presently conducted. Neither the Company nor any of its Subsidiaries is in breach of or default under any Lease, and, to the Knowledge of the Company, no event has occurred that with notice or lapse of time or both would constitute a breach or default thereunder by the Company or any of its Subsidiaries or any other party thereto. Neither the Company nor any of its Subsidiaries owes brokerage commissions or finder’s fees with respect to any Leased Real Property, nor is it party to any agreement or subject to any claim that may require the payment of a real estate brokerage commission. The Company and its Subsidiaries currently occupy all of the Leased Real Property for the operation of their business. The Company has not transferred or assigned any interest in any Lease, nor has the Company subleased or otherwise granted rights of use or occupancy of any of the premises described therein to any other person or entity.

 

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Neither the Company nor any of its Subsidiaries could be required to expend more than $50,000 in causing any Leased Real Property to comply with the surrender conditions set forth in the applicable Lease. The Company and each of its subsidiaries has performed all of its obligations under any termination agreements pursuant to which it has terminated any leases of real property that are no longer in effect and has no continuing liability with respect to such terminated real property leases.

(d) Each Leased Real Property is in good operating condition and repair, and suitable for the conduct of the business of the Company and its Subsidiaries as presently conducted.

3.20 Tangible Personal Property.

The machinery, equipment, furniture, fixtures and other tangible property and assets owned, leased or used by the Company or any of its Subsidiaries (the “Assets”) are sufficient and adequate to carry on their respective businesses in all material respects as presently conducted. The Company and its Subsidiaries are in possession of and have good title to, or valid leasehold interests in or valid rights under contract to use, such Assets, free and clear of all Liens, except for defects in title that, individually or in the aggregate, are valued at less than $50,000.

3.21 Intellectual Property.

(a) Section 3.21(a) of the Company Disclosure Schedule contains a complete and accurate list of all Company Products being distributed, licensed or sold by the Company or any of its Subsidiaries.

(b) Section 3.21(b) of the Company Disclosure Schedule sets forth as of the date hereof a true and complete list of all Registered Intellectual Property owned or claimed to be owned by, filed in the name of, or licensed exclusively to, the Company or any of its Subsidiaries, indicating for each item the registration or application number, the applicable filing jurisdiction, and the status of such application or registration (“Company Registered Intellectual Property”). Each item of Company Registered Intellectual Property is subsisting and, to the Knowledge of the Company, valid and enforceable, and has not expired, been cancelled, or been abandoned.

(c) All Company Intellectual Property and Technology that is owned by the Company is free and clear of all Liens (other than Permitted Encumbrances) and immediately following the Closing will be, valid and enforceable and freely exercisable, transferable, licensable, and alienable without the consent of, or notice or payment of any kind to any Governmental Authority or third party. Neither the Company nor any of its Subsidiaries has granted ownership to any person, or permitted any person to retain, any exclusive rights, or joint ownership of, any Intellectual Property Right that is or was Company Intellectual Property.

(d) The Company and its Subsidiaries have sufficient rights to use all Intellectual Property Rights and Technology used in their respective businesses as presently conducted, all of which rights shall survive unchanged upon and immediately following the Closing.

 

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(e) Neither the Company Products, nor the past or current conduct or operations of the Company or its Subsidiaries have infringed or misappropriated the Intellectual Property Rights of any third party, or have violated any right of any person or any Laws. No Legal Proceeding has been asserted or threatened against the Company or any of its Subsidiaries by, and none of the Company or its Subsidiaries has received notice from, any third party alleging that any Company Product or the operation or conduct of the business of the Company or any of its Subsidiaries, infringes or misappropriates the Intellectual Property Rights of any third party, violates the rights of any third party or any Laws, or challenging the ownership, validity, or enforceability of any Company Intellectual Property.

(f) To the Knowledge of the Company, no person is misappropriating, infringing, diluting or violating any Company Intellectual Property. None of the Company or its Subsidiaries has brought any claims, suits, arbitrations or other adversarial proceedings before any court, Governmental Authority or arbitral tribunal against any third party with respect to any Company Intellectual Property which remain unresolved as of the date hereof.

(g) In each case in which the Company or any of its Subsidiaries has engaged or hired a third party to develop or create any Intellectual Property Rights or Technology for any of them, or the Company or any of its Subsidiaries has acquired or purported to acquire ownership of any Intellectual Property Rights or Technology from any person, the Company or any of its Subsidiaries, as the case may be, has obtained a valid and enforceable written assignment, sufficient to irrevocably transfer all such Intellectual Property Rights (including the right to seek past and future damages with respect thereto) and Technology to the Company or any of its Subsidiaries, and where such Intellectual Property Rights are Registered Intellectual Property, the Company or any of its Subsidiaries has recorded each such assignment with the relevant Governmental Authority.

(h) The Company and its Subsidiaries have taken commercially reasonable measures necessary to protect its Trade Secrets and the Trade Secrets provided to the Company or any of its Subsidiaries by any other person. Without limiting the generality of the foregoing, (i) the Company and its Subsidiaries have, and enforce, a policy requiring each employee, consultant and independent contractor involved in the creation of Intellectual Property Rights or Technology for the Company or its Subsidiaries to (A) execute a proprietary information, confidentiality and invention assignment agreement substantially in the form attached to Section 3.21(h) of the Company Disclosure Schedule, or (B) execute an agreement that includes provisions that assign such Intellectual Property Rights and Technology to the Company or its Subsidiaries, and protect the Company’s and its Subsidiaries’ confidential information which are substantively the same as those in the form attached to Section 3.21(h) of the Company Disclosure Schedule, and (ii) all current and former employees, consultants and independent contractors of the Company or its Subsidiaries involved in the creation of such Intellectual Property Rights or Technology has executed such or a substantially similar agreement.

(i) Section 3.21(i) of the Company Disclosure Schedule lists all Contracts currently in effect as of the date of this Agreement or containing any Technology licenses, data

 

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security obligations to which the Company or any of its Subsidiaries is bound, or any third party’s right to audit the Company’s or any of its Subsidiary’s use of Technology, surviving as of the date of this Agreement pursuant to which a third party has licensed or granted any right to the Company or any of its Subsidiaries in any Technology or Intellectual Property Rights or agreed to provide any services (including hosted services and services with which the Company Products interface via API or other method) related to Technology or Intellectual Property Rights to the Company or any of its Subsidiaries (“In-Licenses”), other than any licenses for (i) commercial, off-the-shelf software (1) for which the Company or any of its Subsidiaries has paid less than $50,000 in aggregate and (2) which is not incorporated into, embedded into, hosted with, distributed with, or installed with any Company Products (“Off-the-Shelf Software”), and (ii) Open Source Licenses. For all In-Licenses for Technology or Intellectual Property Rights that are incorporated into, embedded into, hosted with, distributed with, or installed with any Company Products, Section 3.21(i) of the Company Disclosure Schedule specifies whether any royalty, honorarium, or other fee is or will become payable by Company or any of its Subsidiaries to retain such rights and, in each such case, indicates the applicable payment.

(j) Section 3.21(j) of the Company Disclosure Schedule lists all Contracts (i) currently in effect as of the date of this Agreement or (ii) containing any surviving Technology licenses, or software-as-a-service, support maintenance, or hosting services to which the Company or any of its Subsidiaries is bound as of the date of this Agreement, in each case pursuant to which Company or any of its Subsidiaries: (A) has granted any third party any rights or licenses to any Company Intellectual Property other than Ordinary Course Licenses, (B) has performed or agreed to perform services for any third party (other than Ordinary Course Licenses), or (C) granted any right or license to, provided access to, or provided, sold or distributed (or agreed to do any of the foregoing) with respect to, any Company Product or Technology, other than Ordinary Course Licenses. Section 3.21(j) of the Company Disclosure Schedule also lists all Contracts between or among Company and any of its Subsidiaries with respect to Intellectual Property Rights, Technology, or related services (the Contracts described in this Section 3.21(j), together with the Ordinary Course Licenses, “Out-Licenses”; and together with the In-Licenses and Open Source Licenses, the “IP Contracts”).

(k) All IP Contracts are in full force and effect. Neither Company nor any of its Subsidiaries is, nor, to the Knowledge of Company, is any other party to any IP Contract, in material breach of any IP Contract. The Closing of this Agreement, will not: (i) violate or result in the breach, modification, cancellation, termination, or suspension of any IP Contract; (ii) result in the release of any Source Code, or other proprietary Technology, of Company or the Surviving Corporation, or in the granting of any right or licenses to any Company Intellectual Property to any third party; (iii) result in Parent or any of its Affiliates being required to grant to any third party any rights to or under their Intellectual Property Rights; or (iv) subject the Surviving Corporation or any of its Subsidiaries, or Parent or any of its Affiliates to any non-compete or other material restriction on the operation or scope of their respective businesses. All IP Contracts shall survive the Closing in accordance with their terms and the Surviving Corporation will be permitted to exercise all of the Company’s rights under all IP Contracts that they had prior to the Closing.

(l) Other than pursuant to Ordinary Course Licenses, none of the IP Contracts requires Company or any of its Subsidiaries, or will require the Surviving Corporation, to return

 

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or refund any amounts paid to any of them, or grant any credit to any third party, or pay any liquidated damages or penalties in the event of any breach of any warranty of any of them or any failure of any of them to perform under such IP Contract.

(m) Section 3.21(m) of the Company Disclosure Schedule lists any Technology used by the Company or its Subsidiaries in, or in the development of, any Company Products or any other Technology sold, licensed, or distributed by the Company or any of its Subsidiaries that is licensed under or subject to any Open Source License and identifies (i) the name of the applicable Open Source License and the applicable license URL, (ii) whether the Technology is embedded into a Company Product, (iii) whether the Technology is or has been sold, licensed, or distributed by Company or its Subsidiaries, (iv) whether the Technology has been modified by Company or its Subsidiaries, and (v) whether the Technology is statically or dynamically linked to any Company Product.

(n) Without limiting Section 3.21(m), neither Company nor any of its Subsidiaries has (i) granted, nor are any of them obligated to grant, access or rights to any of its Source Code in or for any Company Products or Technology (other than to the Company’s and its Subsidiaries’ employees and contractors solely as necessary to internally support, maintain, and develop the Company Products or Company Technology), (ii) rendered its Source Code subject to any Open Source License, (iii) distributed any of the Company Products with Open Source Materials or pursuant to the terms of an Open Source License, (iv) licensed, distributed or used any Technology in breach of the terms of any Open Source License, or (v) licensed or delivered, or has any obligation to license or deliver, any of its Source Code in any Company Product or Technology to any escrow agent for the storage and conditional release of any Source Code.

(o) No unresolved claim or complaint has been made by any third party against Company or any of its Subsidiaries, and no notice of any such claim or complaint has been received by, Company or any of its Subsidiaries, within the four (4) year period immediately preceding the date of this Agreement with respect to any Company Products (including with respect to any delay, defect, deficiency of any product, or quality of any service) or with respect to the breach of any Contract (including any Out-License) under which Company Products have been supplied or provided. To the Company’s Knowledge, there is no reasonable basis for any present or future complaint or claim with respect to any Company Products (including with respect to any delay, defect, deficiency of any product, or quality of any service) or with respect to the breach of any Contract (including any Out-License) under which Company Products have been supplied or provided. Each Company Product (including any service provided) has been and is in conformity with all applicable Laws and contractual commitments and all express and implied warranties (to the extent any such implied warranties have not been disclaimed under applicable Law), except for such violations or noncompliance that would not be material to the Company and its Subsidiaries, taken as a whole.

(p) To the Knowledge of the Company, no Company Product contains any (i) undisclosed disabling codes or instructions, “time bombs,” “Trojan horses,” “back doors,” “trap doors,” “worms,” viruses, or other software routines or hardware components that enable or assist any person to, without authorization, access, disable, or erase the Company Products, or the hardware, Software, network, or systems of a Person. To the Knowledge of the Company, no

 

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Company Product contains any bugs, faults, or other software routines or hardware that materially adversely affect the functionality of the Company Products or the hardware, Software, network, or systems of a Person.

(q) Section 3.21(q) of the Company Disclosure Schedule lists any Company Products that have been distributed or made available free of charge (excluding free trial periods and discounts offered by the Company or any of its Subsidiaries pursuant to Ordinary Course Licenses).

3.22 Compliance with Laws.

The Company and each of its Subsidiaries, and their respective properties (including the Assets and the Leased Real Property), are in compliance with all Laws and Orders applicable to the Company and its Subsidiaries or such properties or to the conduct of the business or operations of the Company and its Subsidiaries, except for such violations or noncompliance that would not be material to the Company and its Subsidiaries, taken as a whole.

3.23 Export Control and Import Laws.

(a) The Company and each of its Subsidiaries have complied with all applicable export and re-export control laws and regulations (“Export Controls”), including but not limited to the Export Administration Regulations (“EAR”) maintained by the U.S. Department of Commerce, trade and economic sanctions maintained by the Treasury Department’s Office of Foreign Assets Control (“OFAC”), and the International Traffic in Arms Regulations (“ITAR”) maintained by the Department of State and any applicable anti-boycott compliance regulations. Neither the Company nor any of its Subsidiaries has directly or indirectly sold, exported, re-exported, transferred, diverted, or otherwise disposed of any products, software, or technology (including products derived from or based on such technology) to any destination, entity, or person prohibited by the Laws or regulations of the United States or any other country, without obtaining prior authorization from the competent Governmental Authorities as required by those Laws and regulations. The Company and its Subsidiaries are in compliance with all applicable U.S. and foreign import laws and regulations (“Import Restrictions”), including but not limited to Title 19 of the U.S. Code and Title 19 of the Code of Federal Regulations.

(b) Section 3.23(b) of the Company Disclosure Schedule accurately describes all of the goods, services, items, software, technology, or technical data of the Company and its subsidiaries along with the appropriate classification, including their Export Control Classification Numbers (“ECCNs”) or designation on the U.S. Munitions List (“USML”). The Company and its Subsidiaries have complied with all terms and conditions of any license issued or approved by the Directorate of Defense Trade Controls, the Bureau of Industry and Security, or the Office of Foreign Assets Control which is or has been in force or any other export authorization used.

 

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(c) Except pursuant to valid licenses, the Company and its Subsidiaries have not released or disclosed controlled technical data or technology to any foreign national whether in the United States or abroad.

(d) No action, proceeding, writ, injunction, claim, request for information, or subpoena is pending, or to the Company’s Knowledge, threatened, concerning or relating to any export or import activity of the Company or any Subsidiary. No voluntary self-disclosures have been filed by or for the Company or any of its Subsidiaries with respect to possible violations of Export Controls and Import Restrictions.

(e) Neither the Company nor any of its Subsidiaries has knowledge of any fact or circumstance that could result in any liability for violation of Export Control and Import Restrictions.

(f) The Company and its Subsidiaries have maintained all records required to be maintained in the Company’s and its Subsidiaries’ possession as required under the Export Control and Import Restrictions.

3.24 Anti-Corruption and Anti-Bribery Laws.

(a) Neither the Company nor any of its Subsidiaries, including any of their respective officers, directors, agents, employees, distributors, or representatives (in each case, acting in their capacities as officers, directors, agents, employees, distributors, agents, or representative of the Company or such Subsidiary) has, directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made, attempted, offered, promised, or authorized any unlawful payment to foreign or domestic government officials or employees, including employees of government owned or controlled entities, public international organizations, or candidates for office or members of political parties; or made, attempted or conspired to pay any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment to any person; established or maintained any fund or asset for any such unlawful payment or provision that was not properly recorded in the Company’s books and records; or taken any action which would cause it to be in violation of Anti-Corruption or Anti-Bribery Laws.

(b) There are no pending and served or, to the Company’s Knowledge, pending and not served or threatened claims, charges, investigations, violations, settlements, civil or criminal enforcement actions, lawsuits, or other court, governmental or private actions against the Company with respect to any Anti-Corruption and Anti-Bribery Laws.

(c) There are no allegations, whistleblower complaints, past or present internal investigations, or conditions or circumstances pertaining to the Company’s activities that may give rise to future claims, charges, investigations or civil or criminal violations of any Anti-Corruption and Anti-Bribery Laws.

 

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(d) The Company has established and maintains a compliance program and reasonable and sufficient internal controls and procedures appropriate to the requirements of Anti-Corruption and Anti-Bribery Laws.

3.25 Privacy and Data Protection.

(a) Neither the Company nor any of its Subsidiaries, nor any Company Product, is in violation of, or has violated, any Privacy Legal Requirement in a manner that would be material to the Company and its Subsidiaries, taken as a whole. There is not and has not been any complaint to, or any audit, proceeding, investigation (formal or informal), claim or other Legal Proceeding against, the Company or any of its Subsidiaries by any third party or Governmental Authority with respect to the collection, use, retention, disclosure, transfer, storage, security, disposal, or other processing of Personal Data or Customer Data. The Company has no reason to believe that any such complaint, audit, proceeding, investigation (formal or informal), claim or other Legal Proceeding relating to data security or privacy will be commenced against the Company or any of its Subsidiaries that would be material to the Company or any of its Subsidiaries, taken as a whole. At all times since inception, the Company and its Subsidiaries have provided accurate notice of its material practices regarding its collection, use, and disclosure of Personal Data on or in connection with all Company Products, and these notices have not contained any material omissions of the Company’s or any of its Subsidiaries’ practices regarding its collection, use, and disclosure of Personal Data. The execution, delivery, and performance of this Agreement will not violate any Privacy Legal Requirement.

(b) Each of the Company and its Subsidiaries has a Privacy Policy that accurately describes the collection, use and disclosure of information in connection with the operation of the business of the Company and its Subsidiaries, including the collection, use and disclosure of Personal Data and Customer Data. True and complete copies of all Privacy Policies that have been used by the Company or any its Subsidiaries in the past five years have been made available to Parent.

(c) The Company and each of its Subsidiaries has at all times taken steps reasonably necessary (including implementing and monitoring compliance with appropriate measures with respect to technical and physical security) designed to ensure that the Company Products and all Personal Data and Customer Data in the direct or indirect possession or control of the Company or any of its Subsidiaries are protected against unauthorized access, use, modification, disclosure, or other misuse and no unauthorized access to or unauthorized use, modification, disclosure or other misuse of such Company Products, Personal Data, or Customer Data has occurred. The Company has obtained written agreements from each Person performing services for the Company that the Company has permitted to access or process Personal Data or Customer Data that bind such Person to commercially reasonable confidentiality and security restrictions, obligations, and conditions related such Personal Data or Customer Data.

 

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3.26 Customers; Suppliers; Distributors.

(a) Customers. Section 3.26(a) of the Company Disclosure Schedule sets forth an accurate and complete list of the twenty-five (25) largest customers of the Company and its Subsidiaries (each, a “Material Customer”), determined on the basis of sales revenues by the Company and its Subsidiaries, taken together as a whole, to its customers, for each of the last three fiscal years ended January 31, 2015 and the current fiscal year. Such list includes the total sales revenues per customer for each applicable period. Neither the Company nor any of its Subsidiaries has received any written, or to the Knowledge of the Company, oral notice from any Material Customer that such customer shall not continue as a customer of the Company (or the Surviving Corporation or Parent) after the Closing or that such customer intends to terminate or materially modify existing Contracts with the Company (or the Surviving Corporation or Parent). The Company has not had any of its products returned by a Material Customer except for normal warranty returns consistent with past history and those returns that would not result in a reversal of any revenue by the Company.

(b) Suppliers. Section 3.26(b) of the Company Disclosure Schedule sets forth an accurate and complete list of the twenty-five (25) largest suppliers of the Company and its Subsidiaries (each, a “Material Supplier”), determined on the basis of costs of items purchased by the Company and its Subsidiaries, taken together as a whole, for each of the last three fiscal years ended January 31, 2015 and the current fiscal year. Such list includes the total cost of items purchased by the Company per supplier for each applicable period. Neither the Company nor any of its Subsidiaries has received any written, or to the Knowledge of the Company, oral notice from any Material Supplier that such supplier shall not continue as a supplier to the Company (or the Surviving Corporation or Parent) after the Closing or that such supplier intends to terminate or materially modify existing Contracts with the Company (or the Surviving Corporation or Parent). The Company and its Subsidiaries have access, on commercially reasonable terms, to all products and services reasonably necessary to carry on the Company’s business, and the Company has no Knowledge of any reason why it will not continue to have such access on commercially reasonable terms.

(c) Distributors. Schedule 3.26(c) of the Company Disclosure Schedule sets forth an accurate and complete list of the twenty-five (25) largest distributors through which the Company currently distributes the Company Products (each, a “Material Distributor”), on the basis of total sales by the Company and its Subsidiaries, taken together as a whole, to its distributors, for each of the last three fiscal years ended January 31, 2015 and the current fiscal year. Such list includes the total sales by the Company to each such distributor for each applicable period. Neither the Company nor any of its Subsidiaries has received any written, or to the Knowledge of the Company, oral notice from any Material Distributor that such customer shall not continue as a distributor of the Company (or the Surviving Corporation or Parent) after the Closing or that such distributor intends to terminate or materially modify existing Contracts with the Company (or the Surviving Corporation or Parent).

 

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3.27 Insurance.

The Company and its Subsidiaries have all policies of insurance covering the Company, its Subsidiaries or any of their respective employees, properties or assets (including policies of life, property, fire, workers’ compensation, products liability, errors and omissions, directors’ and officers’ liability and other casualty and liability insurance), in forms and amounts that is customarily carried by persons conducting business similar to that of the Company and its Subsidiaries, and such policies provide adequate protection for the operation of the business of the Company and its Subsidiaries. Except as would not be material to the Company and its Subsidiaries, taken as a whole, all such insurance policies are in full force and effect. Except as would not be material to the Company and its Subsidiaries, taken as a whole, there is no claim pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies and neither the Company or any Subsidiary has received notice of any actual or threatened cancellation, termination of, or material premium increase with respect to, any such policies.

3.28 Related Party Transactions.

Except as set forth in the SEC Reports or compensation or other employment arrangements in the ordinary course, there are no transactions, agreements, arrangements or understandings between the Company or any of its Subsidiaries, on the one hand, and any Affiliate (including any officer or director) thereof, but not including any wholly owned Subsidiary of the Company, on the other hand.

3.29 Brokers.

Except for Deutsche Bank Securities Inc. (true and correct copies of whose engagement letter has been furnished to Parent), there is no investment banker, broker, finder, agent or other Person that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries which is entitled to any financial advisors, brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby (including the Offer and the Merger).

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF PARENT AND MERGER SUB

Parent and Merger Sub hereby represent and warrant to the Company as follows:

4.1 Organization and Good Standing.

Parent is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite power and authority to conduct its business as it is presently being conducted and to own, lease or operate its respective properties and assets. Merger Sub is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its respective properties and assets. Each of Parent and Merger Sub is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature

 

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of its activities make such qualification necessary, except where the failure to be so qualified or in good standing would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

4.2 Authorization and Enforceability.

Each of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to perform its obligations hereunder (including the Offer and the Merger). The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby (including the Offer and the Merger) have been duly authorized by all necessary corporate or other action on the part of Parent and Merger Sub, and no other corporate or other proceeding on the part of Parent or Merger Sub is necessary to authorize, adopt or approve this Agreement and the transactions contemplated hereby (including the Offer and the Merger). This Agreement has been duly executed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each in accordance with its terms, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting or relating to creditors’ rights generally and (b) is subject to general principles of equity.

4.3 Required Governmental Consents.

(a) No Consent of any Governmental Authority is required on the part of Parent, Merger Sub or any of their Affiliates in connection with the execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the transactions contemplated hereby (including the Offer and the Merger), except (a) the filing and recordation of the Certificate of Merger with the Secretary of State of the State of Delaware and such filings with Governmental Authorities to satisfy the applicable Law of states in which the Company and its Subsidiaries are qualified to do business, (b) such filings and approvals as may be required by any federal or state securities laws, including compliance with any applicable requirements of the Exchange Act, (c) compliance with any applicable requirements of the HSR Act and other applicable Antitrust Laws and (d) such other Consents, the failure of which to obtain would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

4.4 Conflicts.

The execution, delivery or performance by Parent and Merger Sub of this Agreement, the consummation by Parent and Merger Sub of the transactions contemplated hereby (including the Offer and the Merger) and the compliance by Parent and Merger Sub with any of the provisions hereof do not and will not (i) violate or conflict with any provision of the articles of association or memorandum of association of Parent or the certificate of incorporation or bylaws of Merger Sub or, (ii) assuming compliance with the matters referred to in Section 4.3, violate or conflict with any Law or Order applicable to Parent or Merger Sub or by which any of their properties or assets are bound, except in the case of clause (ii) above, for such violations, conflicts, defaults, terminations, accelerations or Liens which would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

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4.5 Offer Documents; Schedule 14D-9.

(a) The Offer Documents, when filed with the SEC, will comply as to form in all material respects with the applicable requirements of the Exchange Act and, on the date first published, sent or given to the Company Stockholders, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that notwithstanding the foregoing, no representation or warranty is made by Parent with respect to information supplied by the Company or any of its officers, directors, representatives, agents or employees in writing specifically for inclusion or incorporation by reference in the Offer Documents.

(b) None of the information supplied by Parent, Merger Sub or their officers, directors, representatives, agents or employees expressly for inclusion in the Schedule 14D-9 will, on the date the Schedule 14D-9 is first sent to the Company Stockholders or at the expiration date of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

4.6 Ownership of Company Capital Stock.

Neither Parent nor Merger Sub is, nor at any time during the last three (3) years has it been, an “interested stockholder” of the Company as defined in Section 203 of the DGCL (other than as contemplated by this Agreement).

4.7 Funds.

Parent has, or will have upon the expiration date of the Offer (as the same may be extended from time to time pursuant to this Agreement) and at the Effective Time, the funds necessary to consummate the Offer and the Merger.

4.8 Litigation.

As of the date hereof, there is no Legal Proceeding pending and served or, to the Knowledge of the Parent or Merger Sub, pending and not served, or threatened (a) against the Parent or Merger Sub, or (to the Knowledge of the Parent or Merger Sub) against any present or former officer, director or employee of the Parent or Merger Sub in such individual’s capacity as such other than a Legal Proceeding that would not, individually or in the aggregate with all other pending or threatened Legal Proceedings, reasonably be expected to have Parent Material Adverse Effect. As of the date hereof, neither the Parent or Merger Sub is subject to any outstanding Order that would, individually or in the aggregate reasonably be expected to have Parent Material Adverse Effect.

 

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ARTICLE V

CONDUCT OF COMPANY BUSINESS

5.1 Affirmative Obligations.

(a) Except (a) as expressly contemplated or expressly required by this Agreement, (b) as set forth in Section 5.2 of the Company Disclosure Schedule or (c) as approved in advance by Parent in writing, at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of (x) the Acceptance Time, (y) the Effective Time and (z) the termination of this Agreement pursuant to Article VII, the Company and each of its Subsidiaries shall (i) carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and in compliance with all applicable Law, (ii) pay its debts and Taxes when due, in each case subject to good faith disputes over such debts or Taxes for which adequate reserves have been established in accordance with GAAP on the appropriate financial statements, (iii) pay or perform all material obligations when due and (iv) use commercially reasonable efforts, consistent with past practices and policies, to (A) preserve intact its present business organization, (B) keep available the services of its present officers and employees (provided, however, that, for the avoidance of doubt, the Company shall be under no obligation to put in place any new retention programs or include additional personnel in existing retention programs) and (C) preserve its relationships with customers, suppliers, distributors, licensors, licensees and others with which it has significant business dealings.

5.2 Restrictions.

Except (i) as expressly contemplated or expressly permitted by this Agreement, (ii) as set forth in Section 5.2 of the Company Disclosure Schedule or (iii) as approved in advance by Parent in writing (which approval shall not be unreasonably withheld, delayed or conditioned with respect to subsections (b) and (i)), at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of (x) the Acceptance Time, (y) the Effective Time and (z) the termination of this Agreement pursuant to Article VII, the Company shall not, and shall cause its Subsidiaries not to:

(a) propose to adopt any amendments to or amend its certificate of incorporation or bylaws or comparable organizational documents;

(b) authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, restricted stock units, warrants, commitments, subscriptions, rights to purchase or otherwise) any Company Securities or any Subsidiary Securities, except for the issuance and sale of Company Shares pursuant to Company Options, Company RSUs or other equity awards outstanding prior to the date hereto pursuant to the express terms of the underlying equity award agreements (without the application of any Company discretion) previously provided to Parent;

(c) waive any stock repurchase rights or right of first refusal, accelerate vesting of options, restricted stock units or other equity awards, amend or change the period of

 

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exercisability of options or any other equity or other incentive awards (including without limitation any long-term incentive awards), amend restricted stock units, or re-price options or authorize any cash or equity exchange for any options granted under any of the Company Stock Plans;

(d) acquire or redeem, directly or indirectly, or amend any Company Securities or Subsidiary Securities;

(e) other than cash dividends made by any direct or indirect wholly-owned Subsidiary of the Company to the Company or one of its Subsidiaries, split, combine or reclassify any shares of capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock;

(f) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the transactions contemplated hereby, including the Offer and the Merger);

(g) (i) incur or assume any long-term or short-term debt or issue any debt securities, except for (A) short-term debt incurred to fund operations of the business in the ordinary course of business consistent with past practice and (B) loans or advances to direct or indirect wholly-owned Subsidiaries, (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person except with respect to obligations of direct or indirect wholly-owned Subsidiaries of the Company, (iii) make any loans, advances or capital contributions to or investments in any other Person except for travel advances to employees in the ordinary course of business consistent with past practice to employees of the Company or any of its Subsidiaries, or (iv) mortgage or pledge any of its or its Subsidiaries’ assets, tangible or intangible, or create or suffer to exist any Lien thereupon (other than Permitted Encumbrances);

(h) except for such changes as specifically required by Section 6.9 hereto, enter into, adopt, amend (including acceleration of vesting), modify or terminate any Employee Plan or other employee benefit agreement, trust, plan, fund or other arrangement for the compensation, benefit or welfare of any Employee in any manner or increase in any manner the compensation or fringe benefits of any Employee, pay any bonus or special remuneration to any Employee, or pay any benefit not required by the express terms of any written plan or arrangement as in effect as of the date hereof (without the application of any Company discretion) and previously provided to Parent;

(i) hire, terminate or change the duties, title responsibilities or geographic location of any Employee, breach any agreement with an Employee, or encourage or otherwise cause any Employee to resign from the Company or any of its Subsidiaries;

(j) forgive any loans to any Employees;

 

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(k) make any deposits or contributions of cash or other property to or take any other action to fund or in any other way secure the payment of compensation or benefits under any Employee Plan or agreements subject to an Employee Plan or any other Contract of the Company, other than deposits and contributions that are required pursuant to the express terms of the Employee Plans (or any agreements subject to the Employee Plans) in effect as of the date hereof (without the application of any Company discretion) and previously provided to Parent;

(l) enter into, amend, or extend any Collective Bargaining Agreement;

(m) except in the ordinary course in substantially the same manner as heretofore conducted and in compliance with all applicable Law, acquire, sell, lease, license, transfer or dispose of any property or assets, or any portion thereof or interest therein, in any single transaction or series of related transactions, except either (i) transactions required under an existing Contract of the Company or any of its Subsidiaries, which transactions are not, individually or in the aggregate, material to the Company and its Subsidiaries, taken together as a whole, or (ii) the sale of goods or grants of non-exclusive licenses with respect to Company Intellectual Property in the ordinary course of business consistent with past practice;

(n) except as may be required as a result of a change in applicable Law or in GAAP, make any change in any of the accounting principles or practices used by it;

(o) (i) make or change any material Tax election, (ii) amend any income or other material Tax Return, (iii) settle or compromise any material Tax liability, (iv) adopt or change any Tax accounting method or (v) consent to any extension or waiver of any limitation period with respect to any material claim or assessment for Taxes;

(p) acquire or license any material Intellectual Property Rights from any third party, transfer or grant any exclusive rights to any Company Intellectual Property to any third party, grant any license to any Company Product or to any Company Intellectual Property except pursuant to an Ordinary Course License, materially change the pricing or royalties set or charged by the Company under any Out-License, or amend any existing Contract to do any of the foregoing;

(q) except in the ordinary course in substantially the same manner as heretofore conducted and in compliance with all applicable Law, (i) enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee), (ii) modify, amend or exercise any right to renew any Lease or other lease or sublease of real property, or waive term or condition thereof or grant any consents thereunder; (iii) grant or otherwise create or consent to the creation of any easement, covenant, restriction, assessment or charge affecting any Leased Real Property or other real property, or any interest therein or part thereof; (iv) commit any waste or nuisance on any such property; (v) make any material changes in the construction or condition of any such property; and (vi) enter into any agreement to purchase or sell any interest in real property;

(r) (i) acquire (by merger, consolidation or acquisition of stock or assets) any other Person or any equity interest therein, (ii) enter into any Contract other than in the ordinary course of business that would be or reasonably be expected to be, material to business,

 

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operations or financial condition of the Company and its Subsidiaries, taken together as a whole, or (iii) authorize, incur or commit to incur any new capital expenditure(s), individually or in the aggregate, with obligations to the Company or any of its Subsidiaries in excess of $50,000; provided, however, that none of the foregoing shall limit any capital expenditure required pursuant to existing Contracts; and provided further, that none of the foregoing shall prohibit the Company from dissolving and/or merging into any of its Subsidiaries certain other Subsidiaries that are not material to the Company or its Subsidiaries, taken as a whole;

(s) commence, settle or compromise any pending or threatened Legal Proceeding or pay, waive, discharge or satisfy or agree to pay, waive, discharge or satisfy any claim, liability or obligation (absolute or accrued, asserted or unasserted, contingent or otherwise), other than the settlement, compromise, payment, discharge or satisfaction of Legal Proceedings, claims and other Liabilities (i) expressly reflected or reserved against in full on the Balance Sheet or incurred since the date of the Balance Sheet in the ordinary course of business consistent with past practice or (ii) the settlement, compromise, discharge or satisfaction of which does not include any obligation (other than the payment of money) to be performed by the Company or its Subsidiaries following the Effective Time that is not, individually or in the aggregate, material to the Company;

(t) except as required by applicable Law or GAAP, revalue in any material respect any of its properties or assets including without limitation writing-off notes or accounts receivable other than in the ordinary course of business consistent with past practice;

(u) except as required by applicable Law, convene any regular or special meeting (or any adjournment or postponement thereof) of the Company Stockholders;

(v) send any written communications (including electronic communications) to Employees regarding this Agreement or the transactions contemplated hereby;

(w) make any representations or issue any communications to Employees that are inconsistent with this Agreement or the transactions contemplated thereby, including but not limited to any representations regarding offers of employment from Parent;

(x) except as required by applicable Law, terminate, modify, or waive any right under any Permit;

(y) amend any Privacy Policy, or publish or make available any new Privacy Policy; or

(z) enter into a Contract to do any of the foregoing or authorize, commit or agree to take any action to do any of the foregoing or which results or is reasonably likely to result in any of the conditions to the Offer set forth in Section 1.1(b) to fail to be satisfied, or would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect in any material respect, or that would materially impair the ability of the Company to consummate the transactions contemplated hereby (including the Offer and the Merger) in accordance with the terms hereof or materially delay such consummation.

 

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5.3 No Control.

Notwithstanding the foregoing, nothing in this Article V is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or its Subsidiaries at any time prior to the Acceptance Time. Prior to the Acceptance Time, the Company and its Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1 Non-Solicitation of Competing Acquisition Proposals.

(a) The Company and its Subsidiaries shall immediately cease any and all existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Acquisition Proposal. The Company shall promptly (and in any event within three (3) Business Days following the date hereof) request in writing each Person which as heretofore executed a confidentiality agreement in connection with its consideration of acquiring the Company or any portion thereof to return all confidential information heretofore furnished to such Person by or on behalf of the Company, and the Company shall use its reasonable best efforts to have such information returned or destroyed (to the extent destruction of such information is permitted by such confidentiality agreement). Such written requests shall contain a notice to each Person that any information that is sent to the Company in the future will not be treated as confidential pursuant to such confidentiality agreement.

(b) At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VII and the Effective Time, the Company and its Subsidiaries shall not, and shall use their reasonable best efforts to cause any of their respective directors, officers or other employees, controlled affiliates, or any investment banker, attorney or other advisors or representatives retained by any of them (collectively, the “Company Representatives”) not to (and shall not authorize or permit any of them to), directly or indirectly, (i) solicit, initiate, knowingly encourage, assist, facilitate or induce the making, submission or announcement of, an Acquisition Proposal or Acquisition Transaction, (ii) except as expressly provided in Section 6.1(c), participate or engage in discussions or negotiations with any Person (other than Parent or Merger Sub or any designees of Parent or Merger Sub) regarding an Acquisition Proposal or Acquisition Transaction, or furnish any non-public information relating to the Company or any of its Subsidiaries, or afford access to the business, properties, assets, books or records of the Company or any of its Subsidiaries to, or take any other action intended to encourage, assist or facilitate, any Person (other than Parent or Merger Sub or any designees of Parent or Merger Sub) that is seeking to make or has made an Acquisition Proposal, (iii) enter into any letter of intent, memorandum of understanding, definitive agreement or similar document or Contract relating to any Acquisition Proposal or Acquisition Transaction (other than any confidentiality agreement entered into in accordance with Section 6.1(c)), (iv) terminate, amend, waive or fail to enforce any rights under any “standstill” or other similar agreement between the Company or any of its Subsidiaries and any Person (other than Parent), or (v) waive the applicability of all or any portion of Section 203 of the DGCL in respect of any Person (other than Parent and its Affiliates) in relation to any Acquisition Proposal or Acquisition Transaction.

 

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(c) Notwithstanding the limitations set forth in Section 6.1(b), prior to the Acceptance Time, the Company Board may, directly or indirectly through advisors, agents or other intermediaries, subject to the Company’s compliance with the provisions of this Section 6.1, (A) engage or participate in discussions or negotiations with any Person that has made (and not withdrawn) an unsolicited, bona fide, written Acquisition Proposal on or after the date of this Agreement that did not result from any breach of Section 1.2(b) or this Section 6.1 and which the Company Board determines in good faith (after consultation with a financial advisor of nationally recognized standing and outside legal counsel) is a Superior Proposal or is reasonably likely to lead to a Superior Proposal and (B) furnish to any Person that has made (and not withdrawn) an unsolicited, bona fide, written Acquisition Proposal on or after the date of this Agreement that did not result from any breach of Section 1.2(b) or this Section 6.1 and which the Company Board determines in good faith (after consultation with a financial advisor of nationally recognized standing and outside legal counsel) is a Superior Proposal or is reasonably likely to lead to a Superior Proposal any non-public information relating to the Company or any of its Subsidiaries pursuant to a confidentiality agreement the terms of which are no less favorable to the Company than those contained in the Confidentiality Agreement (which confidentiality agreement shall not include any provisions that would prevent or restrict the Company or the Company Representatives from providing any information to Parent to which Parent would be entitled under any provision of this Agreement); provided, however, that in the case of any action taken pursuant to the foregoing clauses (A) or (B), (1) the Company Board has determined in good faith (after consultation with outside legal counsel) that such action is reasonably required in order to comply with its fiduciary duties to the Company Stockholders under Delaware Law, (2) at least forty-eight (48) hours prior to taking any of the actions set forth in clauses (A) or (B), the Company gives Parent written notice containing the information set forth in Section 6.1(d), and of the Company’s intention to take such actions and (3) contemporaneously with furnishing any non-public information to such Person, the Company furnishes such non-public information to Parent (to the extent such information has not been previously furnished by the Company to Parent). Without limiting the generality of the foregoing, Parent, Merger Sub and the Company acknowledge and hereby agree that any violation of the restrictions set forth in this Section 6.1 by any Company Representative shall constitute a breach of this Section 6.1 by the Company.

(d) In addition to the obligations of the Company set forth in Section 6.1(b), the Company shall promptly, and in all cases within twenty four (24) hours of its receipt, advise Parent orally and in writing of (i) any Acquisition Proposal, (ii) any request for information that would reasonably be expected to lead to an Acquisition Proposal or Acquisition Transaction or (iii) any inquiry with respect to, or which would reasonably be expected to lead to, any Acquisition Proposal or Acquisition Transaction, in each case, including the terms and conditions of such Acquisition Proposal or Acquisition Transaction, request or inquiry (unless such Acquisition Proposal is in written form, in which case the Company shall give Parent a copy thereof), and the identity of the Person or group making any such Acquisition Proposal, request or inquiry. The Company shall keep Parent promptly and reasonably informed of the status, details, terms and conditions (including all amendments or proposed amendments) of any such Acquisition Proposal, request or inquiry. In addition to the foregoing, the Company shall provide Parent with at least forty-eight (48) hours prior written notice of a meeting of the Company Board at which the Company Board is reasonably expected to consider an Acquisition Proposal or Acquisition Transaction, an inquiry relating to a potential Acquisition Proposal or Acquisition Transaction, or a request to provide nonpublic information to any Person in relation to an Acquisition Proposal or Acquisition Transaction.

 

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6.2 Commercially Reasonable Efforts to Complete.

Upon the terms and subject to the conditions set forth in this Agreement, each of Parent, Merger Sub and the Company shall use their commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done (and to assist and cooperate with the other party hereto in doing), all things reasonably necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement (including the Offer and the Merger), including using commercially reasonable efforts to (a) cause the conditions to the Offer set forth on Section 1.1(b) and the conditions to the Merger set forth in Section 2.2(b) to be satisfied or fulfilled as soon as reasonably practicable, (b) obtain all necessary or appropriate consents, waivers and approvals under any Contracts to which the Company or any of its Subsidiaries is a party in connection with this Agreement and the consummation of the transactions contemplated hereby (including the Offer and the Merger) so as to maintain and preserve the benefits under such Contracts following the consummation of the transactions contemplated hereby (including the Offer and the Merger), (c) obtain all necessary actions or non-actions, waivers, consents, approvals, Orders and authorizations from Governmental Authorities, the expiration or termination of any applicable waiting periods, making all necessary registrations, declarations and filings (including registrations, declarations and filings with Governmental Authorities, if any), and (d) execute or deliver any additional instruments reasonably necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement. With respect to clause (b) above, (i) all fees, costs and expenses to obtain, and satisfy the conditions of the consents to be obtained by the Company hereunder (including the consents of all lessors of Leased Real Property) shall be paid and borne entirely by the Company, and (ii) if the lessor, master lessor, sublessor, or licensor under any Lease conditions its grant of a consent (including by threatening to exercise a “recapture” or other termination right) upon, or otherwise requires in response to a notice or consent request regarding the transactions contemplated by this Agreement, the payment of a consent fee, “profit sharing” payment or other consideration (including increased rent payments), or the provision of additional security (including a guaranty), the Company shall be solely responsible for making all such payments and providing all such additional security.

6.3 Regulatory Approvals.

(a) Without limiting the generality of Section 6.2, as soon as reasonably practicable (and in any event within ten (10) Business Days) following the date hereof, each of Parent and the Company shall file with the FTC and the Antitrust Division of the DOJ a Notification and Report Form relating to this Agreement and the transactions contemplated hereby (including the Offer and the Merger) as required by the HSR Act, as well as comparable pre-merger notification filings, forms and submissions with any foreign Governmental Authority that may be required by other applicable Antitrust Laws, in each case as Parent may deem necessary and/or appropriate. Each of Parent and the Company shall promptly, subject to an appropriate confidentiality agreement to limit disclosure to counsel and outside consultants retained by such counsel, and except as may be prohibited by any Governmental Authority or by

 

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any Law, (i) cooperate and coordinate with the other in the making of such filings, (ii) supply the other with any information that may be required in order to effectuate such filings, and (iii) supply any additional information that reasonably may be required or requested by the FTC, the DOJ or the competition or merger control authorities of any other jurisdiction and that Parent reasonably deems necessary and/or appropriate. Parent shall be solely responsible for all fees and expenses incurred in connection with filings made in connection with this Section 6.3(a). Each party hereto shall promptly inform the other party or parties hereto, as the case may be, of any communication from any Governmental Authority regarding any of the transactions contemplated by this Agreement (including the Offer and the Merger). If any party hereto or Affiliate thereof receives a request for additional information or documentary material from any such Governmental Authority with respect to the transactions contemplated by this Agreement (including the Offer and the Merger), then such party shall use commercially reasonable efforts to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request. Neither Parent nor the Company shall commit or agree (or permit their respective Subsidiaries or Affiliates to commit or agree) with any Governmental Authority to stay, toll or extend any applicable waiting period under the HSR Act or other applicable Antitrust Laws, without the prior written consent of the other (such consent not to be unreasonably withheld or delayed).

(b) Notwithstanding anything to the contrary set forth in this Agreement, none of Parent, Merger Sub or any of their Subsidiaries shall be required to, and the Company may not, without the prior written consent of Parent, (i) become subject to, consent to, or offer or agree to, or otherwise take any action with respect to, any requirement, condition, limitation, understanding, agreement or order to (A) sell, license, assign, transfer, divest, hold separate or otherwise dispose of any assets, business or portion of business of the Company, the Surviving Corporation, Parent, Merger Sub or any of their respective Subsidiaries, (B) conduct, restrict, operate, invest or otherwise change the assets, business or portion of business of the Company, the Surviving Corporation, Parent, Merger Sub or any of their respective Subsidiaries in any manner, or (C) impose any restriction, requirement or limitation on the operation of the business or portion of the business of the Company, the Surviving Corporation, Parent, Merger Sub or any of their respective Subsidiaries; provided that, if requested by Parent, the Company will become subject to, consent to, or offer or agree to, or otherwise take any action with respect to, any such requirement, condition, limitation, understanding, agreement or order so long as such requirement, condition, limitation, understanding, agreement or order is only binding on the Company in the event the Closing occurs or (ii) file or defend any lawsuit or Legal Proceeding, appeal any judgment or Order or contest any injunction issued in a Legal Proceeding initiated by a Governmental Authority.

6.4 Anti-Takeover Statutes.

Without limiting the generality of the provisions of Sections 6.2 and 6.3, in the event that any state anti-takeover or other similar statute or regulation is or becomes applicable to this Agreement or any of the transactions contemplated by this Agreement (including the Offer and the Merger), the Company, at the direction of the Company Board, shall use reasonable best efforts to ensure that the transactions contemplated by this Agreement (including the Offer and the Merger) may be consummated as promptly as practicable on the terms and subject to the conditions set forth in this Agreement, and otherwise to minimize the effect of such statute or regulation on this Agreement and the transactions contemplated hereby (including the Offer and the Merger).

 

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6.5 Access to Books, Records, Properties and Personnel.

At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VII and the Acceptance Time, the Company shall afford Parent and its accountants, legal counsel and other representatives reasonable access during normal business hours, upon reasonable notice, to the properties, books and records and personnel of the Company to enable Parent to obtain all information concerning the Leased Real Property, the Assets and the businesses of the Company and its Subsidiaries, including the status of product development efforts, properties, results of operations and personnel of the Company, as Parent may reasonably request; provided, however, that any such access shall be conducted at Parent’s expense, at a reasonable time, under the supervision of appropriate personnel of the Surviving Corporation and in such a manner as not to unreasonably interfere with the normal operation of the business of the Surviving Corporation. Nothing herein shall require the Surviving Corporation to disclose any information to Parent if such disclosure would, in its reasonable discretion (i) jeopardize any attorney-client or other legal privilege (so long as the Surviving Corporation has reasonably cooperated with Parent to permit such inspection of or to disclose such information on a basis that does not waive such privilege with respect thereto) or (ii) contravene any applicable legal requirement; provided, however, that information shall be disclosed subject to execution of a joint defense agreement in customary form, and disclosure may be limited to external counsel for Parent, to the extent doing so may be reasonably required for the purpose of complying with applicable Antitrust Laws; and provided, further, that the parties will cooperate and use reasonable best efforts to find a way to allow diligence of such information in a manner that would not cause the results in clauses (i) or (ii); and provided, further, that no information or knowledge obtained by Parent in any investigation conducted pursuant to this Section 6.5 shall affect or be deemed to modify or waive (i) any right or claim of the Parent or the Surviving Corporation with respect to any representation or warranty of the Company or a Subsidiary set forth herein, or (ii) any condition to the obligations of Parent and Merger Sub to consummate the transactions contemplated hereby, including the Offer and the Merger, or the remedies available to the parties hereunder; and provided further, that the terms and conditions of the Confidentiality Agreement shall apply to any information provided to Parent pursuant to this Section 6.5.

6.6 Notification Obligations.

(a) At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VII and the Effective Time, the Company shall give prompt notice to Parent (i) upon becoming aware that any representation or warranty made by it in this Agreement has become untrue or inaccurate in any material respect, or of any failure of the Company to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, (ii) upon receiving any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement, or (iii) upon receiving any notice or other communication that

 

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any Legal Proceedings have commenced, or to the Company’s Knowledge, threatened, against the Company or any of its Subsidiaries, that are related to the transactions contemplated by this Agreement; provided, however, that no such notification shall affect or be deemed to modify any representation or warranty of the Company set forth herein or the conditions to the obligations of Parent and Merger Sub to consummate the transactions contemplated hereby, including the Offer and the Merger, or the remedies available to the parties hereunder; and provided further, that the terms and conditions of the Confidentiality Agreement shall apply to any information provided to Parent pursuant to this Section 6.6(a).

(b) At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VII and the Effective Time, the Company shall give prompt notice to Parent of (i) any notice or other communication received by it from any third party, subsequent to the date of this Agreement and prior to the Effective Time, alleging any material breach of or material default under any Material Contract or Government Contract to which the Company or any of its Subsidiaries is a party, or (ii) any notice or other communication received by the Company or any of its Subsidiaries from any third party, subsequent to the date of this Agreement and prior to the Effective Time, alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement (including the Offer and the Merger); provided, however, that no such notification shall affect or be deemed to modify any representation or warranty of the Company set forth herein or the conditions to the obligations of Parent and Merger Sub to consummate the transactions contemplated hereby, including the Offer and the Merger, or the remedies available to the parties hereunder; and provided further, that the terms and conditions of the Confidentiality Agreement shall apply to any information provided to Parent pursuant to this Section 6.6(b).

(c) At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VII and the Effective Time, Parent shall give prompt notice to the Company upon becoming aware that any representation or warranty made by it or Merger Sub in this Agreement has become untrue or inaccurate in any material respect, or of any failure of Parent or Merger Sub to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect or be deemed to modify any representation or warranty of Parent or Merger Sub set forth herein or the conditions to the obligations of the Company to consummate the transactions contemplated hereby, including the Offer and the Merger, or the remedies available to the parties hereunder and provided further, that the terms and conditions of the Confidentiality Agreement shall apply to any information provided to the Company pursuant to this Section 6.6(c).

6.7 Transaction-Related Litigation.

(a) The Company shall promptly advise Parent orally and in writing of any litigation commenced after the date hereof against the Company or any of its directors by any Company Stockholders (on their own behalf or on behalf of the Company) relating to this Agreement or the transactions contemplated hereby (including the Offer and the Merger) and shall keep Parent reasonably and regularly informed regarding any such litigation.

 

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(b) The Company shall give Parent the opportunity to consult with the Company regarding the defense or settlement of any litigation filed against the Company or any of its directors or officers in connection with any of the transactions contemplated by this Agreement (including the Offer and the Merger), shall consider Parent’s views with respect to such litigation and shall not settle any such litigation without the prior written consent of Parent.

6.8 Treatment of Company Warrants and Company Equity Awards.

(a) Company Warrants. Prior to the Closing, the Company shall satisfy all notification or amendment requirements under the terms of any Company Warrants and each Company Warrant that is listed on Section 6.8(a) of the Company Disclosure Schedule and that is issued and outstanding immediately prior to the Offer Acceptance Time, unless otherwise elected by the holder of any such Company Warrant, shall be caused to be exercised immediately prior to the Acceptance Time. All Company Shares issued to holders of Company Warrants pursuant to an exercise shall be made through Book-Entry Shares.

(b) Company Options.

(i) At the Effective Time, each Vested Option that is outstanding immediately prior to the Effective Time shall be cancelled as of immediately prior to the Effective Time and converted into the right to receive an amount, less applicable withholdings, equal to the product obtained by multiplying (x) the number of shares of Common Stock covered by such Vested Option immediately prior to the Closing by (y) the excess (if any) of the Offer Price over the per share exercise price under such Vested Option (“Option Consideration”).

(ii) At the Effective Time, each Unvested Option shall be cancelled as of immediately prior to the Effective Time and converted into the right to receive an amount equal to the product obtained by multiplying (x) the number of shares of Common Stock covered by such Unvested Option immediately prior to the Closing by (y) the excess (if any) of the Offer Price over the per share exercise price under such Unvested Option (“Unvested Option Cash”). The Unvested Option Cash will be subject to applicable withholdings and continue to have, and will, except as otherwise provided in a written employment agreement between the holder of such Unvested Option and Parent, be subject to, the same terms and conditions set forth in the Company Stock Plan under which it was granted and the agreements evidencing the grant thereof immediately prior to the Effective Time, including without limitation provisions with respect to vesting, provided that payments of Unvested Option Cash will be made on the last business day of the Parent’s fiscal quarter in which the Unvested Options to which the Unvested Option Cash is attributable would have vested. For the avoidance of any doubt, if a holder of an Unvested Option fails to vest in any portion of his or her Unvested Option Cash (including, but not limited to, due

 

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to a failure to meet the applicable vesting requirements set forth in his or her agreement evidencing the grant of such Unvested Option), such amounts shall be retained by Parent and forfeited by such holder for no consideration. Each payment of Unvested Option Cash hereunder is intended to be a separate “payment” for purposes of Section 409A of the Code and comply with or be exempt from Section 409A of the Code, and any ambiguities hereunder will be resolved in a manner to maintain such exemption from or compliance with Section 409A of the Code.

(iii) Each Vested Option and each Unvested Option with a per share exercise price equal to or in excess of the Offer Price shall terminate for no consideration at the Effective Time.

(c) Company RSUs.

(i) At the Effective Time, each Vested RSU that is outstanding immediately prior to the Effective Time shall be cancelled as of immediately prior to the Effective Time and converted into the right an amount, less applicable withholdings, equal to the product obtained by multiplying (x) the number of shares of Common Stock covered by such Vested RSU immediately prior to the Closing by (y) the Offer Price (“RSU Consideration”).

(ii) At the Effective Time, each Unvested RSU shall be cancelled as of immediately prior to the Effective Time and converted into the right to receive the RSU Consideration that would be payable for such Unvested RSU if it were a Vested RSU as of the Closing (“Unvested RSU Cash”). Unvested RSU Cash will be subject to applicable withholdings and continue to have, and will, except as otherwise provided in a written employment agreement between the holder of such Unvested RSU and Parent, be subject to, the same terms and conditions set forth in the Company’s 2013 Equity Incentive Plan, as amended, and the agreements evidencing the grant thereof immediately prior to the Effective Time, including without limitation provisions with respect to vesting, provided that payments of Unvested RSU Cash will be made on the last business day of the Parent’s fiscal quarter in which the Unvested RSUs to which the Unvested RSU Cash is attributable would have vested. For the avoidance of any doubt, if a holder of an Unvested RSU fails to vest in any portion of his or her Unvested RSU Cash (including, but not limited to, due to a failure to meet the applicable vesting requirements set forth in his or her agreement evidencing the grant of such Unvested RSU), such amounts shall be retained by Parent and forfeited by such holder for no consideration. Each payment of Unvested RSU Cash hereunder is intended to be a separate “payment” for purposes of Section 409A of the Code and comply with or be exempt from Section 409A of the Code, and any ambiguities hereunder will be resolved in a manner to maintain such exemption from or compliance with Section 409A of the Code.

(d) Phantom Stock Rights

 

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(i) Notwithstanding any provisions to the contrary in the Phantom Stock Plan and the agreements evidencing the grant thereof, the following provisions will apply to Phantom Stock Rights in the event of a Change in Control (as that term is defined in the Phantom Stock Plan) which, for the avoidance of doubt, includes the transaction contemplated in this Agreement.

(ii) At the Effective Time, each holder of a Vested Phantom Stock Right that is outstanding immediately prior to the Effective Time shall be entitled to receive an amount, less applicable withholdings, equal to the excess (if any) of the Offer Price over the Initial Value (“Phantom Stock Right Consideration”).

(iii) At the Effective Time, each holder of an Unvested Phantom Stock Right that is unvested immediately prior to the Effective Time shall be entitled to receive an amount, less applicable withholdings, equal to the excess (if any) of the Offer Price over the Initial Value (“Unvested Phantom Stock Right Consideration”). The Unvested Phantom Stock Right Consideration will be subject to applicable withholdings and the Unvested Phantom Stock Right will continue to have, and be subject to, the same terms and conditions set forth in the Phantom Stock Plan and the agreements evidencing the grant thereof, including without limitation provisions with respect to vesting, provided that payments of Unvested Phantom Stock Right Consideration will be made on the last business day of the Parent’s fiscal quarter in which the Unvested Phantom Stock Rights to which the Unvested Phantom Stock Right Consideration is attributable vest. For the avoidance of any doubt, if a holder of an Unvested Phantom Stock Right fails to vest in any portion of his or her Unvested Phantom Stock Right (including, but not limited to, due to a failure to meet the applicable vesting requirements set forth in his or her agreement evidencing the grant of such Unvested Phantom Stock Right), the Unvested Phantom Stock Right Consideration relating to that portion shall be retained by Parent and forfeited by such holder. Each payment of Unvested Phantom Stock Right Consideration hereunder is intended to be a separate “payment” for purposes of Section 409A of the Code and comply with or be exempt from Section 409A of the Code, and any ambiguities hereunder will be resolved in a manner to maintain such exemption from or compliance with Section 409A of the Code.

(e) Company Action. Prior to the Effective Time, the Company shall take or cause to be taken any and all actions necessary to give effect to the treatment of the Company Options, Company RSUs and Company Phantom Stock Rights pursuant to this Section 6.8. The Company shall provide or make available all true, correct and complete copies of individual equity award agreements to Parent as soon as reasonably practicable following the date of this Agreement (but not later than 15 days following the date hereof). In addition, prior to the Effective Time, the Company shall take or cause to be taken any and all actions necessary to accelerate the vesting of any Unvested Options and Unvested RSUs held by each non-employee member of the Company Board.

 

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6.9 Company Employee Matters.

(a) Company ESPP. The Company shall take all action necessary with respect to the 2013 Employee Stock Purchase Plan, as amended (the “Company ESPP”) such that the current offering in progress as of the date of this Agreement shall be the final offering under the Company ESPP. If such offering has not ended prior to the Effective Time, then, prior to the Effective Time, the Company (x) shall take all actions necessary such that a date to be determined by the Company in accordance with the terms of the Company ESPP (but no later than the Effective Time) shall be the last day of such offering (the “Final Purchase”) and (y) shall make such other pro-rata adjustments as may be necessary to reflect the shortened and final offering but otherwise treating such shortened and final offering as a fully effective and completed offering for all purposes under the Company ESPP. In addition, effective as of the date of this Agreement, the Company shall have taken all actions necessary such that no new participant will be permitted to join the current offering in progress under the Company ESPP. Unless it has earlier terminated, the Company shall take all actions necessary so that the Company ESPP shall terminate immediately prior to and effective as of the Effective Time, and notice shall be given to participants in the Company ESPP as soon as administratively practicable following the date of this Agreement describing the Final Purchase and the termination of the Company ESPP pursuant to this Section 6.9. All amounts withheld by the Company on behalf of the participants in the Company ESPP that have not been used to purchase Company Common Stock at or prior to the Effective Time will be returned to the participants without interest pursuant to the terms of the Company ESPP.

(b) Compensation. For a period of one (1) year following the Effective Time, Parent shall provide, or cause to be provided, to those employees of the Company who are employed by the Company as of immediately prior to the Effective Time and who continue to be actively employed by the Surviving Corporation (or any Subsidiary thereof) during such one year period (the “Continuing Employees”) base salary and base wages and short-term cash incentive compensation opportunities (excluding equity based compensation) that are substantially comparable in the aggregate to such base salary and base wages and short-term cash incentive compensation opportunities (excluding equity based compensation) as in effect immediately prior to the execution of this Agreement for similarly-situated employees of Parent.

(c) Accrued Benefits. With respect to any accrued but unused personal, sick or vacation time to which any U.S.-based Continuing Employee is entitled pursuant to the personal, sick or vacation policies applicable to such Continuing Employee immediately prior to the Effective Time, Company shall cash out all such vacation at the Closing. With respect to any accrued but unused personal, sick or vacation time to which any non-U.S.-based Continuing Employee is entitled pursuant to the personal, sick or vacation policies, Laws or Contracts applicable to such non-U.S.-based Continuing Employee immediately prior to the Effective Time, Parent shall, or shall cause the Surviving Corporation to and instruct its Subsidiaries to, as applicable (and without duplication of benefits), assume the liability for such accrued personal, sick or vacation time and allow such non-U.S.-based Continuing Employee to use such accrued personal, sick or vacation time in accordance with the practice and policies of the Parent and applicable Laws and Contracts.

 

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(d) Severance. Parent shall be solely responsible for all termination and severance benefits (which benefits, for the avoidance of doubt, shall either be provided under the plans of Parent or its Subsidiaries, or the Employee Plans), costs, charges and liabilities of any nature incurred with respect to the termination of any Continuing Employees after the Effective Time, including any claims arising out of or relating to any mass layoff or similar event under applicable Law occurring on or after the Effective Time.

(e) Employee Benefits. Parent agrees that all Continuing Employees shall be eligible to continue to participate in the Surviving Corporation’s health and welfare benefit plans; provided, however, that (i) nothing in this Section 6.9 or elsewhere in this Agreement shall limit the right of Parent or the Surviving Corporation to amend or terminate any such health or welfare benefit plan at any time and (ii) if Parent or the Surviving Corporation terminates any such health or welfare benefit plan (a “Terminated Plan”), then (upon expiration of any appropriate transition period), the Continuing Employees shall be eligible to participate in the Surviving Corporation’s health and welfare benefit plans (subject to applicable terms and conditions) to the extent that coverage under such plans is replacing comparable coverage under any such Terminated Plan. To the extent that service is relevant for eligibility, vesting or allowances (including paid time off) under any health or welfare benefit plan of Parent and/or the Surviving Corporation, then Parent shall use its commercially reasonable efforts to ensure that such health or welfare benefit plan shall, for purposes of eligibility, vesting, allowances and benefit accrual (including paid time off), credit Continuing Employees for service prior to the Effective Time with the Company to the same extent that such service was recognized prior to the Effective Time under the corresponding health or welfare benefit plan of the Company. In addition, Parent shall in no event apply a pre-existing condition or actively at work or similar limitation, eligibility waiting period, evidence of insurability requirement or other condition under any group health or welfare plan with respect to the Continuing Employees and the eligible dependents of the Continuing Employees, other than limitations or waiting periods that are already in effect with respect to such individuals to the extent not satisfied as of the Effective Time under the corresponding Employee Plan. To the extent that any Continuing Employee or any eligible dependent of a Continuing Employee is transferred during a plan year from coverage under one or more of the Employee Plans to coverage under a successor group health and welfare plan, Parent shall, or shall cause the Company to, provide the affected Continuing Employee, or eligible dependent with credit for any co-payments, deductibles and offsets (or similar payments) made during the plan year in which the transfer occurs for the purposes of satisfying any applicable deductible, out-of-pocket or similar requirements under any such successor benefit plan, program or arrangement. In the event Parent or the Surviving Corporation terminates any Employee Plan that is a Section 125 plan flexible spending arrangement, Surviving Corporation shall transfer and Parent shall accept the flexible spending account elections and accounts of the Continuing Employees.

(f) 401(k) Plan. The Company shall terminate any and all 401(k) plans maintained by the Company or any ERISA Affiliates (each a “401(k) Plan”), in each case effective as of the day immediately preceding the date the Company becomes a member of the same controlled group of corporations (as defined in Section 414(b) of the Code) as Parent (the “401(k) Termination Date”), unless Parent provides written notice (at least three (3) business days prior to the date the Company becomes a member of the same controlled group of corporations as Parent) to the Company that such 401(k) Plan(s) shall not be terminated. The

 

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Company shall provide Parent evidence that the 401(k) plan(s) of the Company and its Subsidiaries have been terminated pursuant to resolutions of the Company Board or the board of directors of its Subsidiaries, as applicable. The Company shall also take such other actions in furtherance of terminating any such 401(k) Plan(s) as Parent may reasonably request. Parent shall use commercially reasonable efforts to allow the Continuing Employees to rollover any associated loan notes to the extent permitted under the Company 401(k) Plan. Parent shall take all steps necessary to permit each such Continuing Employee who has received an eligible rollover distribution (as defined in Section 402(c)(4) of the Code) from the Company 401(k) Plan to roll such eligible rollover distribution, including, for a reasonable period of time following the Effective Time, any associated loans into an account under a 401(k) plan maintained by Parent or its Subsidiaries to the extent permissible under such 401(k) plan, provided that Parent shall undertake commercially reasonable efforts for a reasonable period of time following the Effective Time to amend the 401(k) plan maintained by Parent to permit such roll over.

(g) Termination of Company Plans. The Company shall terminate any and all Company Stock Plans, group severance, separation, deferred compensation or salary continuation plans, programs or arrangements maintained by the Company or any of its ERISA Affiliates and other Company Employee Plans that are set forth Section 6.9(g)(i) of the Company Disclosure Schedule, in each case effective as of the day immediately preceding the last day of the initial period of the Offer, except as otherwise described in Section 6.9(g)(ii) of the Company Disclosure Schedule. For the avoidance of any doubt, the termination of all group severance, separation and salary continuation plans, programs or arrangements pursuant to the preceding sentence shall be effected without any payment (or giving rights to any payment) thereunder. The Company shall provide Parent evidence that such plans have been terminated pursuant to resolutions of the Company Board or the board of directors of its Subsidiaries, as applicable (the form and substance of which resolutions shall be subject to review and approval of Parent).

(h) No Third Party Rights. Notwithstanding anything to the contrary set forth in this Agreement, no provision of this Agreement shall be deemed to (i) guarantee employment for any period of time for, or preclude the ability of Parent, Merger Sub or the Surviving Corporation to terminate, any Employee for any reason, or (ii) require Parent or the Surviving Corporation to continue any Employee Plan or prevent the amendment, modification or termination thereof on and after the Effective Time.

6.10 Company Director and Officer Indemnification and Insurance.

(a) Parent shall cause the Surviving Corporation and its Subsidiaries to, honor and fulfill in all respects the obligations of the Company and its Subsidiaries under their respective certificates of incorporation and bylaws (and other similar organizational documents) and all indemnification agreements in effect as of the date of this Agreement between the Company or any of its Subsidiaries and any of their respective current or former directors and officers (the “Company Indemnified Parties”).

(b) For a period of six (6) years after the Effective Time, Parent and the Surviving Corporation shall maintain in effect the Company’s current directors’ and officers’

 

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liability insurance (“D&O Insurance”) in respect of acts or omissions occurring at or prior to the Acceptance Time, covering each person covered by the D&O Insurance as of the date of this Agreement, on terms with respect to the coverage and amounts no less favorable, in the aggregate, than those of the D&O Insurance in effect on the date of this Agreement; provided, however, that the Surviving Corporation may, at its option, substitute therefor policies of Parent, the Surviving Corporation or any of their respective Subsidiaries containing terms with respect to coverage and amounts no less favorable, in the aggregate, to such persons than the D&O Insurance, provided, further, that in satisfying its obligations under this Section 6.10(b) Parent and the Surviving Corporation shall not be obligated to pay annual premiums in excess of two hundred percent (200%) of the amount paid by the Company for coverage for its last full fiscal year (such two hundred percent (200%) amount, the “Maximum Annual Premium”) (which premiums the Company represents and warrants to be as set forth in Section 6.10(b) of the Company Disclosure Schedule), provided, further, that that if the annual premiums of such insurance coverage exceed such amount, Parent and the Surviving Corporation shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding the Maximum Annual Premium. Prior to the Acceptance Time, notwithstanding anything to the contrary set forth in this Agreement, Parent may purchase a six-year “tail” prepaid policy (the “Tail Policy”) on the D&O Insurance on terms and conditions no less favorable, in the aggregate, than the D&O Insurance. In the event that Parent purchases such a Tail Policy prior to the Acceptance Time, Parent and the Surviving Corporation shall maintain such Tail Policy in full force and effect and continue to honor their respective obligations thereunder, in lieu of all other obligations of Parent and the Surviving Corporation under the first sentence of this Section 6.10(b) for so long as such Tail Policy shall be maintained in full force and effect.

(c) If Parent or the Surviving Corporation or any of its successors or assigns shall (i) consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfer all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made so that the successors and assigns of the Surviving Corporation shall assume all of the obligations of Parent and the Surviving Corporation set forth in this Section 6.10.

(d) The obligations under this Section 6.10 shall not be terminated, amended or otherwise modified in such a manner as to adversely affect any Company Indemnified Party (or any other person who is a beneficiary under the D&O Insurance or the Tail Policy referred to in Section 6.10(b) (and their heirs and representatives)) without the prior written consent of such affected Company Indemnified Party or other person who is a beneficiary under the D&O Insurance or the Tail Policy referred to in Section 6.10(b) (and their heirs and representatives). Each of the Company Indemnified Parties or other persons who are beneficiaries under the D&O Insurance or the Tail Policy referred to in Section 6.10(b) (and their heirs and representatives) are intended to be third party beneficiaries of this Section 6.10, with full rights of enforcement as if a party thereto. The rights of the Company Indemnified Parties (and other persons who are beneficiaries under the D&O Insurance or the Tail Policy referred to in Section 6.10(b) (and their heirs and representatives)) under this Section 6.10 shall be in addition to, and not in substitution for, any other rights that such persons may have under the certificate or articles of incorporation, bylaws or other equivalent organizational documents, any and all indemnification agreements of or entered into by the Company or any of its Subsidiaries, or applicable Law (whether at law or in equity).

 

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6.11 Section 16 Matters.

Prior to the Effective Time, the Company shall take all such steps as may be required to cause to be exempt under Rule 16b-3 promulgated under the Exchange Act any dispositions of shares of Company Shares (including derivative securities with respect to such shares) that are treated as dispositions under such rule and result from the Offer, the Merger and the other transactions contemplated hereby by each director or officer of the Company who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company.

6.12 Compensation Committee Approval of New Compensation Arrangements.

Prior to the Effective Time, the Company (acting through its Compensation Committee) will take all steps that may be necessary or advisable to cause each compensation arrangement entered into by the Company or any of its Subsidiaries on or after the date of this Agreement to be approved by the Compensation Committee (comprised solely of “independent directors” determined within the meaning of Rule 14d-10(d) under the Exchange Act) as an “employment compensation, severance or other employee benefit arrangement” within the meaning of Rule 14d-10(d)(2) under the Exchange Act and to satisfy the requirements of the non-exclusive safe harbor set forth in Rule 14d-10(d) of the Exchange Act. To the extent such actions are taken by resolution or consent, the form and substance of such resolutions or consents shall be in writing and be subject to review and approval of Parent, which shall not be unreasonably delayed or withheld.

6.13 Termination of Certain Agreements.

The Company shall use commercially reasonable efforts to terminate each of the agreements listed in Section 6.13 of the Company Disclosure Schedule (the “Terminated Agreements”), effective as of and contingent upon the Closing, including sending all required notices, such that each such agreement shall be of no further force or effect immediately following the Effective Time. Upon the Closing, the Company shall have paid all amounts owed under the Terminated Agreements (as a result of the termination of the Terminated Agreements or otherwise), and the Surviving Corporation will not incur any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) under any Terminated Agreement following the Closing Date. The Company shall be responsible for making any payments required to terminate the Terminated Agreements. In the event the Offer or the Merger does not close for any reason, Parent shall not have any liability to the Company, the stockholders of the Company or any other Person for any costs, claims, liabilities or damages resulting from the Company seeking to obtain such terminations.

6.14 Export Control Voluntary Disclosure.

Should U.S. export violations by the Company be identified by Parent or the Company prior to the Closing, the Company shall, no later than the Closing Date, prepare and file to the U.S. Bureau of Industry and Security (the “BIS”) and Office of Foreign Assets Control (“OFAC”) an initial voluntary self-disclosure in writing of (a) any exports of Company products, source code or technology prior to obtaining proper authorization for such exportations, (b) any exports to prohibited countries or end-users as identified in the regulations enforced by BIS and OFAC, and (c) any other information regarding any Company export violations.

 

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6.15 Obligations of Merger Sub.

Parent shall take all action necessary to cause Merger Sub and the Surviving Corporation to perform their respective obligations under this Agreement and to consummate the transactions contemplated by this Agreement, including the Offer and the Merger, upon the terms and subject to the conditions set forth in this Agreement. Immediately following the execution of this Agreement, Parent shall execute and deliver, in accordance with Section 228 of the DGCL and in its capacity as the sole stockholder of Merger Sub, a written consent adopting this Agreement.

ARTICLE VII

TERMINATION OF AGREEMENT

7.1 Termination Prior to Acceptance Time.

This Agreement may be validly terminated, and the Offer may be terminated and abandoned, at any time prior to the Acceptance Time only as follows:

(a) by mutual written agreement of Parent and the Company; or

(b) by either Parent or the Company, if the Offer shall have expired or been terminated in accordance with the terms hereof without Merger Sub (or Parent on Merger Sub’s behalf) having accepted for payment any Company Shares pursuant to the Offer; provided, however, that the right to terminate this Agreement pursuant to this Section 7.1(b) shall not be available to any party hereto whose action or failure to fulfill any obligation under this Agreement has been the principal cause of or resulted (i) in any of the conditions to the Offer Conditions having failed to be satisfied, or (ii) in the expiration or termination of the Offer in accordance with the terms hereof without Merger Sub (or Parent on Merger Sub’s behalf) having accepted for payment any Company Shares pursuant to the Offer, and in either such case, such action or failure to act constitutes a material breach of this Agreement; or

(c) by either Parent or the Company, if Merger Sub (or Parent on Merger Sub’s behalf) shall not have accepted for payment any Company Shares pursuant to the Offer on or before October 27, 2015 (the “Termination Date”); provided however, that the right to terminate this Agreement pursuant to this Section 7.1(c) shall not be available to any party hereto whose action or failure to fulfill any obligation under this Agreement has been the principal cause of or resulted (i) in any of the Offer Conditions having failed to be satisfied on or before the Termination Date, or (ii) in the expiration or termination of the Offer in accordance with the terms hereof without Merger Sub (or Parent on Merger Sub’s behalf) having accepted for payment any Company Shares pursuant to the Offer, and in either such case, such action or failure to act constitutes a material breach of this Agreement; or

(d) by the Company, in the event (i) of a breach of any covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement that has, or would reasonably be

 

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expected to have, a Parent Material Adverse Effect, or (ii) that any of the representations and warranties of Parent and Merger Sub set forth in this Agreement shall have become inaccurate in a manner that has, or would reasonably be expected to have, a Parent Material Adverse Effect; provided, however, that notwithstanding the foregoing, in the event that such breach by Parent or Merger Sub, or such inaccuracies in the representations and warranties of Parent or Merger Sub, are curable by Parent or Merger Sub through the exercise of commercially reasonable efforts, then the Company shall not be permitted to terminate this Agreement pursuant to this Section 7.1(d) until the earlier to occur of (A) twenty (20) calendar days after delivery of written notice from the Company to Parent of such breach or inaccuracy, as applicable or (B) the termination by Parent and Merger Sub of commercially reasonable efforts to cure such breach or inaccuracy (it being understood that the Company may not terminate this Agreement pursuant to this Section 7.1(d) if such breach or inaccuracy by Parent or Merger Sub is cured within such twenty (20)) calendar day period); or

(e) by Parent, in the event (i) of a breach of any covenant or agreement on the part of the Company set forth in this Agreement such that the conditions set forth in Section 1.1(b)(iii) would not reasonably be expected to be satisfied at the time of such breach (assuming for such purposes that the time of such breach was the scheduled expiration of the Offer), or (ii) that any representation or warranty of the Company set forth in this Agreement shall have become inaccurate such that the conditions set forth in Section 1.1(b)(iv) would not reasonably be expected to be satisfied as of the time such representation and warranty became inaccurate (assuming for such purposes that the time of such inaccuracy was the scheduled expiration of the Offer); provided, however, that notwithstanding the foregoing, in the event that such breach by the Company, or such inaccuracies in the representations and warranties of the Company, are curable by the Company through the exercise of commercially reasonable efforts, then Parent shall not be permitted to terminate this Agreement pursuant to this Section 7.1(e) until the earlier to occur of (A) twenty (20) calendar day period after delivery of written notice from Parent to the Company of such breach or inaccuracy, as applicable, or (B) the termination by the Company of commercially reasonable efforts to cure such breach or inaccuracy (it being understood that Parent may not terminate this Agreement pursuant to this Section 7.1(e) if such breach or inaccuracy by the Company is cured within such twenty (20) calendar day period); or

(f) by Parent, in the event that there shall have occurred a Company Material Adverse Effect (whether or not events or circumstances occurring prior to the execution and delivery of this Agreement caused or contributed to the occurrence of such Company Material Adverse Effect); or

(g) by Parent, in the event that (i) the Company shall have breached the provisions of Section 1.2(b) or Section 6.1 in any material respect (without regard to whether such breach results in an Acquisition Proposal), (ii) the Company Board or any committee thereof shall have effected a Company Board Recommendation Change for any reason, or (iii) the Company enters into a definitive agreement with respect to an Acquisition Transaction or enters into any agreement, contract or agreement in principle requiring the Company to abandon, terminate or breach its obligations hereunder; or

(h) by the Company in order to enter into a definitive agreement to consummate a Superior Proposal, provided that (i) such Acquisition Proposal did not arise out of

 

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a breach of provisions of Section 1.2(b) or Section 6.1, and (ii) prior to terminating this Agreement pursuant to this Section 7.1(h), the Company Board shall have given Parent at least four (4) Business Days prior written notice thereof, which notice shall attach such Superior Proposal and set forth the identity of the Person making such Superior Proposal and all the material terms and conditions of such Superior Proposal in reasonable detail, and the opportunity to meet with the Company Board and its outside legal counsel, all with the purpose and intent of enabling Parent and the Company to discuss in good faith a modification of the terms and conditions of this Agreement so that the transactions contemplated hereby may be effected and (iii) Parent shall not have made, within four (4) Business Days after receipt of the Company’s written notice of its intention to terminate this Agreement pursuant to this Section 7.1(h), a counter-offer or proposal of a nature such that the Company Board shall have determined in good faith (after consultation with a financial advisor of nationally recognized standing and outside legal counsel) that the Acquisition Proposal no longer constitutes a Superior Proposal, and (iv) in connection with the termination of this Agreement, the Company tenders to Parent (and pays to Parent if Parent agrees to accept such payment) the Termination Fee Amount payable pursuant to Section 7.3(d), provided, further, that the provisions of the foregoing proviso shall also apply to any material amendment to any Acquisition Proposal and require a new notice to Parent in compliance with clause (ii) of such proviso, except that the references to four (4) business days shall be deemed to be two (2) business days).

7.2 Notice and Effect of Termination.

(a) A party hereto that desires to validly terminate this Agreement pursuant to Section 7.1 (other than pursuant to Section 7.1(a)) shall give notice of such termination to the other party hereto, which shall be effective immediately upon the delivery of written notice of such termination to the other party.

(b) In the event of the termination of this Agreement pursuant to Section 7.1, this Agreement shall be of no further force or effect without liability of any party or parties hereto, as applicable (or any stockholder, director, officer, employee, agent, consultant or representative of such party or parties) to the other party or parties hereto, as applicable, except (i) for the terms of this Section 7.2, Section 7.3, and Article VIII (and any definitions contained in any such Section and Article), each of which shall survive the termination of this Agreement, and (ii) that nothing herein shall relieve any party or parties hereto, as applicable, from liability for any willful or intentional breach of, or fraud in connection with, this Agreement.

7.3 Termination Fees.

(a) In the event that (i) following the execution and delivery of this Agreement and prior to the termination of this Agreement, an Acquisition Proposal shall have been publicly announced or shall have become publicly known, or shall have been communicated or otherwise made known to the Company, and (ii) this Agreement is thereafter terminated pursuant to Section 7.1(b) or Section 7.1(c), and (iii) within twelve (12) months following the termination of this Agreement, either an Acquisition Transaction (whether or not the Acquisition Transaction referenced in the preceding clause (i)) is consummated or the

 

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Company enters into a letter of intent, memorandum of understanding or other Contract providing for an Acquisition Transaction (whether or not the Acquisition Transaction referenced in the preceding clause (i)), then the Company shall pay to Parent (or its designee), within one Business Day after the event in the preceding clause (iii) that triggers the obligation to such fee, a fee in the amount of Seventeen Million Four Hundred Thousand Dollars ($17,400,000) (the “Termination Fee Amount”), in cash by wire transfer of immediately available funds to an account designated in writing by Parent (provided that for purposes of this clause (a) the references to “20%” and “80%” in the definition of “Acquisition Transaction” shall be deemed to be references to “50%”).

(b) In the event that (i) following the execution and delivery of this Agreement and prior to the breach described in clause (ii) below that forms the basis for the termination of this Agreement, an Acquisition Proposal shall have been publicly announced or shall have become publicly known, or shall have been communicated or otherwise made known to the Company and (ii) this Agreement is thereafter terminated pursuant to Section 7.1(e)(i) (solely where the underlying breach of the covenant or agreement by the Company was intentional), and (iii) within twelve (12) months following the termination of this Agreement, either an Acquisition Transaction (whether or not the Acquisition Transaction referenced in the preceding clause (i)) is consummated or the Company enters into a letter of intent, memorandum of understanding or other Contract providing for an Acquisition Transaction (whether or not the Acquisition Transaction referenced in the preceding clause (i)), then the Company shall pay to Parent (or its designee), within one Business Day after the event in the preceding clause (iii) that triggers the obligation to such fee, the Termination Fee Amount in cash by wire transfer of immediately available funds to an account designated in writing by Parent (provided that for purposes of this clause (b) the references to “20%” and “80%” in the definition of “Acquisition Transaction” shall be deemed to be references to “50%”).

(c) In the event that this Agreement is terminated pursuant to Section 7.1(g), the Company shall pay to Parent (or its designee), within one Business Day after such termination, the Termination Fee Amount in cash by wire transfer of immediately available funds to an account designated in writing by Parent.

(d) In the event that this Agreement is terminated pursuant to Section 7.1(h), the Company shall pay to Parent (or its designee), contemporaneously with such termination, the Termination Fee Amount in cash by wire transfer of immediately available funds to an account designated in writing by Parent.

(e) The Company acknowledges and hereby agrees that the provisions of this Section 7.3 are an integral part of the transactions contemplated by this Agreement (including the Offer and the Merger), and that, without such provisions, Parent would not have entered into this Agreement. Accordingly, if the Company shall fail to pay in a timely manner the amounts due pursuant to this Section 7.3, and, in order to obtain such payment, Parent makes a claim that results in a judgment against the Company, the Company shall promptly reimburse Parent its reasonable costs and expenses (including its reasonable attorneys’ fees and expenses) incurred in connection with such suit, together with interest on the amounts set forth in this Section 7.3 at the prime rate of Citibank N.A. in effect on the date such payment was required to be made. Payment of the fees described in this Section 7.3 shall not be in lieu of, or replacement or substitution for, damages incurred in the event of any breach of this Agreement.

 

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ARTICLE VIII

GENERAL PROVISIONS

8.1 Certain Interpretations.

(a) Unless otherwise indicated, all references herein to Sections, Articles, Annexes, Exhibits or Schedules, shall be deemed to refer to Sections, Articles, Annexes, Exhibits or Schedules of or to this Agreement, as applicable.

(b) Unless otherwise indicated, the words “include,” “includes” and “including,” when used herein, shall be deemed in each case to be followed by the words “without limitation.”

(c) Unless otherwise indicated or the context otherwise requires, when reference is made herein to a Person, such reference shall be deemed to include all direct and indirect Subsidiaries of such Person.

(d) Unless otherwise indicated, all references herein to the Subsidiaries of a Person shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires.

(e) Unless otherwise indicated, all references in this Agreement to “Dollars” or “$” shall mean means United States Dollars.

(f) As used in this Agreement, the word “extent” and the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such word or phrase shall not mean simply “if.”

(g) As used in this Agreement, the singular or plural number shall be deemed to include the other whenever the context so requires.

(h) The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.

(i) The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

8.2 Non-Survival of Representations and Warranties.

 

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The representations and warranties of the Company, Parent and Merger Sub set forth in this Agreement shall terminate at the Effective Time.

8.3 Amendment.

Subject to applicable Law and the provisions of this Agreement, this Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each of Parent, Merger Sub and the Company.

8.4 Waiver.

At any time and from time to time prior to the Effective Time, any party or parties hereto may, to the extent legally allowed and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of the other party or parties hereto, as applicable, (b) waive any inaccuracies in the representations and warranties made to such party or parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions for the benefit of such party or parties hereto contained herein. Any agreement on the part of a party or parties hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party or parties, as applicable. Any delay in exercising any right under this Agreement shall not constitute a waiver of such right.

8.5 Assignment.

No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

8.6 Notices.

All notices and other communications hereunder shall be in writing and shall be deemed to have been given if and only if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) or email, to the parties at the following addresses, telecopy numbers or email addresses (or at such other address, telecopy number or email address for a party as shall be specified by like notice):

(a) if to Parent or Merger Sub, to:

CA, Inc.

520 Madison Avenue

New York, New York 10022

Attention: Jacob Lamm, EVP Strategy and Corporate Development

Telecopy: (631) 342-5330

Email: jacob.lamm@ca.com

 

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with copies (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati

Professional Corporation

One Market Plaza

Spear Tower, Suite 3300

San Francisco, California 94105

Attention: Mike Ringler

Telecopy: (415) 947-2099

Email: mringler@wsgr.com

(b) if to the Company, to:

Rally Software Development Corp.

Attention: David Huberman

3333 Walnut Street

Boulder, CO 80301

Email: dhuberman@rallydev.com

with copies (which shall not constitute notice) to:

Cooley LLP

101 California Street, 5th Floor

San Francisco, CA 94111-5800

Attention: Jamie Leigh

Telecopy: (415) 693-2222

Email: jleigh@cooley.com

8.7 Fees and Expenses.

Subject to the terms of Section 6.2 and Section 7.3, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby (including the Offer and the Merger) shall be paid by the party or parties, as applicable, incurring such expenses whether or not the Offer and the Merger are consummated.

8.8 Confidentiality.

Parent, Merger Sub and the Company hereby acknowledge that Parent and the Company have previously executed a Confidentiality Agreement, dated December 9, 2014 (the “Confidentiality Agreement”), which will continue in full force and effect in accordance with its terms at all times during the pendency of the transactions contemplated by this Agreement (including the Offer and the Merger) and following the termination of this Agreement, if applicable.

8.9 Public Disclosure.

 

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Parent, Merger Sub and the Company shall consult with each other, and to the extent practicable, agree, before issuing any press release or otherwise making any public statement with respect to this Agreement and the transactions contemplated hereby (including the Offer and the Merger) or any Acquisition Proposal, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law or any listing agreement with a national securities exchange, in which case commercially reasonable efforts to consult with the other party hereto shall be made prior to any such release or public statement.

8.10 Entire Agreement.

This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including the Company Disclosure Schedule, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; provided, however, that the Confidentiality Agreement shall not be superseded by this Agreement.

8.11 No Third Party Beneficiaries.

Except as set forth in or contemplated by the provisions of Section 6.10, this Agreement is not intended to (and shall not) confer upon any Person not a party hereto any rights or remedies hereunder.

8.12 Remedies.

(a) The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

(b) Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.

8.13 Severability.

In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable

 

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provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

8.14 Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof.

8.15 Consent to Jurisdiction.

Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of any state court located within New Castle County, State of Delaware in connection with any matter based upon or arising out of this Agreement or the transactions contemplated hereby, agrees that process may be served upon them in any manner authorized by the laws of the State of Delaware for such persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and process. Each party hereto hereby agrees not to commence any legal proceedings relating to or arising out of this Agreement or the transactions contemplated hereby (including the Offer and the Merger) in any jurisdiction or courts other than as provided herein.

8.16 WAIVER OF JURY TRIAL.

EACH OF PARENT, COMPANY AND MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

8.17 Counterparts.

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective duly authorized officers to be effective as of the date first above written.

 

CA, INC.
By:

/s/ Jacob Lamm

Name:

Jacob Lamm

Title:

EVP, Strategy & Corporate Development

GRAND PRIX ACQUISITION CORP.
By:

/s/ Lawrence Egan

Name:

Lawrence Egan

Title:

President and Secretary

RALLY SOFTWARE DEVELOPMENT CORP.
By:

/s/ Timothy A. Miller

Name:

Timothy A. Miller

Title:

Chief Executive Officer

[SIGNATURE PAGE TO ACQUISITION AGREEMENT]

ANNEX A

CERTAIN DEFINED TERMS

For all purposes of and under this Agreement, the following capitalized terms shall have the following respective meanings:

“Acquisition Proposal” shall mean any offer, proposal or indication of interest (other than by Parent or Merger Sub or any designees of Parent or Merger Sub) relating to any Acquisition Transaction.

“Acquisition Transaction” shall mean any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving: (i) any acquisition or purchase by any Person or “group” (as defined in or under Section 13(d) of the Exchange Act), directly or indirectly, of more than a twenty percent (20%) interest in the total outstanding voting securities of the Company or one or more of its Subsidiaries that own or control more than twenty percent (20%) of the consolidated assets (measured by the lesser of book or fair market value at the time of determination), revenues or earnings (measured as of the 12-month period immediately preceding the date of determination) of the Company and its Subsidiaries, taken together as a whole, or any tender offer or exchange offer that if consummated would result in any Person or “group” (as defined in or under Section 13(d) of the Exchange Act) beneficially owning more than twenty percent (20%) of the total outstanding voting securities of the Company or one or more of its Subsidiaries that own or control more than twenty percent (20%) of the consolidated assets (measured by the lesser of book or fair market value at the time of determination), revenues or earnings (measured as of the 12-month period immediately preceding the date of determination) of the Company and its Subsidiaries, taken together as a whole; (ii) any merger, consolidation, business combination or other similar transaction pursuant to which the Company Stockholders immediately preceding such transaction hold, directly or indirectly, less than eighty percent (80%) of the equity interests in the surviving or resulting entity of such transaction; (iii) any sale, lease (other than in the ordinary course of business), exchange, transfer, license (other than in the ordinary course of business), acquisition or disposition of more than twenty percent (20%) of the consolidated assets of the Company and its Subsidiaries, taken together as a whole (measured by the lesser of book or fair market value thereof); (iv) any liquidation or dissolution of the Company or any of its Subsidiaries or (v) any combination of the foregoing.

“Affiliate” shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person. For purposes of the immediately preceding sentence, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Anti-Corruption and Anti-Bribery Laws” shall mean the Foreign Corrupt Practices Act of 1977, as amended, any rules or regulations thereunder, U.S. Travel Act, United Kingdom Bribery Act of 2010, Organization of Economic Cooperation and Development

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or any other applicable United States or non-U.S. anti-corruption, anti-bribery, or money laundering laws or regulations.

“Antitrust Laws” means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other applicable United States Laws and Orders that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade, significant impediments to or lessening of competition, or the creation or strengthening of a dominant position through merger or acquisition.

“Balance Sheet” shall mean the consolidated balance sheet of the Company and its Subsidiaries as of April 30, 2015.

“Business Day” shall mean any day, other than a Saturday, Sunday or any day which is a legal holiday under the laws of the State of New York, California or Colorado or is a day on which commercial banking institutions located in the States of New York, California or Colorado are authorized or required by Law or other governmental action to close.

“Change in Control Plan” means the Rally Software Development Corp. Change in Control Severance Plan.

“COBRA” shall mean the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and Sections 601 through 608 of ERISA, together with any regulations and official guidance promulgated thereunder, and any state or local law equivalent.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“Company Board” shall mean the Board of Directors of the Company.

“Company Capital Stock” shall mean the Company Shares, the Company Preferred Stock and any other shares of capital stock of the Company.

“Company Intellectual Property” shall mean all of the Intellectual Property Rights owned by, or filed in the name of, or exclusively licensed to the Company or any of its Subsidiaries.

“Company Material Adverse Effect” shall mean any fact, event, circumstance, change or effect that, individually or when taken together with all other such facts, events, circumstances, changes or effects, has been or would reasonably be expected to (x) be materially adverse to the business, operations, properties, assets (including intangible assets), liabilities, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken together as a whole or (y) materially impede the ability of the Company or its Subsidiaries to consummate the transactions contemplated by this Agreement (including the Offer and the Merger) in accordance with the terms hereof and applicable Law; provided, however, that none

 

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of the following facts, events, circumstances, changes or effects, by itself or when aggregated with any one or more of the other such facts, events, circumstances, changes or effects, shall be deemed to be or constitute a Company Material Adverse Effect and none of the following facts, events, circumstances, changes or effects, by itself or when aggregated with any one or more of the other such facts, events, circumstances, changes or effects, shall be taken into account when determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur:

(i) any general economic, or other general business, financial or market conditions or political conditions (or changes in such conditions), including any changes arising out of acts of terrorism or war, provided that such changes do not have a disproportionate impact on the Company and its Subsidiaries, taken as a whole, as compared to other participants in the industries in which the Company and its Subsidiaries conduct their businesses;

(ii) any conditions in the industry or industries in which the Company primarily conducts business (or changes in such conditions), provided that such changes do not have a disproportionate impact on the Company and its Subsidiaries, taken as a whole, as compared to other participants in the industries in which the Company and its Subsidiaries conduct their businesses;

(iii) any changes after the date hereof in Laws or GAAP;

(iv) any changes arising directly or indirectly from or otherwise relating to fluctuations in the value of any currency;

(v) the failure of the Company to meet internal or analysts’ expectations or projections or the results of operations of the Company (provided, that any underlying fact, event, circumstance, change or effect that may have contributed to such failure shall not be excluded from the determination of whether a Company Material Adverse Effect has occurred by reason of this clause (v));

(vi) any changes in trading price of Company Shares or the trading volume of Company Shares (but not, in each case, the underlying cause of any such changes, unless such underlying change would otherwise be excepted from this definition);

(vii) any action taken by the Company at the written direction of Parent or any action specifically required to be taken by the Company under this Agreement; or

(viii) any changes resulting from the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement (including the Offer and the Merger), or the public announcement or pendency of this Agreement or the transactions contemplated by this Agreement (including the Offer and the Merger) (other than for purposes of any representation or warranty contained in Sections 3.3, 3.4, 3.12, 3.17, 3.18 or 3.19 but subject to disclosures in the corresponding sections of the Company Disclosure Schedule).

 

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“Company Options” shall mean any options to purchase shares of Company Shares outstanding under any of the Company Stock Plans or otherwise.

“Company Phantom Stock Rights” shall mean phantom stock rights outstanding under the Phantom Stock Plan.

“Company Preferred Stock” shall mean shares of the preferred stock, par value $0.0001 per share, of the Company.

“Company Products” shall mean any and all items, reports, products and services, including Software as a service or data processing services, marketed, offered, sold, licensed, provided or distributed by Company or its Subsidiaries, and any of the forgoing under development as of the date hereof and that the Company expects or intends to make available commercially within one year of the date hereof.

“Company RSUs” shall mean restricted stock units outstanding under any of the Company Stock Plans or otherwise.

“Company Shares” shall mean shares of the common stock, par value $0.0001 per share, of the Company.

“Company Stock Plans” shall mean the Company’s Amended and Restated 2002 Stock Option Plan and 2013 Equity Incentive Plan.

“Company Stockholders” shall mean holders of Company Shares.

“Company Warrants” shall mean any warrants to purchase shares of Company Shares outstanding.

“Contract” shall mean any oral or written contract, subcontract, agreement, commitment, note, bond, mortgage, guaranty, indenture, lease, license, sublicense, permit, franchise or other instrument, obligation or binding arrangement or understanding of any kind or character.

“Controlled Group Liability” means any and all liabilities (a) under Title IV of ERISA, (b) under Section 302 of ERISA, (c) under Sections 412 or 4971 of the Code, (d) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA or Section 4980B of the Code, and (e) under corresponding or similar provisions of foreign laws or regulations, other than such liabilities that arise solely out of, or relate solely to, the Employee Plans.

“Customer Data” shall mean all data and content uploaded or otherwise provided by or for the customers of the Company or any of its Subsidiaries to, or stored by the customers of the Company or any of its Subsidiaries on, the Company Products.

 

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“Delaware Law” shall mean the DGCL and any other Laws of the State of Delaware.

“DGCL” shall mean the General Corporation Law of the State of Delaware, or any successor statute thereto.

“DOJ” shall mean the United States Department of Justice, or any successor thereto.

“DOL” shall mean the United States Department of Labor, or any successor thereto.

“Employee” shall mean any current or former employee, consultant, independent contractor or director of the Company or any ERISA Affiliate.

“Environmental Laws” shall mean all Laws which regulate or control pollution, natural resources, or the environment, or any Hazardous Material or any Hazardous Material Activity.

“Environmental Permit” shall mean any approval, permit, registration, certification, license, clearance or consent required to be obtained from any private person or any Governmental Authority pursuant to Environmental Law.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder, or any successor statue, rules and regulations thereto.

“ERISA Affiliate” shall mean each Subsidiary of the Company and any other Person or entity under common control with the Company or a Subsidiary of the Company within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“FTC” shall mean the United States Federal Trade Commission, or any successor thereto.

“GAAP” shall mean generally accepted accounting principles, as applied in the United States.

“Government Contract” shall mean any prime Contract, subcontract, purchase order, task order, delivery order, teaming agreement, joint venture agreement, strategic alliance agreement, basic ordering agreement, pricing agreement, letter contract or other similar arrangement of any kind with (i) any Governmental Authority, (ii) any prime contractor of a Governmental Authority in its capacity as a prime contractor, or (iii) any subcontractor at any tier with respect to any contract of a type described in clauses (i) or (ii) above. A task, purchase or delivery order under a Government Contract shall not constitute a separate Government Contract, for purposes of this definition, but shall be part of the Government Contract to which it relates.

 

A-5

“Governmental Authority” shall mean any United States or foreign governmental authority, including any supranational, national, federal, territorial, state, commonwealth, province, territory, county, municipality, district, local governmental jurisdiction of any nature or any other governmental, self-regulatory or quasi-governmental authority of any nature (including any governmental department, division, agency, bureau, office, branch, court, arbitrator, commission, tribunal or other governmental instrumentality) or any political or other subdivision or part of any of the foregoing.

“Hazardous Material” shall mean any material, chemical, substance or waste that has been designated by any Governmental Authority to be radioactive, toxic, hazardous, a pollutant, a contaminant, or otherwise a danger to health, reproduction or the environment.

“Hazardous Materials Activity” shall mean the transportation, transfer, recycling, storage, use, treatment, manufacture, removal, remediation, release, exposure of others to, sale, labelling or distribution of any Hazardous Material or any product or waste containing a Hazardous Material, including, without limitation, payment of waste fees or charges (including so-called e-waste fees) and compliance with any product recycling, product take-back or Hazardous Materials product content requirements.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“Initial Value” shall mean the initial value indicated in each Phantom Stock Plan participant’s individual Company Phantom Stock Right grant.

“Intellectual Property Rights” shall mean any and all statutory and/or common law rights throughout the world in, arising out of, or associated with any of the following: (i) all United States and foreign patents and utility models and applications therefore (including provisional applications) and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations in part thereof (collectively, “Patents”); (ii) all trade secrets and similar rights in confidential information, know-how, and materials (“Trade Secrets”); (iii) copyrights and all other rights corresponding thereto associated with any works of authorship (collectively, “Copyrights”); (iv) all trademark rights and similar rights in trade names, logos, trademarks and service marks (collectively, “Trademarks”); (v) all rights in databases and data collections (including knowledge databases, customer lists and customer databases); (vi) all rights to Uniform Resource Locators, Web site addresses and domain names (collectively, “Domain Names”); (vii) all Moral Rights; (viii) any similar, corresponding or equivalent rights to any of the foregoing; and (ix) any registrations of or applications to register any of the foregoing.

“Intervening Event” shall mean, with respect to the Company, a material fact, event, change, development or set of circumstances (other than, and not arising out of or resulting from, an Acquisition Proposal) that (i) was neither known to nor reasonably foreseeable

 

A-6

by any member of the Company Board, assuming reasonable consultation with the executive officers of the Company, as of or prior to the date of this Agreement, (ii) did not result from or arise out of the reasonably foreseeable consequences of the announcement or pendency of, or any actions required to be taken (or to be refrained from being taken) pursuant to, this Agreement, and (iii) does not relate to, result from or arise out of any Acquisition Proposal (whether or not a Superior Proposal).

“IRS” shall mean the United States Internal Revenue Service, or any successor thereto.

“Key Employees” shall mean those individuals designated on Schedule I.

“Knowledge,” with respect to the Company, shall mean the actual knowledge of any of the Key Employees after reasonable inquiry of the employees of the Company who are the direct reports of such Key Employees charged with the administrative or operational responsibility for such matter in question.

“Law” or “Laws” shall mean any and all applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, directive, code, edict, decree, rule, regulation, ruling or requirement issues, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

“Legal Proceeding” shall mean any action, claim, suit, litigation, arbitration, proceeding (public or private), criminal prosecution, hearing, audit, review or investigation commenced, brought, conducted or heard by or before any Governmental Authority.

“Liabilities” shall mean any liability, indebtedness, obligation or commitment of any kind (whether accrued, absolute, contingent, matured, unmatured or otherwise and whether or not required to be recorded or reflected on a balance sheet under GAAP).

“Lien” shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, infringement, interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).

“Moral Rights” shall mean any right to claim authorship to or to object to any distortion, mutilation, or other modification or other derogatory action in relation to a work of authorship, whether or not such would be prejudicial to the author’s reputation, and any similar right, such as recognition of authorship or access to work, existing under common or statutory law of any country in the world or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right.”

“NYSE” shall mean the New York Stock Exchange.

“NYSE Rules” shall mean the rules and regulations of the NYSE.

 

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“Object Code” shall mean computer Software, substantially or entirely in binary form, which is intended to be directly executable by a computer after suitable processing and linking but without the intervening steps of compilation or assembly.

“Open Source License” shall mean a license that is considered an “Open Source License” by the Open Source Initiative (www.opensource.org), including, for example, the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), Apache License, BSD License, and MIT License, or any other license that otherwise requires that (i) the Source Code for Software of the licensee that is or becomes subject to such license be licensed on the same terms as set forth in such license, or (ii) that the Source Code of licensee that is or becomes subject to such license be made publicly available without a requirement for payment, or (iii) requires that the licensee include specified notices of attribution in its Software that is or becomes subject to such license.

“Open Source Materials” shall mean all Software that is licensed pursuant to an Open Source License or otherwise defined as “Open Source” by the Open Source Initiative.

“Order” shall mean any judgment, decision, decree, injunction (whether temporary, preliminary or permanent), ruling, writ, assessment or order of any Governmental Authority.

“Ordinary Course License” shall mean a non-exclusive Contract between Company or any of its Subsidiaries and a third party entered into in the ordinary course with respect to Company Products and which Contract is either (i) on Company’s standard terms and conditions (a copy of which has been provided to Parent) or (ii) on terms and conditions substantially the same as the Company’s standard terms and conditions.

“Parent Material Adverse Effect” shall mean any fact, event, circumstance, change or effect that, individually or when taken together with all other such facts, events, circumstances, changes or effects, would reasonably be expected to materially impede the ability of Parent or Merger Sub to consummate the transactions contemplated by this Agreement (including the Offer and the Merger) in accordance with the terms of this Agreement and applicable Law.

“Permitted Encumbrances” shall mean (i) Liens for Taxes not yet due and payable or Taxes being contested in good faith through appropriate proceedings and for which adequate reserves have been established in accordance with GAAP on the Balance Sheet, (ii) statutory Liens existing as of the Closing Date and held by any Governmental Authority that are related to obligations that are not due or delinquent and (iii) Liens securing Liabilities reflected and properly accounted for on the Balance Sheet.

“Person” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Authority.

“Personal Data” shall mean (A) information that, alone or in combination with other information, may be used to identify, locate, or contact a natural person, including an

 

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individual’s name, street address, telephone number, e-mail address, photograph, Social Security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number, biometric identifiers, health-related information or data, persistent identifier (such as an IP address or a device identifier); (B) data collected from an IP address, web beacon, pixel tag, ad tag, cookie, local storage object, software, or by any other means, or from a particular computer, Web browser, mobile telephone, or other device or application; (C) any other information if such information is defined as “personal data”, “personally identifiable information”, “individually identifiable health information,” “protected health information,” or “personal information” under any Privacy Legal Requirement; and (D) any information that is associated, directly or indirectly (by, for example, records linked via unique keys), with any of the foregoing.

“Phantom Stock Plan” means the Rally Software Development Australia Pty Ltd Phantom Stock Plan.

“Privacy Legal Requirements” shall mean all (i) applicable Laws, (ii) Privacy Policies, (iii) contractual obligations, (iv) third-party privacy policies, terms of use, and similar documents that the Company or any of its Subsidiaries is or has been contractually obligated to comply with, (v) rules of any applicable self-regulatory organizations in which the Company or any of its Subsidiaries is or has been a member or that the Company or any of its Subsidiaries has been contractually obligated to comply with (including, to the extent applicable, the Payment Card Industry Data Security Standard), and (vi) applicable published industry standards relating to (A) the privacy of users of all Company Products and visitors to the websites and other online services of the Company and each of its Subsidiaries; (B) consumer protection, marketing, promotion, and text messaging, email, and other communications; and (C) the use, collection, retention, storage, security, disclosure, transfer, disposal, and other processing of any Personal Data or Customer Data.

“Privacy Policy” shall mean each external or internal, past or present privacy policy or representation, obligation, or promise of the Company or any of its Subsidiaries relating to privacy, data security, or the collection, obtainment, compilation, creation, retention, storage, security, disclosure, transfer, disposal, use, and other processing of any Personal Data.

“Registered Intellectual Property” shall mean all United States, international and foreign: (i) Patents; (ii) Trademarks; (iii) Copyrights; (iv) Domain Names; and (v) any other Intellectual Property Rights that are the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded by any state, government or other public legal authority.

“Sarbanes-Oxley Act” shall mean the Sarbanes-Oxley Act of 2002, as amended.

“SEC” shall mean the United States Securities and Exchange Commission, or any successor thereto.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules or regulations thereto.

 

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“Software” shall mean any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in Source Code or Object Code, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, and (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing.

“Source Code” shall mean computer Software and code, in form other than Object Code or machine readable form, including related programmer comments and annotations, help text, data and data structures, instructions and procedural, object-oriented and other code, which may be printed out or displayed in human readable form.

“Subsidiary” of any Person shall mean (i) a corporation holding more than fifty percent (50%) of the combined voting power of the outstanding voting stock of which is owned, directly or indirectly, by such Person or by one of more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries thereof, (ii) a partnership of which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the general partner and has the power to direct the policies, management and affairs of such partnership, (iii) a limited liability company of which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the managing member and has the power to direct the policies, management and affairs of such company or (iv) any other Person (other than a corporation, partnership or limited liability company) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has a majority ownership and power to direct the policies, management and affairs thereof.

“Superior Proposal” shall mean any unsolicited, bona fide written offer or proposal to acquire 75% of the outstanding voting securities of the Company which the Company Board shall have determined in good faith (after consultation with a financial advisor of nationally recognized standing and outside legal counsel, and after taking into account all aspects of such offer or proposal, including the identity of the third party making such offer or proposal, all financial, legal and regulatory aspects of such offer or proposal, the conditions to and prospects for completion of such offer or proposal and the transaction(s) contemplated thereby, as well as any counter-offer or proposal made by Parent in response thereto) is more favorable to the Company Stockholders (in their capacity as such), from a financial point of view, than the transactions contemplated by this Agreement (including the Offer and the Merger) and, if applicable, any counter-offer or proposal made by Parent or any of its Affiliates in response thereto.

“Tax” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, goods and services, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, escheat, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts, and (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including any liability under Treasury Regulation Section 1.1502-6 or any comparable provision of non-U.S., state or local law (including any arrangement for group or consortium relief or similar arrangement)).

 

A-10

“Tax Returns” shall mean all returns, declarations, estimates, reports, information returns, statements and other documents, including any related or supporting information with respect to any of the foregoing or any amendments of the foregoing, filed or to be filed in respect of any Taxes.

“Technology” shall mean all tangible items related to, constituting, disclosing or embodying any or all of the following: Patents, Trademarks, Domain Names, technology, information, know how, Copyrights, Trade Secrets, inventions (whether or not patented or patentable), discoveries, improvements, show how, techniques, mask works, designs, design rules, algorithms, routines, models, methodologies, Software, computer programs (whether Source Code or Object Code), files, compilations, including any and all data and collections of data, databases processes, prototypes, devices, schematics, netlists, test methodologies, development work and tools and all user documentation.

“Unvested Option” means an outstanding Company Option that is not a Vested Option.

“Unvested Phantom Stock Right” means a Company Phantom Stock Right that is not a Vested Phantom Stock Right.

“Unvested RSU” means a Company RSU that is not a Vested RSU.

“Vested Option” means an outstanding and unexercised Company Option that is vested as of the time immediately prior to the Closing or that vests upon the Closing.

“Vested Phantom Stock Right” means an outstanding Company Phantom Stock Right that is vested as of the time immediately prior to the Closing or that vests upon the Closing.

“Vested RSU” means an outstanding Company RSU that is vested as of the time immediately prior to the Closing or that vests upon the Closing.

 

A-11



Exhibit 99.1

CA Technologies Agrees to Acquire Rally Software, Accelerates Ability for Businesses to Build Transformative Applications Quickly

Acquisition Expands CA’s Opportunity in the Application Economy

NEW YORK, May 27, 2015 – CA Technologies (NASDAQ: CA) today announced it has signed a definitive agreement to acquire Rally Software Development Corp. (NYSE: RALY), a leading provider of Agile development software and services, for $19.50 per share, which equates to approximately $480 million, net of cash acquired. The transaction has been unanimously approved by both Boards of Directors, and is expected to close in the second quarter of CA’s fiscal 2016. Based in Boulder, CO, Rally has approximately 500 employees across four continents and FY 2015 sales of $88 million.

“Software applications are changing the world, disrupting established business models and bringing in completely new experiences in areas from travel to banking. In order to compete, businesses need to develop high quality software quickly and reliably,” said Mike Gregoire, Chief Executive Officer, CA Technologies. “Rally is a leading provider of Agile development software and services, with offerings that complement and expand CA’s strengths in the areas of DevOps and Management Cloud. Every developer dreams of creating truly transformative software that responds to a business challenge extremely quickly. Joining forces with Rally makes this dream a possibility for millions of developers worldwide, and in turn opens up the possibility of a whole new range of experiences driven by software. At the end of the day, this deal is about enabling speed and flexibility, about how we can make the most demanding enterprises truly agile.”

With users in more than 135 countries and nearly every industry, Rally works with some of the world’s largest and most respected brands, including over 35 of the Fortune 100. These customers depend on Rally’s award-winning, cloud-based Agile development platform and the industry’s most experienced transformation consultants and Agile coaches.

The acquisition of Rally is a significant milestone in CA’s strategy to help customers thrive in the application economy, in which software applications are ubiquitous - driving every facet of business in every part of the world.

Tim Miller, Rally’s Chairman and Chief Executive Officer added, “In a world driven by software, the powerful combination of Rally and CA will help our combined customers to better navigate changing markets, improve performance and deliver value faster - while accelerating the pace of disruption and developing a competitive advantage through technology. CA and Rally have more than four years of history working together, and we are thrilled to be taking this next step in our relationship to deliver unique value to both CA and Rally customers.”

Leading industry analysts firms like Forrester1 and IDC say that the Agile methodology is a major trend in developing software.

According to Forrester, sixty-nine percent of respondents out of 560 surveyed decision-makers of the annual Forrester Forrsights Software Survey1 have interest, plan to implement, or have already implemented Agile for their custom development. Sixty-three percent of respondents of the same survey answered similarly for packaged software development and maintenance.

Market intelligence firm IDC expects strong growth for Agile ALM software. In an analysis2 of the Agile application life-cycle management market, it reports that worldwide Agile application life-cycle management software revenue in 2012 reached $211.9 million, and, with a forecasted compound annual growth rate of 39%, will reach $1.1 billion by 2017.

 

1  Forrester Research, Inc., 2014 Market Overview: Agile Development Service Providers, December 2014
2 IDC’s Worldwide Agile Application Life-Cycle Management Software 2014–2017 Forecast and 2012 Vendor Shares: Quick Access Drives Adoption and Business Agility, May 2014

Additional prepared remarks on the acquisition can be found at http://ca.com/invest

Qatalyst Partners acted as financial advisor to CA Technologies and Wilson Sonsini Goodrich & Rosati acted as legal counsel. Deutsche Bank served as financial advisor to Rally Software Development Corp. and Cooley LLP served as legal counsel.

About Rally Software Development Corp.

Rally Software Development Corp. (NYSE: RALY) is a leading global provider of enterprise-class software and services solutions that drive agility. Companies use Rally’s solutions to accelerate the pace of innovation, improve performance, and respond effectively to evolving competitive markets and customer needs. Rally SaaS platform transforms the way organizations manage the software development lifecycle by aligning software development and strategic business objectives, facilitating collaboration, and increasing transparency. Rally consulting and training services apply Agile and Lean approaches to help organizations innovate, lead, adapt, and deliver. Learn more at http://www.rallydev.com.

About CA Technologies

CA Technologies (NASDAQ: CA) creates software that fuels transformation for companies and enables them to seize the opportunities of the application economy. Software is at the heart of every business in every industry. From planning, to development, to management and security, CA is working with companies worldwide to change the way we live, transact, and communicate – across mobile, private and public cloud, distributed and mainframe environments. Learn more at www.ca.com.

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Legal Notices

Copyright © 2015 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this communication (such as statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates,” “targets” and similar expressions relating to the future) constitute “forward-looking statements” that are based upon the beliefs of, and assumptions made by, CA’s and Rally’s respective managements, as well as information currently available to CA’s and Rally’s respective managements. These forward-looking statements reflect CA’s and Rally’s current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to consummate the transaction; the risk that an insufficient number of Rally’s stockholders tender into the tender offer; the risk that regulatory approvals required for the acquisition are not obtained or are obtained subject to conditions that are not anticipated; the risk that the other conditions to the closing of the acquisition are not satisfied; potential adverse reactions or changes to customer, supplier, partner or employee relationships, including those resulting from the announcement or completion of the acquisition; uncertainties as to the timing of the acquisition; competitive responses to the proposed acquisition; response by activist stockholders to the acquisition; uncertainty of the expected financial performance of CA following completion of the proposed transaction; the ability to successfully integrate Rally’s operations and employees in a timely manner; the ability to realize anticipated synergies, cost savings and operational efficiencies; unexpected costs, charges or expenses resulting from the acquisition; litigation relating to the acquisition; the inability to retain key personnel; any changes in general economic and/or industry specific conditions; and other factors described more fully in CA’s and Rally’s filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should CA’s and Rally’s assumptions prove incorrect, actual results may vary materially from those described herein as believed, planned, anticipated, expected, estimated, targeted or similarly expressed in a forward-looking manner. CA and Rally assume

no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

CA Technologies Contacts:

 

Jennifer Hallahan Michael Bauer
Corporate Communications Investor Relations
(212) 415-6924 (212) 310-6276
jennifer.hallahan@ca.com michael.bauer@ca.com
Saswato Das
Corporate Communications
(646) 710-6690
saswato.das@ca.com
Rally Contacts:
Leslie Marcotte Jeff Cooper
Public Relations Investor Relations
(720) 446-4926 (720) 446-4914
lmarcotte@rallydev.com ir@rallydev.com

ADDITIONAL INFORMATION AND WHERE TO FIND IT

Under the terms of the agreement between CA and Rally described herein, a subsidiary of CA will commence a tender offer to acquire all of the outstanding shares of Rally for $19.50 per share, net to seller in cash. CA’s obligation to accept and pay for any Rally shares tendered pursuant to the foregoing offer will be subject to customary closing conditions, including receipt of a majority of the outstanding shares of Rally pursuant to the tender offer (excluding any shares tendered pursuant to guaranteed delivery procedures) and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

The tender offer for the outstanding shares of Rally described herein has not yet commenced. This communication is provided for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any securities of Rally pursuant to the tender offer by CA or otherwise. Any offers to purchase or solicitations of offers to sell will be made only pursuant to the Tender Offer Statement on Schedule TO (including the offer to purchase, the letter of transmittal and other documents relating to the tender offer) which will be filed with the U.S. Securities and Exchange Commission (“SEC”) by CA. In addition, Rally will file

with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the tender offer described herein. Rally’s stockholders are advised to read these documents, any amendments to these documents and any other documents relating to the tender offer that are filed with the SEC carefully and in their entirety prior to making any decision with respect to CA’s tender offer because they will contain important information, including the terms and conditions of the tender offer. Rally’s stockholders may obtain copies of these documents (when they become available) for free at the SEC’s website at www.sec.gov.

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