U.S. 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 (Date of earliest event reported): August 27, 2015
GREATBATCH, INC.
(Exact
name of registrant as specified in its charter)
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| Delaware |
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1-16137 |
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16-1531026 |
| (State or Other Jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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| 2595 Dallas Parkway, Suite 310, Frisco, Texas |
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75034 |
| (Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code (716) 759-5600
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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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.
Merger Agreement
On August 27, 2015, Greatbatch,
Inc. (the “Company”), Provenance Merger Sub Inc., a Delaware corporation and an indirect wholly owned subsidiary of the Company (“Merger Sub”), and Lake Region Medical Holdings, Inc., a Delaware corporation (“Lake
Region”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for the merger of Merger Sub with and into Lake Region, with Lake Region continuing as the surviving corporation and a wholly owned indirect
subsidiary of the Company. The aggregate merger consideration to be paid by the Company to the equityholders of Lake Region will consist of approximately $478 million in cash and 5.1 million newly issued shares of common stock and options
to purchase shares of common stock of the Company.
This aggregate merger consideration will be allocated among holders of Lake Region’s outstanding
common stock, certain holders of options to purchase shares of common stock of Lake Region (“Options”), holders of restricted stock units of Lake Region and participants in Lake Region’s director’s deferred compensation plan.
Certain outstanding Options held by senior management of Lake Region will be exchanged at the closing of the merger (“Rollover Options”) for fully vested options to purchase shares of common stock of the Company that retain the same
aggregate spread value as the Rollover Options and contain substantially similar terms and conditions as applied to the Rollover Options.
In connection
with the merger, the Company also will pay off all of Lake Region’s outstanding net funded debt, currently estimated at approximately $1.0 billion. The Company expects to fund the cash portion of the merger consideration and the repayment of
Lake Region’s outstanding funded debt with a combination of new debt and cash on hand.
The Merger Agreement contains certain termination rights for
both the Company and Lake Region, including if the merger is not completed on or before November 25, 2015; provided that if all the conditions to closing, as described below, other than the required regulatory approvals have been satisfied or
waived, then such date may be extended for an additional ninety calendar days, to a date not beyond February 23, 2016.
The consummation of the
merger is subject to customary closing conditions, including, without limitation, (i) the absence of any law or order that is in effect and restrains, enjoins or otherwise prohibits the merger, (ii) the receipt of regulatory approval or
the expiration or termination of applicable waiting periods under the applicable antitrust laws of certain jurisdictions, including the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act
of 1976, as amended, (iii) the shares of common stock of the Company to be issued in the merger as part of the merger consideration being approved for listing on the New York Stock Exchange and (iv) the approval of the merger by at least a
majority of the voting securities held by the holders of Lake Region’s common stock. The consummation of the merger is not subject to a financing condition.
The Merger Agreement generally requires each party to take any and all action reasonably necessary to obtain approval of the merger under any antitrust law;
provided, however, that neither party shall be required to agree to a divestiture transaction if it is not conditioned on consummation of the merger and, with respect to the Company only, if such divestiture transaction would reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the Company, taken as a whole.
The Merger Agreement contains detailed
representations and warranties of the Company, Merger Sub and Lake Region. Lake Region and the Company have agreed to various covenants and agreements, including, among others, an agreement to conduct their respective businesses in the ordinary
course during the period prior to the closing of the merger and not to engage in certain kinds of transactions during this period.
The foregoing
description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached hereto as Exhibit 2.1 and incorporated by reference herein. The Merger Agreement has been
included as an exhibit hereto solely to provide investors and security holders with information regarding its terms. It is not intended to be a source of financial, business or operational information about the Company, Lake Region or their
respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement are made only for purposes of the Merger Agreement and are made as of specific dates; are solely for the benefit of the parties;
may be subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Merger Agreement, including being qualified by confidential disclosures made for the purpose of allocating contractual risk
between the parties rather than establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Investors and security holders
should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of the Company, Lake Region or their respective subsidiaries or affiliates. Moreover,
information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures.
1
Commitment Letter
On August 27, 2015, in connection with the signing of the Merger Agreement, Greatbatch Ltd., a direct wholly owned subsidiary of the Company and the
direct parent of the Merger Sub, entered into a commitment letter (the “Commitment Letter”) with Manufacturers and Traders Trust Company, Credit Suisse Securities (USA) LLC, Credit Suisse AG, KeyBank National Association and KeyBanc
Capital Markets Inc. The Commitment Letter provides a commitment, subject to customary conditions, for a (i) (A) a $300 million senior secured term loan A facility (the “TLA Facility”), (B) a $1.0 billion senior secured term
loan B facility (the “TLB Facility”) and (C) a $200 million senior secured revolving facility, including a $15 million sublimit for standby letters of credit and a $15 million sublimit swingline loans (the “Revolving
Facility”, and collectively with the TLA Facility and the TLB Facility, the “Senior Secured Facilities”), which Senior Secured Facilities will be secured on a first priority basis by a security interest in all or substantially all of
the non-real estate assets of the Company, Greatbatch Ltd. and certain of their U.S. subsidiaries, subject to certain exclusions, and (ii) up to a $400 million senior unsecured bridge facility. It is expected that the Company will seek
long-term debt financing in lieu of a portion or all of the drawings under the bridge facility, subject to market and other conditions. The foregoing description of the Commitment Letter does not purport to be complete and is qualified in its
entirety by reference to the Commitment Letter, which is attached hereto as Exhibit 10.1 and incorporated by reference herein.
Cautionary Statement
Regarding Forward-Looking Statements
Some of the statements contained in this Current Report on Form 8-K are “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
You can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,”
“expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or “variations” or the negative of these
terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about the benefits of the proposed merger, including future financial and operating results, the combined company’s plans,
objectives, expectations and intentions, the expected timing of completion of the transaction and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Company’s management
and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to: the possibility that the anticipated synergies and other
benefits from the proposed merger will not be realized, or will not be realized within the anticipated time periods; the inability to obtain regulatory approvals of the merger (including the approval of antitrust authorities necessary to complete
the transaction) on the terms desired or anticipated; the timing of such approvals and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the
transaction; the risk that a condition to closing the transaction may not be satisfied on a timely basis or at all; the risk that the proposed transaction fails to close for any other reason; the risks and uncertainties related to the Company’s
ability to successfully integrate the operations, products and employees of the Company and Lake Region; the effect of the potential disruption of management’s attention from ongoing business operations due to the pending merger; the effect of
the announcement of the proposed merger on the Company’s and Lake Region’s relationships with their respective customers, vendors and lenders and on their respective operating results and businesses generally; risks relating to the value
of the Company shares to be issued in the transaction; access to available financing (including financing for the acquisition or refinancing of the Company’s or Lake Region’s debt) on a timely basis and on reasonable terms; and the
following factors that may impact the Company’s and the combined company’s business: dependence upon a limited number of customers; customer ordering patterns; product obsolescence; inability to market current or future products; pricing
pressure from customers; inability to timely and successfully implement cost reduction and plant consolidation initiatives; reliance on third party suppliers for raw materials, products and subcomponents; fluctuating operating results; inability to
maintain high quality standards for products; challenges to intellectual property rights; product liability claims; product field actions or recalls; inability to successfully consummate and integrate acquisitions and to realize synergies and to
operate these acquired businesses in accordance with expectations; our unsuccessful expansion into new markets; failure to develop new products including system and device products; the timing, progress and ultimate success of pending regulatory
actions and approvals, inability to obtain licenses to key technology; regulatory changes, including health care reform, or consolidation in the healthcare industry; global economic factors including currency exchange rates and interest rates; the
resolution of various legal actions; and other risks and uncertainties that arise from time to time and are described in the Company’s periodic filings with the Securities and Exchange Commission. The Company assumes no obligation to update
forward-looking statements in this Current Report on Form 8-K whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.
Item 3.02 Unregistered Sales of Equity Securities.
As described in Item 1.01 above, the Company has entered into the Merger Agreement pursuant to which the Company will issue 5.1 million shares of
common stock or options to purchase shares of common stock as part of the merger consideration upon the closing of the merger. The issuance and sale of the shares of common stock is intended to be exempt from registration under Section 4(a)(2)
of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering.
2
To the extent relevant, the information disclosed in Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 3.02 by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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| Exhibit
Number |
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Description of Exhibit |
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| 2.1 |
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Agreement and Plan of Merger, dated as of August 27, 2015, by and among Lake Region Medical Holdings, Inc., Greatbatch, Inc. and Provenance Merger Sub Inc.* |
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| 10.1 |
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Commitment Letter, dated as of August 27, 2015, by and among Manufacturers and Traders Trust Company, Credit Suisse Securities (USA) LLC, Credit Suisse AG, KeyBank National Association, KeyBanc Capital Markets Inc. and
Greatbatch Ltd. |
* Schedules and exhibits are omitted pursuant to Item 601(b)(2) of Regulation S-K. the Company agrees to furnish
supplementally a copy of any omitted schedules or exhibits to the Securities and Exchange Commission upon request.
3
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, thereunto duly authorized.
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| Date: August 31, 2015 |
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GREATBATCH, INC. |
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By: |
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/s/ MICHAEL DINKINS |
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Michael Dinkins |
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Executive Vice President & Chief Financial Officer |
EXHIBIT INDEX
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| Exhibit
Number |
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Description of Exhibit |
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| 2.1 |
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Agreement and Plan of Merger, dated as of August 27, 2015, by and among Lake Region Medical Holdings, Inc., Greatbatch, Inc. and Provenance Merger Sub Inc.* |
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| 10.1 |
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Commitment Letter, dated as of August 27, 2015, by and among Manufacturers and Traders Trust Company, Credit Suisse Securities (USA) LLC, Credit Suisse AG, KeyBank National Association, KeyBanc Capital Markets Inc. and
Greatbatch Ltd. |
* Schedules and exhibits are omitted pursuant to Item 601(b)(2) of Regulation S-K. the Company agrees to furnish
supplementally a copy of any omitted schedules or exhibits to the Securities and Exchange Commission upon request.
Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
LAKE
REGION MEDICAL HOLDINGS, INC.,
GREATBATCH, INC.
and
PROVENANCE MERGER SUB
INC.
Dated as of August 27, 2015
TABLE OF CONTENTS
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| ARTICLE I |
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| DEFINITIONS, TERMS AND INTERPRETIVE MATTERS |
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1 |
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| Section 1.1 Certain Definitions |
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1 |
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| Section 1.2 Other Terms |
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15 |
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| ARTICLE II |
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| THE MERGER |
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15 |
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| Section 2.1 The Merger |
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15 |
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| Section 2.2 Closing |
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15 |
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| Section 2.3 Effective Time |
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15 |
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| ARTICLE III |
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| THE SURVIVING CORPORATION |
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16 |
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| Section 3.1 Certificate of Incorporation |
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16 |
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| Section 3.2 Bylaws |
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16 |
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| Section 3.3 Directors and Officers |
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16 |
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| ARTICLE IV |
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| EFFECT ON CAPITAL STOCK; PURCHASE PRICE |
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16 |
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| Section 4.1 Effect on Capital Stock |
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16 |
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| Section 4.2 Surrender and Payment |
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17 |
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| Section 4.3 Fractional Shares |
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21 |
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| Section 4.4 Lost Certificates |
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21 |
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| Section 4.5 Dissenting Shares |
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21 |
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| Section 4.6 Treatment of Stock Options, Restricted Stock Units and Directors’ Deferred Compensation Plan Shares |
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22 |
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| Section 4.7 Company Transaction Expenses and Funded Debt |
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24 |
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| Section 4.8 Withholding Rights |
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24 |
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| ARTICLE V |
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| REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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25 |
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| Section 5.1 Corporate Existence |
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25 |
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| Section 5.2 Authorization |
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25 |
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| Section 5.3 Company Financial Statements |
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26 |
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| Section 5.4 Absence of Changes or Events |
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26 |
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| Section 5.5 Capitalization |
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27 |
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| Section 5.6 Consents and Approvals |
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28 |
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| Section 5.7 No Violations |
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28 |
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| Section 5.8 Litigation |
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28 |
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| Section 5.9 Affiliate Agreements |
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29 |
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| Section 5.10 Compliance with Laws; Permits |
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29 |
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| Section 5.11 Absence of Undisclosed Liabilities |
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29 |
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| Section 5.12 Material Contracts |
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30 |
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| Section 5.13 Employee Benefit Matters |
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32 |
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i
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| Section 5.14 Environmental Matters |
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34 |
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| Section 5.15 Property and Assets |
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35 |
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| Section 5.16 Employment and Labor |
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36 |
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| Section 5.17 Insurance |
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36 |
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| Section 5.18 Intellectual Property Matters |
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36 |
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| Section 5.19 Taxes |
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38 |
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| Section 5.20 Regulatory Compliance |
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39 |
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| Section 5.21 Foreign Corrupt Practices Act |
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40 |
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| Section 5.22 State Takeover Statutes |
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41 |
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| Section 5.23 No Brokers |
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41 |
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| Section 5.24 No Additional Representations |
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41 |
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| ARTICLE VI |
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| REPRESENTATIONS AND WARRANTIES OF PARENT |
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42 |
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| Section 6.1 Corporate Existence |
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42 |
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| Section 6.2 Authorization |
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42 |
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| Section 6.3 Absence of Changes or Events |
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43 |
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| Section 6.4 Parent SEC Documents |
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43 |
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| Section 6.5 Capitalization of Parent and Merger Sub |
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44 |
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| Section 6.6 Consents and Approvals |
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45 |
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| Section 6.7 No Violations |
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45 |
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| Section 6.8 Litigation |
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45 |
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| Section 6.9 Compliance with Laws; Permits |
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46 |
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| Section 6.10 Absence of Undisclosed Liabilities |
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46 |
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| Section 6.11 Taxes |
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46 |
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| Section 6.12 Availability of Funds |
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47 |
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| Section 6.13 Operations of Merger Sub |
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48 |
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| Section 6.14 Regulatory Compliance |
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48 |
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| Section 6.15 No Brokers |
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49 |
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| Section 6.16 No Additional Representations |
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| ARTICLE VII |
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| COVENANTS |
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49 |
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| Section 7.1 Conduct of Business by the Company Pending the Closing |
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49 |
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| Section 7.2 Conduct of Business by Parent Pending the Closing |
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53 |
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| Section 7.3 Antitrust Matters; Third Party Consents |
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54 |
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| Section 7.4 Information Pending Closing; Access |
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58 |
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| Section 7.5 Confidentiality and Announcements |
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59 |
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| Section 7.6 Exclusivity |
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60 |
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| Section 7.7 Indemnification of Directors and Officers |
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60 |
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| Section 7.8 Employee Matters |
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61 |
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| Section 7.9 Affiliate Agreements |
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62 |
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| Section 7.10 Financing |
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63 |
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| Section 7.11 Tax Matters |
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66 |
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| Section 7.12 FIRPTA Certificate |
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66 |
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| Section 7.13 Section 280G |
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66 |
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| Section 7.14 Notice of Events |
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67 |
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| Section 7.15 Expenses |
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67 |
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| Section 7.16 Further Assurances |
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67 |
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| Section 7.17 Company Stockholder Approval |
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67 |
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| Section 7.18 Merger Sub |
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67 |
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| Section 7.19 Subsidiary Loans |
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67 |
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| Section 7.20 Mexican Maquiladora |
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68 |
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| ARTICLE VIII |
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| CONDITIONS TO CLOSING |
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68 |
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| Section 8.1 Mutual Conditions |
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68 |
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| Section 8.2 Conditions to Parent’s and Merger Sub’s Obligations |
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68 |
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| Section 8.3 Conditions to the Company’s Obligations |
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69 |
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| ARTICLE IX |
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| TERMINATION |
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70 |
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| Section 9.1 Termination |
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70 |
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| Section 9.2 Obligations upon Termination |
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71 |
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| ARTICLE X |
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| GENERAL |
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71 |
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| Section 10.1 Amendment |
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71 |
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| Section 10.2 Entire Agreement |
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71 |
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| Section 10.3 Interpretation |
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72 |
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| Section 10.4 Severability |
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72 |
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| Section 10.5 Notices |
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72 |
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| Section 10.6 Binding Effect; Persons Benefiting; No Assignment |
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73 |
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| Section 10.7 Counterparts |
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73 |
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| Section 10.8 No Prejudice; Survival |
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74 |
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| Section 10.9 Governing Law; Consent to Jurisdiction |
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74 |
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| Section 10.10 Waiver |
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75 |
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| Section 10.11 Waiver of Jury Trial |
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75 |
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| Section 10.12 Enforcement of Agreement |
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75 |
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| Section 10.13 Recourse Against Financing Sources |
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76 |
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| Section 10.14 Releases |
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76 |
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| Section 10.15 Non-Recourse |
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77 |
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| Section 10.16 Disclosure Letters |
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77 |
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| Section 10.17 Waiver of Conflicts |
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78 |
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| Exhibits |
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| Exhibit A |
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Knowledge of Company |
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| Exhibit B |
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Knowledge of Parent |
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| Exhibit C |
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Form of Rollover Option Agreement |
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| Exhibit D |
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Form of Stockholders Agreement |
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| Exhibit E |
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Certificate of Incorporation of Surviving Corporation |
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made as of August 27, 2015, by and among LAKE REGION
MEDICAL HOLDINGS, INC., a Delaware corporation (the “Company”), GREATBATCH, INC., a Delaware corporation (“Parent”), and Provenance Merger Sub Inc., a Delaware corporation and indirect wholly owned
Subsidiary of Parent (“Merger Sub”).
RECITALS
WHEREAS, the boards of directors of Parent (on its own behalf and as the sole indirect stockholder of Merger Sub) and Merger Sub have approved
the acquisition of the Company by Parent, by means of a merger of Merger Sub with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly owned indirect subsidiary of Parent, on the
terms and subject to the conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”); and
WHEREAS, the board of directors of the Company (i) has determined that the Merger is advisable and fair to, and in the best interests of,
the Company and its stockholders, (ii) has approved this Agreement and the transactions contemplated hereby and (iii) is recommending the adoption of this Agreement by the stockholders of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, and intending to be legally
bound, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS, TERMS AND INTERPRETIVE MATTERS
Section 1.1 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth or as referenced
below:
“280G Waivers” has the meaning set forth in Section 7.13.
“Accredited Investor” means an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities
Act.
“Affiliate” means, with respect to any specified Person, any other Person that directly or indirectly, through one
or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person. For the purposes of this Agreement, “Control” means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the ownership of securities, by contract, management control, or otherwise. “Controlled” and “Controlling” shall be construed accordingly.
Notwithstanding the foregoing, for all purposes of this Agreement, in no event shall an Affiliate of the Company include any “portfolio company” (as such term is customarily used among institutional investors) of any Sponsor, or any of
their respective Affiliates.
“Affiliate Agreement” has the meaning set forth in Section 5.9.
“Aggregate Cash Consideration” means Four Hundred Seventy Seven Million Dollars ($477,000,000), minus the amount of
the Company Transaction Expenses in excess of the Company Transaction Expenses Cap, minus the amount of any Disallowed Expenses, plus the product of (x) the Rollover Stock Number multiplied by (y) 25% of the Closing
Parent Common Stock Price.
“Aggregate Stock Consideration” means Five Million One Hundred Thousand
(5,100,000) shares of Parent Common Stock.
“Agreement” means this Agreement and Plan of Merger, as may hereafter be
amended from time to time.
“Alternate Commitment Letter” has the meaning set forth in Section 7.10(c).
“Alternate Financing” has the meaning set forth in Section 7.10(c).
“Applicable Law” means (a) any applicable foreign, federal, state or local statute, law (including common law),
ordinance, rule, regulation or regulatory guideline having the force of law and (b) any applicable Order.
“Balance Sheet
Date” has the meaning set forth in Section 5.3(a).
“Benefit Plans” has the meaning set forth in
Section 5.13(a).
“Bond Financing” has the meaning set forth in Section 7.10(d).
“Breakage Cost” means any consent fee, change of control premium, termination fee, prepayment penalty, make-whole payment,
“breakage” cost or similar payment or related cost, including the fees and expenses of the attorneys to the lenders or agents to the extent payable under the applicable credit agreement or credit facility, associated with the pay-off,
unwinding or satisfaction of any and all Funded Debt, including the amounts under the credit agreements and facilities of the Company or any of its Subsidiaries, outstanding or in existence as of the date of this Agreement and set forth in
Section 1.1(a) of the Company Disclosure Letter; provided, that in no event shall Breakage Cost include any of the foregoing related to interest rate cap agreements, interest rate swap agreements, commodity swap agreements, commodity cap
agreements, foreign currency exchange agreements or hedging transactions or other similar arrangements or agreements.
“Business
Day” means any day other than Saturday, a Sunday or a day on which banks in Buffalo, New York are authorized or required to be closed for regular banking business.
“Cancelled Shares” has the meaning set forth in Section 4.1(d).
“Certificate” has the meaning set forth in Section 4.1(b).
“Certificate of Merger” has the meaning set forth in Section 2.1.
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“Closing” has the meaning set forth in Section 2.2.
“Closing Date” means the date of the Closing.
“Closing Parent Common Stock Price” means the last reported sale price of Parent Common Stock on the New York Stock Exchange
(as reported in The Wall Street Journal) on the second trading day immediately preceding the date of the Effective Time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
“Collective Bargaining Agreement” means any and all Contracts that have been entered into between the Company or any of its
Subsidiaries and any Employee Representative, or any industry-wide or nation-wide Contract governing labor or employment relations to which the Company or any of its Subsidiaries is subject or bound.
“Commission” means the Securities and Exchange Commission or any successor Governmental Authority.
“Commitment Letter” has the meaning set forth in Section 6.12.
“Company” has the meaning set forth in the first paragraph of this Agreement.
“Company Common Stock” means the common stock, par value $.01 per share, of the Company (which, for the avoidance of doubt,
shall not include any Restricted Stock Units).
“Company Disclosure Letter” means the disclosure letter delivered by the
Company to Parent concurrently with the execution of this Agreement.
“Company Financial Statements” has the meaning set
forth in Section 5.3(a).
“Company Intellectual Property” means the Owned Company Intellectual Property and the
Licensed Company Intellectual Property.
“Company IT Systems” has the meaning set forth in Section 5.18(h).
“Company Material Adverse Effect” means any change, effect, event, occurrence, state of facts or development that,
individually or in the aggregate with all other changes, effects, events, occurrences, state of facts and developments, (a) is or would reasonably be expected to be materially adverse to the business, results of operations or financial
condition of the Company and its Subsidiaries, taken as a whole, except to the extent that such change, effect, event, occurrence, state of facts or development results from, arises out of or is attributable to (i) changes in general economic
conditions, (ii) general financial or security market fluctuations or changes in conditions thereof, (iii) changes in or events affecting any of the industries in which the Company or any of its Subsidiaries operate, (iv) any effect
arising out of a change or proposed change in GAAP (or any authoritative interpretation thereof) or Applicable Law (or any authoritative interpretation thereof), (v) the negotiation, execution, delivery, announcement or pendency of this
Agreement and the transactions contemplated hereby (provided, however,
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that the exception in this clause (v) for the execution and delivery of this Agreement, shall not apply to Section 5.7 or the first sentence of Section 5.13(e)), including any
(x) litigation resulting therefrom and (y) change in customer, distributor, sales representative, employee, labor union, works council, supplier, financing source, licensor, licensee, sub-licensee, stockholder, Governmental Authority or
similar relationships, including as a result of the identity of Parent or its plans or intentions for the Company or any of its Subsidiaries or their respective businesses or operations (or any portion thereof), (vi) any failure by the Company
and its Subsidiaries to meet any estimates of revenues, earnings, projections, budgets, plans or forecasts (provided, that unless otherwise excluded from the definition of Company Material Adverse Effect, the underlying cause or causes of
such failure may be taken into consideration when determining whether a Company Material Adverse Effect has occurred), (vii) natural disasters or other force majeure events, (viii) changes in local, national, international or other
political, social or regulatory conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack of any kind, or the worsening
thereof, (ix) compliance by the Company and its Subsidiaries with any of the terms and conditions of this Agreement, (x) any change in the credit rating of the Company or any of its Subsidiaries (provided, that unless otherwise
excluded from the definition of Company Material Adverse Effect, the underlying cause or causes of such change in credit rating may be taken into consideration when determining whether a Company Material Adverse Effect has occurred), (xi) any
action taken by the Company or any of its Subsidiaries at the request or with the consent of Parent or (xii) any relationship or activity subject to the National Labor Relations Act or similar Applicable Law; provided, that in the cases
of the foregoing clauses (i) through (iv), (vii) and (viii), to the extent such changes do not have a materially disproportionate effect on the Company and its Subsidiaries, taken as a whole, as compared to other participants in the same
industry or (b) would prevent consummation of the transactions contemplated by this Agreement by the Company.
“Company
Option” has the meaning set forth in Section 4.6(a).
“Company Permit” has the meaning set forth in
Section 5.10.
“Company Registered Intellectual Property” means the following Owned Company Intellectual Property:
(a) granted and applied-for patents; (b) registered and applied-for trademarks and service marks; (c) domain names and (d) registered and applied-for copyrights.
“Company Stock Plans” has the meaning set forth in Section 4.6(a).
“Company Stockholder Approval” has the meaning set forth in Section 5.2.
“Company Transaction Expenses” means (a) all bona fide fees, costs, expenses and disbursements incurred, payable or paid
at or prior to Closing by or on behalf of any of the Company or its Subsidiaries in connection with the transactions contemplated by this Agreement, including: (i) the fees and expenses of any legal counsel, accountants or other professional
advisors; and (ii) Breakage Costs, and (b) the expenses set forth on Section 1.1(c) of the Company Disclosure Letter; provided, that: (x) Company Transaction Expenses specifically excludes any Disallowed Expenses;
(y) in no event shall Company Transaction Expenses include Transfer Taxes, any Financing Expenses, the cost of the Runoff D&O Insurance or any fees
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payable with respect to filings under the HSR Act or other Competition Laws, all of which shall be borne by Parent; and (z) if prior to August 26, 2016 an amount does not become owing
to the person whose employment agreement is referenced in clause (b) under such person’s employment agreement to reimburse him for certain tax liabilities and, at Closing, the Company Transaction Expenses exceed the Company Transaction
Expenses Cap, Parent shall pay pro rata to all persons who were equityholders of the Company immediately prior to the Effective Time an amount equal to the lesser of (1) the amount by which the Company Transaction Expenses exceeded the Company
Transaction Expenses Cap and (2) the amount described in clause (b).
“Company Transaction Expenses Cap” means Five
Million Dollars ($5,000,000).
“Competition Laws” means the HSR Act and any other applicable foreign, federal, state or
supranational antitrust, competition, fair trade or similar Applicable Laws.
“Confidentiality Agreement” has the meaning
set forth in Section 7.4.
“Continuing Employees” has the meaning set forth in Section 7.8(a).
“Contract” means any agreement, note, guarantee, mortgage, indenture, lease, deed of trust, license, instrument or other
contract or legally binding arrangement or commitment, whether written or oral.
“D&O Insurance” has the meaning set
forth in Section 7.7(b).
“DGCL” has the meaning set forth in the Recitals.
“Debt Financing” has the meaning set forth in Section 6.12.
“Debt Payoff Amount” means the aggregate amount necessary to pay off, redeem, satisfy, discharge or defease any Funded Debt.
“Definitive Financing Agreements” has the meaning set forth in Section 7.10(a).
“Directors’ Deferred Compensation Cash Amount” means the aggregate amount of cash distributed by the Company to
participants in the Directors’ Deferred Compensation Plan in connection with the consummation of the Merger who have not elected, in accordance with the terms thereof, to receive their awards under such plan in the form of Company Common Stock.
“Directors’ Deferred Compensation Plan” means the Accellent Holdings Corp. Directors’ Deferred Compensation
Plan, as amended from time to time, and as assigned to the Company.
“Disallowed Expenses” means the fees and expenses of
any investment or financial advisor or any success, transaction or similar fees payable to Sponsors or their Affiliates as a result of or in connection with the transactions contemplated by this Agreement.
“Disclosure Letter” means the Company Disclosure Letter or the Parent Disclosure Letter, as the case may be.
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“Dissenting Share” has the meaning set forth in Section 4.5.
“Divestiture” has the meaning set forth in Section 7.3(c).
“Dollars” or “$” means the lawful currency of the United States.
“Effective Date” has the meaning set forth in Section 2.3.
“Effective Time” has the meaning set forth in Section 2.3.
“Employee Representative” means any labor union, trade union, labor organization, labor association, collective bargaining
unit, works council, employee council, workers’ committee, cooperation committee, bargaining representative, or any other type of employees’ representative or employee organization elected, appointed or created for information,
consultation, codetermination and/or collective bargaining purposes.
“Encumbrance” means any charge, pledge, mortgage,
deed of trust, hypothecation, security interest, lien, option, lease, license, encroachment, easement, right-of-way, reservation, restriction or defect or imperfection of title, or any right of first refusal or other similar restriction on voting or
transfer, or any other similar limitation, restriction or encumbrance of any kind whatsoever.
“Environmental Law” means
any Applicable Law and any applicable Order or binding agreement with any Governmental Authority relating to: (a) pollution (or the cleanup thereof), protection of the environment (including ambient air, soil, surface water or groundwater, or
subsurface strata), natural resources, or the safety or health of human beings or other living organisms or species; or (b) the presence of, exposure to, management, manufacture, distribution in commerce, treatment, storage, disposal,
discharge, generation, transportation, processing, containment, production, disposal, remediation, use or Release of Hazardous Substances.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any Person or entity that, together with the Company or any of its Subsidiaries, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Agent” has the meaning
set forth in Section 4.2(a).
“Exchange Fund” has the meaning set forth in Section 4.2(b).
“FDA” means the Federal Food and Drug Administration.
“Financing” has the meaning set forth in Section 7.10(d).
“Financing Arrangers” has the meaning set forth in Section 7.10(d).
“Financing Expenses” has the meaning set forth in Section 7.10(d).
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“Financing Sources” means the lenders and other Persons (including agents and
arrangers but excluding Parent and any of its Affiliates) that have committed to provide or otherwise entered into Contracts in connection with the Debt Financing or other financings of Parent in connection with the transactions contemplated hereby
(including, in any event, the Debt Providers and the Financing Arrangers), including any commitment letters or engagement letters relating thereto, together with each former, current and future Affiliate thereof and each former, current and future
partner, shareholders, equityholders, managers, members, controlling person and Representative of such lenders, other Persons or Affiliates thereof or the heirs, executors, successors and assigns of any of the foregoing.
“Forfeited Option” has the meaning set forth in Section 4.6(c).
“Fully-Diluted Outstanding Stock” means as of any date, the total number of shares of Company Common Stock outstanding as of
such date (including shares of Company Common Stock underlying a Restricted Stock Unit, as if fully vested), determined on a fully-diluted, as-if exercised basis and assuming the exercise of all Company Options assuming that all shares of Company
Common Stock underlying Company Options are delivered to the applicable holders and that no shares of Company Common Stock are withheld in payment of any applicable exercise price or tax obligations, whether or not exercisable or vested;
provided, however, that (a) any Company Option that is out-of-the money, and (b) Forfeited Options shall, in each case, be disregarded for purposes of this definition.
“Funded Debt” means all obligations of the Company or its Subsidiaries in respect of (a) Indebtedness for which a
default or an event of default will occur or the maturity of which will be accelerated upon the consummation of the transactions contemplated hereby and (b) Indebtedness that is otherwise required to be, or is set forth on Section 1.1(b)
of the Company Disclosure Letter and will be, repaid, discharged, defeased, redeemed or otherwise satisfied in connection with the Closing and the transactions contemplated hereby.
“GAAP” means U.S. generally accepted accounting principles as in effect at the time any applicable financial statements were
prepared or any act requiring the application of GAAP was performed.
“Governmental Authority” means any national,
supranational, foreign, federal, state, county, local or municipal government, or political subdivision thereof, or any court or tribunal, regulatory or administrative agency, board or commission, arbitrator, arbitration tribunal of any government
or other governmental or quasi-governmental authority or instrumentality.
“Hazardous Substance” means any chemical,
product, derivative, compound, mixture, pollutant, contaminant, hazardous substance, hazardous waste, medical waste, special waste, toxic substance, petroleum or petroleum-derived substance, waste or additive, radioactive material, asbestos in any
form that is friable or that would reasonably be expected to become friable, lead or lead-containing materials, polychlorinated biphenyls, or other compound, element, material or substance in any form whatsoever (including products) regulated,
restricted, classified or otherwise characterized as hazardous, toxic, or words of similar import that could give rise to any liability under any applicable Environmental Law.
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“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
“Indebtedness” means, with respect to any Person, without
duplication, as of the date of determination: (a) all obligations of such Person for borrowed money, including accrued and unpaid interest, and any prepayment fees or penalties; (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments; (c) all obligations of such Person issued or assumed as the deferred purchase price of property (including any potential future earn- out, purchase price adjustment, release of “holdback” or
similar payment, but excluding obligations of such Person incurred in the ordinary course of business consistent with past practice); (d) all lease obligations of such Person capitalized on the books and records of such Person; (e) all
Indebtedness of others secured by an Encumbrance on property or assets owned or acquired by such Person, whether or not the Indebtedness secured thereby have been assumed; (f) all obligations of such Person under interest rate, currency or commodity
derivatives or hedging transactions or similar arrangement (valued at the termination value thereof); (g) all letters of credit or performance bonds issued for the account of such Person, to the extent drawn upon; and (h) all guarantees
and keepwell arrangements of such Person of any Indebtedness of any other Person other than a wholly owned subsidiary of such Person.
“Intellectual Property” means any and all intellectual property and industrial property rights recognized under Applicable
Law, including in and to: (a) all U.S. and non-U.S. registered, unregistered and pending (i) trade names, trade dress, trademarks, service marks, logos, internet domain names and all registrations and applications therefor, together with
the goodwill associated with any of the foregoing, (ii) original works of authorship, copyrights, and all registrations and applications therefor and (iii) patents and patent applications, including continuations, divisionals,
continuations-in-part, reissues, renewals, extensions, registrations, and supplemental protection certificates and the like of any of the foregoing, registered designs and invention disclosures, and all grants, registrations and applications
therefor; and (b) all (i) computer software and (ii) trade secrets, inventions, processes, formulae, information and know- how, in each case, which are proprietary and confidential and derive independent economic value from not being
generally known.
“IRS” means the United States Internal Revenue Service.
“Knowledge of the Company” and each phrase having equivalent meaning (e.g., “known to the Company”) means
the actual knowledge of those individuals identified on Exhibit A attached hereto, after reasonably inquiry.
“Knowledge of
Parent” and each phrase having equivalent meaning (e.g., “known to Parent”) means the actual knowledge of those individuals identified on Exhibit B attached hereto, after reasonable inquiry.
“Latest SEC Report” has the meaning set forth in Section 6.5(a).
“Leased Real Property” has the meaning set forth in Section 5.15(b).
“Lender Related Parties” has the meaning set forth in Section 10.13.
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“Licensed Company Intellectual Property” means all in-licensed registered and
applied- for Intellectual Property used by the Company or any of its Subsidiaries.
“Marketing Period” means the first
period of fifteen (15) consecutive Business Days (a) commencing after Parent shall have received the Required Marketing Period Information and (b) throughout which the conditions set forth in Section 8.1 and Section 8.2
shall be satisfied or waived (other than any conditions that by their nature are to be satisfied at the Closing); provided, that (i) November 27, 2015 shall be excluded as a Business Day for such purposes, (ii) the Marketing Period
shall commence no earlier than September 8, 2015 and (iii) if the Marketing Period has not ended prior to December 18, 2015, the Marketing Period shall not be deemed to have commenced prior to January 4, 2016; provided,
further, that the Marketing Period shall end on any earlier date that is the date on which the Financing is consummated.
“Material Contract” has the meaning set forth in Section 5.12.
“Medical Device” has the meaning set forth in Section 5.20(a).
“Merger” has the meaning set forth in the Recitals.
“Merger Sub” has the meaning set forth in the first paragraph of this Agreement.
“Money Laundering Laws” has the meaning set forth in Section 5.21(b).
“Non-Accredited Investor” means any holder of Company Common Stock who is not an Accredited Investor; provided, that,
for purposes of this Agreement, any holder of Company Common Stock who has not returned a Letter of Transmittal by the close of business on the Business Day prior to the Closing Date shall be deemed to be a Non-Accredited Investor.
“Non-Accredited Investor Cash Consideration” means the aggregate cash consideration payable to Non-Accredited Investors
pursuant to Section 4.1(a)(ii).
“Non-U.S. Benefit Plans” means any material employee benefit plan maintained by the
Company or any of its Subsidiaries, or to which the Company or any of its Subsidiaries contributes (or has an obligation to contribute) as of the date hereof, outside the United States of America primarily for the benefit of employees residing
outside the United States of America, but excluding any such plan sponsored in whole or in part by any government, governmental entity or union or employee organization or any other person other than the Company or any of its Subsidiaries.
“NYSE” means the New York Stock Exchange.
“Operating Company” has the meaning set forth in Section 5.3(a).
“Option Aggregate Cash Consideration” means the aggregate cash consideration payable to holders of Company Options (other
than Rollover Options, Forfeited Options and Company Options that are out-of-the-money) pursuant to Section 4.6(b).
9
“Option Proceeds” means the aggregate exercise price that would be payable to
the Company upon exercise of all Company Options that are outstanding immediately prior to the Effective Time (assuming that an amount in cash equal to the full exercise price of each Company Option were delivered to the Company, regardless of
whether the Company Option requires payment of an exercise price); provided, however, that any Company Option that is out- of-the-money, and any Forfeited Option shall be disregarded for purposes of this definition.
“Order” means any order, judgment, injunction, award, decision, determination, stipulation, ruling, subpoena, writ, decree or
verdict entered by or with any Governmental Authority.
“Ordinary Course of Business” means an action taken by a Person
that is taken in the ordinary course of such Person consistent with past practices.
“Organizational Documents” means any
charter, certificate of incorporation, articles of association, bylaws, operating agreement or similar formation or governing documents and instruments.
“Outside Date” has the meaning set forth in Section 9.1(a)(ii).
“Outstanding Stock” means, as of any date, the total number of shares of Company Common Stock outstanding as of such date
(which, for the avoidance of doubt, shall not include any Restricted Stock Units).
“Owned Company Intellectual Property”
means all Intellectual Property owned or co- owned by the Company or any of its Subsidiaries.
“Owned Real Property” has
the meaning set forth in Section 5.15(a).
“Parent” has the meaning set forth in the first paragraph of this
Agreement.
“Parent Arrangements” has the meaning set forth in Section 7.13.
“Parent Benefit Plans” has the meaning set forth in Section 7.8(b).
“Parent Common Stock” means the common stock, par value $0.001 per share, of Parent.
“Parent Disclosure Letter” means the disclosure letter delivered by Parent to the Company concurrently with the execution of
this Agreement.
“Parent Material Adverse Effect” means any change, effect, event, occurrence, state of facts or
development that, individually or in the aggregate with all other changes, effects, events, occurrences, state of facts and developments, (a) is or would reasonably be expected to be materially adverse to the business, results of operations or
financial condition of Parent and its Subsidiaries, taken as a whole, except to the extent that such change, effect, event, occurrence, state of facts or development results from, arises out of or is attributable to (i) changes in general
economic conditions, (ii) general financial or security market fluctuations or changes in conditions thereof, (iii) changes in or events affecting the industries in which Parent and its
10
Subsidiaries operate, (iv) any effect arising out of a change or proposed change in GAAP (or any authoritative interpretation thereof) or Applicable Law (or any authoritative interpretation
thereof), (v) the negotiation, execution, delivery, announcement or pendency of this Agreement and the transactions contemplated hereby (provided, however, that the exception in this clause (v) for the execution and delivery of
this Agreement shall not apply to Section 5.6), including any (x) litigation resulting therefrom and (y) change in customer, distributor, sales representative, employee, labor union, works council, supplier, financing source,
licensor, licensee, sub-licensee, stockholder, Governmental Authority or similar relationships, including as a result of the identity of the Company or Parent’s plans or intentions for the Company or any of its Subsidiaries or their respective
businesses or operations (or any portion thereof), (vi) any failure by Parent and its Subsidiaries to meet any estimates of revenues, earnings, other projections, budgets, plans or forecasts (provided, that unless otherwise excluded from the
definition of Parent Material Adverse Effect the underlying cause or causes of such failure may be taken into consideration when determining whether a Parent Material Adverse Effect has occurred), (vii) natural disasters or other force majeure
events, (viii) changes in local, national, international or other political, social or regulatory conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence
of any military or terrorist attack of any kind, or the worsening thereof, (ix) compliance by Parent and its Subsidiaries with the terms and conditions of this Agreement, (x) any change in the credit rating of Parent or any of its
Subsidiaries (provided, that unless otherwise excluded from the definition of Parent Material Adverse Effect, the underlying cause or causes of such change in credit rating may be taken into consideration when determining whether a Parent Material
Adverse Effect has occurred), (xi) any action taken by Parent or any of its Subsidiaries at the request or with the consent of the Company or any of its Affiliates or (xii) any relationship or activity subject to the National Labor
Relations Act or similar Applicable Law; provided, that, in the cases of the foregoing clauses (i) through (iv), (vii) and (viii), to the extent such changes do not have a materially disproportionate effect on Parent and its
Subsidiaries, taken as a whole, as compared to other participants in the same industry or (b) would prevent consummation of the transactions contemplated by this Agreement by Parent or Merger Sub.
“Parent Material Permit” has the meaning set forth in Section 6.9.
“Parent Released Claim” has the meaning set forth in Section 10.14.
“Parent Released Party” has the meaning set forth in Section 10.14.
“Parent Releasing Party” has the meaning set forth in Section 10.14.
“Parent Replacement Options” means those options to acquire shares of Parent Common Stock to be issued at Closing in exchange
for Rollover Options.
“Parent SEC Documents” has the meaning set forth in Section 6.4(a).
“Per Share Cash Amount” means, with respect to each share of Company Common Stock, the quotient of (a) the difference
between (i) the Aggregate Cash Consideration, minus (ii) the Option Aggregate Cash Consideration, minus (iii) the Restricted Stock Unit Aggregate Cash
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Consideration, minus (iv) the Non-Accredited Investor Aggregate Cash Consideration, minus (v) the Directors’ Deferred Compensation Cash Amount, divided by
(b) the difference between (x) the Outstanding Stock, minus (y) the number of shares of Company Common Stock held by Non-Accredited Investors, in each case, immediately prior to the Effective Time.
“Per Share Common Stock Merger Consideration” means, with respect to each share of Company Common Stock, each of (a) the
Per Share Cash Amount and (b) the Per Share Stock Amount.
“Per Share Common Stock Merger Consideration Cash Value”
means, with respect to each share of Common Stock, the quotient of (A) the sum of (i) the Aggregate Cash Consideration, plus (ii) the Option Proceeds, plus (iii) the product of (x) the difference between (1)
the Aggregate Stock Consideration, minus (2) the product of (I) the Rollover Stock Number, multiplied by (II) 25%, multiplied by (y) the Closing Parent Common Stock Price, divided by (B) the Fully-Diluted
Outstanding Stock immediately prior to the Effective Time.
“Per Share Stock Amount” means, with respect to each share of
Company Common Stock, the quotient of (a) the difference between (i) the Aggregate Stock Consideration, minus (ii) the Rollover Stock Number, divided by (b) the difference between (x) the Outstanding Stock,
minus (y) the number of shares of Company Common Stock held by Non-Accredited Investors, in each case, immediately prior to the Effective Time.
“Permit” means franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents,
concessions, registrations, clearances, exemptions, certificates, filings, notices, approvals and orders of any Governmental Authority necessary for a Person to own, lease and operate its properties or assets or to carry on its businesses as they
are now being conducted.
“Permitted Encumbrances” means (a) Encumbrances for Taxes, assessments and governmental
charges or levies not yet delinquent or which may hereafter be paid without penalty, or that are being contested in good faith through appropriate proceedings and for which adequate reserves are maintained on the Company Financial Statements;
(b) materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens, any statutory Encumbrances arising in the ordinary course of business by operation of applicable law with respect to a liability that is not yet
due or delinquent or being contested in good faith, and other similar liens arising in the ordinary course of business; (c) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure
public or statutory obligations; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the Ordinary Course
of Business; (e) all matters set forth in the title insurance policies for Owned Real Property, none of which materially and adversely interferes with the present use of, such real property; (f) Encumbrances (other than Encumbrances
securing indebtedness for borrowed money), defects or irregularities in title, easements, rights-of-way, covenants, restrictions, and other, similar matters that would not, individually or in the aggregate, reasonably be expected to materially
impair the continued use and operation of the assets to which they relate; (g) all applicable zoning, entitlement, conservation restrictions, building and similar codes and regulations and other land use regulations, none of which materially
detracts from the value of or materially and adversely interferes with the present use of, such real property; and (h) non-exclusive licenses to Intellectual Property granted in the Ordinary Course of Business.
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“Person” means any individual, corporation, company, partnership (limited or
general), joint venture, limited liability company, association, trust or other entity, or any Governmental Authority.
“Proceeding” means any action, claim, cause of action, demand, inquiry, audit, notice of violation, proceeding, citation,
summons, subpoena, arbitration, litigation, suit or investigation (whether civil, criminal, administrative or regulatory) by or before any Governmental Authority.
“Real Property” means the Leased Real Property and the Owned Real Property and all of the Company’s right, title and
interest in and to the buildings and improvements located thereon.
“Real Property Leases” has the meaning set forth in
Section 5.15(b).
“Regulatory Laws” has the meaning set forth in Section 5.20(a).
“Release” means any actual or threatened release, pumping, pouring, emptying, injecting, escaping, leaching, migrating,
dumping, seepage, spill, leak, flow, discharge, abandonment, disposal or emission into the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure,
facility or fixture).
“Representatives” means, with respect to any Person, its officers, directors, employees, counsel,
accountants, financial advisors, agents, consultants and other authorized representatives of such Person.
“Required
Amount” has the meaning set forth in Section 6.12.
“Required Foreign Filings” has the meaning set forth in
Section 5.6.
“Required Marketing Period Information” shall mean (a) audited consolidated balance sheets and
related audited statements of operations, statements of comprehensive loss, statement of stockholders’ equity and statement of cash flows of the Operating Company for each of the three most recently completed fiscal years that have ended at
least 90 days prior to the Closing Date and (b) unaudited consolidated balance sheets and related unaudited statements of operations, statements of comprehensive loss, statement of stockholders’ equity and statement of cash flows of the
Operating Company for each subsequent interim quarterly period that has ended at least 45 days prior to the Closing Date.
“Required Information” has the meaning set forth in Section 7.10(d).
“Restraint” has the meaning set forth in Section 8.1(a).
“Restricted Stock Unit” means either (i) the right to acquire a share of Company Common Stock upon the satisfaction of
the applicable vesting conditions or (ii) a share of Company Common Stock issued upon the satisfaction of such vesting conditions that remainssubject to a substantial risk of forfeiture pursuant to Section 83 of the Code and for which a
timely election under Section 83(b) of the Code has not been made.
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“Restricted Stock Unit Aggregate Cash Consideration” means the aggregate cash
consideration payable to holders of Restricted Stock Units pursuant to Section 4.6(d).
“Rollover Option Agreement”
means the agreements in the form attached hereto as Exhibit C entered into with the holders of Rollover Options.
“Rollover
Options” means the Company Options that will be exchanged for Parent Replacement Options pursuant to the Rollover Option Agreements.
“Rollover Stock Number” means the number of shares of Parent Common Stock that would be issued upon exercise of all Parent
Replacement Options immediately after the Effective Time.
“Runoff D&O Insurance” has the meaning set forth in
Section 7.7(b).
“Sarbanes Act” means the Sarbanes Oxley Act of 2002, as amended.
“Section 228 Notice” has the meaning set forth in Section 5.2.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Social Security Act” has the meaning set forth in Section 5.20(d).
“Sponsor” means each of Kohlberg Kravis Roberts & Co. L.P. and Bain Capital LLC.
“Stockholders Agreement” means the agreement to be entered into between Parent and certain stockholders of the Company in the
form attached hereto as Exhibit D.
“Subsidiaries” means, with respect to any Person, another Person, in which such first
Person (a) owns, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities, equity securities, profits interest or capital interest or (b) is entitled to elect at least a majority of the board of
directors, board of managers or similar governing body.
“Takeover Law” shall mean any “moratorium,”
“control share acquisition,” “business combination,” “fair price” or other form of anti-takeover laws of any jurisdiction or other Applicable Laws that purport to limit or restrict business combinations or the ability
to limit or restrict business combinations or the ability to acquire or to vote shares.
“Tax” or
“Taxes” means any and all taxes (whether federal, state, local or foreign), including, without limitation, income, gross receipts, profits, sales, use, occupation, value added, ad valorem, transfer, capital stock, franchise,
withholding, license, customs duty, payroll, employment, unemployment, social security, disability, registration, alternative or add-on minimum, estimated, excise, stamp, or property taxes, together with any interest, penalties or additions to tax
imposed with respect thereto.
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“Tax Returns” means returns, reports, schedules, forms and similar items
required to be filed with any Governmental Authority with respect to any Tax.
“Transfer” means to sell, transfer, lease,
pledge, mortgage, encumber or otherwise dispose of any property or assets (including stock or other ownership interests of subsidiaries).
“Transfer Taxes” has the meaning set forth in Section 7.11.
Section 1.2 Other Terms. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall
have such meaning throughout this Agreement.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL,
at the Effective Time, Merger Sub shall be merged with and into the Company, which shall be the surviving corporation (the “Surviving Corporation”) in the Merger, and the separate corporate existence of Merger Sub shall thereupon
cease. The separate corporate existence of the Company with all its properties, rights, powers, privileges, immunities and franchises shall continue unaffected by the Merger. At the Effective Time, the effect of the Merger shall be as provided in
this Agreement, the certificate of merger as contemplated by the DGCL (the “Certificate of Merger”) and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, powers, privileges, immunities 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.
Section 2.2 Closing. The closing of the transactions contemplated by
this Agreement (the “Closing”) shall take place (a) at the offices of Hodgson Russ LLP, 140 Pearl Street, Buffalo, New York 14202, commencing at 10:00 a.m. local time, on the third (3rd) Business Day after the date on
which all of the conditions set forth in ARTICLE VIII have been satisfied or, to the extent permitted by Applicable Law, waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or,
to the extent permitted by Applicable Law, waiver of those conditions) in accordance with this Agreement or (b) at such other location, date and time as Parent and the Company may agree upon in writing; provided, however, that
notwithstanding the foregoing, Parent shall not be required to effect the Closing until the earlier of: (a) a date during the Marketing Period specified by Parent on no less than three Business Days’ notice to the Company and (b) the
date that is one Business Day after the final day of the Marketing Period. The Closing may be consummated by exchanging documents using email, fax or overnight courier rather than at a physical location, if desired by Parent and the Company.
Section 2.3 Effective Time. Upon the terms and subject to the conditions set forth in this Agreement, as promptly as reasonably
practicable following the Closing on the Closing Date, the parties shall file the Certificate of Merger, together with any required related certificates, filings or recordings, with the Secretary of State of the State of Delaware, in such
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form as required by, and executed in accordance with, the relevant provisions of the DGCL. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such later date and time as the Company and Parent may agree upon and as is set forth in the Certificate of Merger (such time, the “Effective Time” and such date, the “Effective
Date”).
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1 Certificate of Incorporation. At the Effective Time, the Certificate of Incorporation of the Company, as the Surviving
Corporation, shall be amended and restated in its entirety to read as set forth on Exhibit E. As so amended and restated, the Certificate of Incorporation of the Company shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as permitted by Applicable Law, such Certificate of Incorporation and this Agreement (including Section 7.7).
Section 3.2 Bylaws. At the Effective Time, the Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall
be the Bylaws of the Surviving Corporation until thereafter amended as permitted by Applicable Law, such Bylaws and this Agreement (including Section 7.7).
Section 3.3 Directors and Officers. From and after the Effective Time, the directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation, in each case, until their respective successors have been
duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation.
ARTICLE IV
EFFECT ON
CAPITAL STOCK; PURCHASE PRICE
Section 4.1 Effect on Capital Stock.
(a) (i) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by an Accredited Investor
(other than any Cancelled Shares and Dissenting Shares or shares that remain outstanding pursuant to Section 4.1(d)) shall, by virtue of this Agreement and without any action on the part of the Company, Parent or Merger Sub or the holders of
any shares of Company Common Stock, be automatically converted into and shall thereafter represent the right to receive, upon the terms and subject to the conditions set forth in this Agreement, the Per Share Common Stock Merger Consideration.
(ii) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a Non-Accredited Investor
(other than any Cancelled Shares and Dissenting Shares or shares that remain outstanding pursuant to Section 4.1(d)) shall, by virtue of this Agreement and without any action on the part of the Company, Parent or Merger Sub or the holders of
any shares of Company Common Stock, be automatically converted into and shall thereafter represent the right to receive, upon the terms and subject to the conditions set forth in this Agreement, the Per Share Common Stock Merger Consideration Cash
Value.
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(b) From and after the Effective Time, all of the shares of Company Common Stock converted into
the right to receive the Per Share Common Stock Merger Consideration or the Per Share Common Stock Merger Consideration Cash Value, as applicable, pursuant to this ARTICLE IV shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate (each, a “Certificate”) previously representing any such shares of Company Common Stock (or uncertificated shares as reflected in the books and records of the
Company) shall thereafter cease to have any rights with respect to such securities, except the right to receive, upon the terms and subject to the conditions set forth in this Agreement, (i) the Per Share Common Stock Merger Consideration or
the Per Share Common Stock Merger Consideration Cash Value, as applicable, (ii) any dividends and other distributions in accordance with Section 4.2(h) and (iii) any cash to be paid in lieu of any fractional share of Parent Common
Stock in accordance with Section 4.3.
(c) If at any time during the period between the date of this Agreement and the Effective Time,
any change in the outstanding shares of capital stock of Parent shall occur by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon with a record date during
such period, or any similar event, the Per Share Common Stock Merger Consideration, the Per Share Common Stock Merger Consideration Cash Value and the consideration payable to holders of Company Options and Restricted Stock Units and to the
participants in the Directors’ Deferred Compensation Plan shall be appropriately adjusted to reflect such reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend thereon or similar
event and provide to the holders of Company Common Stock and holders of Company Options and Restricted Stock Units as of immediately prior to the Effective Time the same economic effect as contemplated by this Agreement prior to such event.
(d) At the Effective Time, all shares of Company Common Stock that are owned by Parent, Merger Sub, any Subsidiary of Parent or Merger Sub, or
held in treasury of the Company or owned by the Company (the “Cancelled Shares”) shall be automatically cancelled and retired without any conversion thereof and shall cease to exist and no payment shall be made in respect thereof;
provided, that each share of Company Common Stock that is owned by any direct or indirect wholly owned Subsidiary of the Company immediately prior to the Effective Time shall remain outstanding.
(e) Each issued and outstanding share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly issued, fully-paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation.
Section 4.2 Surrender and Payment.
(a) Promptly after the date hereof, Parent shall appoint an exchange agent reasonably acceptable to the Company or Parent’s transfer agent
(the “Exchange Agent”) for the purpose of exchanging Certificates (or uncertificated shares) representing shares of Company
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Common Stock for the Per Share Common Stock Merger Consideration or the Per Share Common Stock Merger Consideration Cash Value, as applicable, in accordance with this ARTICLE IV. As promptly as
reasonably practicable after the appointment of the Exchange Agent, Parent and the Company will develop and finalize a letter of transmittal (the “Letter of Transmittal”), which shall be in customary form and have such other
provisions as to which Parent and the Company may reasonably agree, including customary release language in substance comparable to Section 10.14 hereof and a provision requiring stockholders of the Company to certify whether such stockholder
is an Accredited Investor (which Letter of Transmittal shall specify that the delivery of the Per Share Common Stock Merger Consideration or the Per Share Common Stock Merger Consideration Cash Value, as applicable, shall be effected, and risk of
loss and title shall pass, only upon proper delivery of the Certificates (or, for holders of uncertificated shares, upon proper delivery of a fully executed Letter of Transmittal) to the Exchange Agent) for use in effecting delivery of shares of
Company Common Stock to the Exchange Agent. At or as promptly as reasonably practicable after finalizing such Letter of Transmittal, Parent shall cause the Exchange Agent to send to each holder of record of shares of Company Common Stock on the date
thereof, and from time to time thereafter as requested by Parent or the Company, a Letter of Transmittal, together with instructions for effecting the surrender of Certificates, as applicable, in exchange for the Per Share Common Stock Merger
Consideration or the Per Share Common Stock Merger Consideration Cash Value, as applicable.
(b) At or prior to the Effective Time, Parent
shall deposit, or shall cause to be deposited, with the Exchange Agent, in trust for the benefit of the holders of shares of Company Common Stock (other than any Cancelled Shares or shares remaining outstanding pursuant to Section 4.1(d)), for
exchange in accordance with this ARTICLE IV, evidence of book-entry shares or certificates (which shares of Parent Common Stock shall contain a customary restricted stock legend for unregistered shares until the six-month anniversary of the
Effective Time at which time Parent shall cause such legend to be removed provided the holder thereof is not then an Affiliate of Parent and provided further, that the holder thereof is not then a party to or bound by the Stockholders Agreement)
representing the number of shares of Parent Common Stock and an amount of cash, in each case, sufficient to pay to the holders of shares of Company Common Stock the Per Share Common Stock Merger Consideration and the Per Share Common Stock Merger
Consideration Cash Value (such certificates or book-entry shares for shares of Parent Common Stock and cash in Dollars, together with cash in lieu of fractional shares in accordance with Section 4.3 and any dividends or distributions with
respect to the shares of Parent Common Stock in accordance with Section 4.2(h), being hereinafter referred to as the “Exchange Fund”) payable pursuant to Section 4.1 in exchange for outstanding shares of Company Common
Stock. The Exchange Agent shall, pursuant to irrevocable instructions, deliver the Per Share Common Stock Merger Consideration and the Per Share Common Stock Merger Consideration Cash Value contemplated to be paid pursuant to Section 4.1 out of
the Exchange Fund. Parent agrees to make available to the Exchange Agent from time to time as needed, any cash in lieu of fractional shares of Parent Common Stock to be issued and paid in consideration therefor pursuant to Section 4.3 and any
dividends or distributions to which such holder is entitled pursuant to Section 4.2(h) of this Agreement. Except as specified in this Section 4.2, the Exchange Fund shall not be used for any other purpose.
(c) The Exchange Agent shall invest any cash included in the Exchange Fund as directed by Parent on a daily basis in (i) short-term direct
obligations of the United States of
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America with maturities of no more than 30 days or (ii) short-term obligations for which the full faith and credit of the United States of America is pledged to provide for payment of all
principal and interest; provided, that no gain or loss thereon shall affect the amounts payable to the holders of Company Common Stock pursuant to this ARTICLE IV. If for any reason (including losses) the cash in the Exchange Fund shall be
insufficient to fully satisfy all of the payment obligations to be made in cash by the Exchange Agent hereunder, Parent shall promptly deposit cash into the Exchange Fund in an amount which is equal to the deficiency in the amount of cash required
to fully satisfy such cash payment obligations.
(d) Upon the surrender of each such Certificate, if applicable, and a properly completed
and duly executed Letter of Transmittal at least two (2) Business Days prior to the Closing Date, the Exchange Agent shall, at the Effective Time, pay the holder of such shares of Company Common Stock the Per Share Common Stock Merger
Consideration or the Per Share Common Stock Merger Consideration Cash Value, as applicable, in consideration therefor, and such shares of Company Common Stock and any related Certificate shall forthwith be canceled. Upon the surrender of each such
Certificate, if applicable, and a properly completed and duly executed Letter of Transmittal any time after the date that is two (2) Business Days prior to the Closing Date, the Exchange Agent shall, no earlier than at the Closing and as soon
as reasonably practicable, pay the holder of such shares of Company Common Stock the Per Share Common Stock Merger Consideration or the Per Share Common Stock Merger Consideration Cash Value, as applicable, in consideration therefor, and such shares
of Company Common Stock and any related Certificate shall forthwith be canceled. No interest shall be paid or accrued on any Per Share Common Stock Merger Consideration, the Per Share Common Stock Merger Consideration Cash Value, cash payable in
lieu of fractional shares in accordance with Section 4.3 or dividends and other distributions in accordance with Section 4.2(h). Until so surrendered, each such Certificate (other than Certificates representing Cancelled Shares or shares
that remain outstanding pursuant to Section 4.1(d)) shall, after the Effective Time, represent for all purposes only the right to receive the Per Share Common Stock Merger Consideration or the Per Share Common Stock Merger Consideration Cash
Value, as applicable, cash payable in lieu of fractional shares in accordance with Section 4.3 and dividends and other distributions in accordance with Section 4.2(h).
(e) If payment of the Per Share Common Stock Merger Consideration or the Per Share Common Stock Merger Consideration Cash Value, as applicable,
is to be made to a Person other than the Person in whose name the applicable surrendered Certificate or uncertificated share is registered, it shall be a condition of such payment that the Person requesting such payment shall pay, or cause to be
paid, any transfer or other Taxes required by reason of the making of such cash payment to a Person other than the registered holder of the surrendered Certificate or uncertificated share, or required for any other reason relating to such holder or
requesting Person, or shall establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
(f) At the
Effective Time, the share transfer books of the Company shall be closed and thereafter, there shall be no further registration of Transfers of shares of Company Common Stock. From and after the Effective Time, the holders of Certificates (or
uncertificated shares) representing shares of Company Common Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares of Company Common
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Stock except the right to receive the consideration provided for, and in accordance with the procedures set forth, in this ARTICLE IV or as otherwise provided herein or by Applicable Law. If,
after the Effective Time, Certificates are presented to the Exchange Agent, the Surviving Corporation or Parent, such Certificates shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth,
in this ARTICLE IV.
(g) Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains undistributed to
the holders of shares of Company Common Stock one year after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged his, her or its shares of Company Common Stock for the Per Share Common Stock Merger
Consideration or Per Share Common Stock Merger Consideration Cash Value, as applicable, in accordance with this Section 4.2 prior to that time shall thereafter look only to Parent for delivery of the Per Share Common Stock Merger Consideration
or Per Share Common Stock Merger Consideration Cash Value, as applicable, in respect of such holder’s shares. Notwithstanding the foregoing, none of Parent, Merger Sub, the Company or the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for any Per Share Common Stock Merger Consideration or Per Share Common Stock Merger Consideration Cash Value, as applicable, or other amounts delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any portion of the Exchange Fund remaining unclaimed by holders of shares of Company Common Stock three years after the Effective Time (or such earlier date prior to such time as such amounts would otherwise escheat to or
become property of any Governmental Authority) shall, to the extent permitted by Applicable Law, become the property of Parent free and clear of any claims or interest of any Person previously entitled thereto.
(h) No dividends or other distributions with respect to shares of Parent Common Stock issued in the Merger shall be paid to the holder of any
unsurrendered Certificates until such Certificates (or uncertificated shares of Company Common Stock) are surrendered as provided in this Section 4.2. Following such surrender, subject to the effect of escheat, Tax or other Applicable Law,
there shall be paid, without interest, to the record holder of the shares of Parent Common Stock issued in exchange therefor (i) at the time of such surrender, all dividends and other distributions payable in respect of such shares of Parent
Common Stock with a record date after the Effective Time and a payment date on or prior to the date of such surrender and not previously paid and (ii) at the appropriate payment date, the dividends or other distributions payable with respect to
such shares of Parent Common Stock with a record date after the Effective Time but with a payment date subsequent to such surrender. For purposes of dividends or other distributions in respect of shares of Parent Common Stock, all shares of Parent
Common Stock to be issued pursuant to the Merger shall be entitled to dividends pursuant to the immediately preceding sentence as if issued and outstanding as of the Effective Time.
(i) Any portion of the consideration payable to holders of Company Common Stock deposited with the Exchange Agent pursuant to this
Section 4.2 to pay for Dissenting Shares for which appraisal rights shall have been perfected shall be returned to Parent upon the settlement or final and non-appealable adjudication of any claim for appraisal rights asserted with respect to
such Dissenting Shares.
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(j) The Per Share Common Stock Merger Consideration or the Per Share Common Stock Merger
Consideration Cash Value, as applicable, issued and paid to a holder of Company Common Stock upon conversion of the Company Common Stock in accordance with the terms hereof (including any cash paid pursuant to Section 4.2(h) or
Section 4.3) shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to such Company Common Stock.
Section 4.3 Fractional Shares.
(a) No fractional shares of Parent Common Stock shall be issued in the Merger, but in lieu thereof each holder of shares of Company Common
Stock otherwise entitled to a fractional share of Parent Common Stock will be entitled to receive, from the Exchange Agent in accordance with the provisions of this Section 4.3, a cash payment equal to the number of such fractional shares of
Parent Common Stock multiplied by the Closing Parent Common Stock Price. Fractional share interests will not entitle the owner thereof to vote or to any other rights (including the right to receive dividends or other distributions of Parent) of a
stockholder of Parent.
(b) As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of shares
of Company Common Stock in lieu of any fractional shares of Parent Common Stock, the Exchange Agent shall make available such amounts to such holders of shares of Company Common Stock without interest, subject to and in accordance with
Section 4.2.
Section 4.4 Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the Per Share Common Stock Merger Consideration or
Per Share Common Stock Merger Consideration Cash Value, as applicable, to be paid in respect of the shares of Company Common Stock represented by such Certificate as contemplated by this ARTICLE IV (including any cash payable in respect of such
shares in lieu of fractional shares in accordance with Section 4.3 and any dividends or distributions payable in accordance with Section 4.2(h)); provided, that the Person to whom such payments are made shall, as a condition
precedent to the payment thereof, indemnify Parent and the Surviving Company against any claim that may be made against Parent, Merger Sub or the Surviving Company with respect to the Certificate claimed to have been lost, stolen or destroyed.
Section 4.5 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, with respect to each share of Company
Common Stock as to which the holder thereof shall have properly complied with the provisions of Section 262 of the DGCL as to appraisal rights (each, a “Dissenting Share”), if any, such holder shall be entitled to payment,
solely from the Surviving Corporation, of the appraisal value of the Dissenting Shares to the extent permitted by and in accordance with the provisions of Section 262 of the DGCL; provided, however, that if any holder of
Dissenting Shares (a) under the circumstances permitted by and in accordance with the DGCL, affirmatively withdraws his, her or its demand for appraisal of such Dissenting Shares, (b) fails to establish his, her or its entitlement to
appraisal rights as provided in the DGCL or (c) takes or fails to take any action the consequence of which is that such holder is not
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entitled to payment of the appraisal value for his, her or its shares under the DGCL, such holder or holders (as the case may be) shall forfeit the right to appraisal of such shares of Company
Common Stock and such shares of Company Common Stock shall thereupon cease to constitute Dissenting Shares and such shares of Company Common Stock shall be deemed converted as of the Effective Time into the right to receive the Per Share Common
Stock Merger Consideration or the Per Share Common Stock Merger Consideration Cash Value, as applicable, as provided in this ARTICLE IV. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of shares of
Company Common Stock, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, (i) voluntarily make any payment with
respect to any demands for appraisal for Dissenting Shares, (ii) offer to settle any such demands, (iii) waive any failure to timely deliver a written demand for appraisal in accordance with the DGCL or (iv) agree to do any of the
foregoing.
Section 4.6 Treatment of Stock Options, Restricted Stock Units and Directors’ Deferred Compensation Plan
Shares.
(a) Prior to the Effective Time, the board of directors of the Company (or, if appropriate, any committee thereof) shall take
all actions necessary and appropriate to provide that, each option to purchase shares of Company Common Stock (a “Company Option”) shall become exercisable for a reasonable period of time prior to the Effective Time, provide written
notice to the holders of the Company Options at least 10 days prior to the Effective Time of the period to exercise the Company Option and that the Company Option will terminate and be of no further force and effect as of the Effective Time.
Notwithstanding the foregoing, an outstanding performance based Company Option not previously exercisable will be exercisable only as to the percentage of shares underlying such Company Option in accordance with the achievement by the
“Investor” of the Investor’s “Internal Rate of Return” targets set forth in the underlying award agreement evidencing such Company Option (as defined therein) taking into account the transactions contemplated under this
Agreement.
(b) Prior to the Effective Time, the board of directors of the Company (or, if appropriate, any committee thereof) shall take
all actions necessary and appropriate to provide that, immediately prior to the Effective Time, each Company Option, other than a Rollover Option or a Forfeited Option, granted under the equity incentive plans of the Company or under any and all
individual consultant, employee, director, independent contractor, independent sales personnel or distributor agreements (collectively, the “Company Stock Plans”), whether vested or unvested, that is outstanding immediately prior to
the Effective Time shall, as of the Effective Time, be cancelled and, in exchange therefor, each former holder of any such cancelled Company Option shall be entitled to receive, within five (5) Business Days following the Effective Date, in
consideration of the cancellation of such Company Option and in settlement therefor, a cash payment equal to the product of (i) the excess of (A) the Per Share Common Stock Merger Consideration Cash Value minus (B) the
applicable exercise price per share of Company Common Stock subject to such Company Option, multiplied by (ii) the number of shares of Company Common Stock subject to such Company Option, and no consideration shall be payable with
respect to any Company Option that is out-of-the money. Such payment shall be subject to any withholding or other taxes required by Applicable Law to be withheld.
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(c) Prior to the Closing, the board of directors of the Company (or, if appropriate, any
committee thereof) shall take all actions reasonably necessary and appropriate to provide that, immediately prior to the Effective Time, each outstanding performance-based Company Option set forth on Section 4.6(c) of the Company Disclosure
Letter and each Company Option which has an applicable exercise price per share of Company Common Stock greater than or equal to the Per Share Common Stock Merger Consideration Cash Value (each, a “Forfeited Option”) that is
outstanding immediately prior to the Effective Time shall, as of the Effective Time, be cancelled without the payment of any consideration therefor upon the Effective Time.
(d) Prior to the Closing, the board of directors of the Company (or, if appropriate, any committee thereof) shall take all actions necessary
and appropriate to provide that, immediately prior to the Closing, each Restricted Stock Unit that is outstanding immediately prior to the Effective Time shall be cancelled and, in exchange therefor, each former holder of any such Restricted Stock
Unit shall be entitled to receive, within five (5) Business Days following the Effective Date, in consideration of the cancellation of such Restricted Stock Unit and in settlement therefor, a cash payment equal to the Per Share Common Stock
Merger Consideration Cash Value. Such payment shall be subject to any withholding or other taxes required by Applicable Law to be withheld.
(e) Prior to the Closing, the board of directors of the Company (or, if appropriate, any committee thereof) shall take all actions necessary
and appropriate to provide that any shares of Company Common Stock to be issued to a participant in the Directors’ Deferred Compensation Plan entitled to distributions of amounts thereunder in connection with the consummation of the Merger who
has elected, in accordance with the terms thereof, to receive such amount in the form of shares of Company Common Stock shall have been issued prior to the Effective Time (and will be included in Outstanding Stock and subject to Section 4.1).
Prior to the Closing, the Company shall obtain a release (in form reasonably acceptable to Parent and Merger Sub) from each such participant acknowledging the cancellation of such participant’s rights under the Directors’ Deferred
Compensation Plan and releasing the Company and its Subsidiaries from any claims such participant may have to any equity ownership in the Company or its Subsidiaries, or payment of any amounts arising in connection therewith, other than the issuance
of Company Common Stock in accordance with this Section 4.6(e).
(f) As of the date hereof, the Company has entered into Rollover
Option Agreements to be effective as of the Closing with each holder of Rollover Options providing that the Rollover Options held by each such holder will be exchanged at the Closing for fully vested Parent Replacement Options set forth in the
applicable Rollover Option Agreement, that will retain the same aggregate spread value as the Rollover Options they were exchanged for, but shall have a per share exercise price equal to approximately 25% of the Closing Parent Common Stock Price
with the aggregate number of such Parent Replacement Options correspondingly reduced from the number of Rollover Options, and such Parent Replacement Options shall otherwise have the same terms and conditions as applied to the Rollover Option
immediately prior to the Closing (as such Rollover Options were amended to provide that the post-termination exercise period for such Rollover Options on any termination other than a termination for “Cause” (as defined in the applicable
award agreement) shall be the balance of the term of such Rollover Options). Notwithstanding the foregoing, the terms of each Rollover Option shall comply with the requirements of Code Section 409(A) and Treasury Regulation 1.409(A)-
1(b)(5)(v)(D).
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Section 4.7 Company Transaction Expenses and Funded Debt. Not less than three
Business Days prior to the Closing Date:
(a) the Company shall deliver to Parent a written notice (the “Company Transaction
Expenses Notice”), setting forth and representing in good faith to Parent the total amount of Company Transaction Expenses as of the Closing. The Company shall use its reasonable best efforts to have all Company Transaction Expenses
contained in the Company Transaction Expense Notice and shall update such notice, as necessary, one Business Day prior to Closing. The expenses set forth in the Company Transaction Expense Notice shall be subject to the Parent’s reasonable
review and the Company shall consult in good faith with Parent to resolve any disagreement relating to any such expense; provided, that in no event shall the parties’ obligations under Section 2.2 be affected by any such
disagreement. The Company Transaction Expenses Notice shall include payment instructions for each Company Transaction Expense due and payable to a third party listed therein and Parent shall pay all such Company Transaction Expenses on the Closing
Date; and
(b) the Company shall use its reasonable best efforts to deliver to Parent payoff letters as of the Closing Date that specify
the aggregate Funded Debt as of the Closing Date, and provide that any Encumbrances securing such Funded Debt shall be immediately discharged upon receipt by the lender or administrative agent for such Funded Debt of the amount of such Funded Debt
and that upon such receipt, (i) Parent or its legal counsel are authorized to file a termination of any financing statements filed by the lender relating to such Funded Debt and (ii) each lender or administrative agent, as applicable,
shall promptly execute such additional documents as are necessary to evidence the discharge of such Encumbrances. On behalf of the Surviving Corporation, at or prior to the Effective Time, Parent shall pay by wire transfer of immediately available
funds to the account or accounts designated in the relevant payoff letters the amounts set forth therein (including the Debt Payoff Amount and all Breakage Costs related thereto).
Section 4.8 Withholding Rights. Each of Parent, Merger Sub and the Surviving Corporation shall be entitled to deduct and withhold,
from any of the consideration otherwise payable to any Person pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to all of the consideration payable to such Person under any provision of federal, state,
local or foreign Tax law. To the extent that amounts are so deducted or withheld by Parent, Merger Sub or the Surviving Corporation, as the case may be, and paid over to the applicable Governmental Authority, such deducted or withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder of shares of Company Common Stock, Company Options or Restricted Stock Units, as applicable, in respect of which such deduction and withholding was made by Parent,
Merger Sub or the Surviving Corporation, as the case may be.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company Disclosure Letter (each section or subsection of the Company Disclosure Letter qualifies the Section or
subsection of this Agreement to which it corresponds in number and each other Section or subsection of this Agreement or the Company Disclosure Letter where its applicability to, relevance as an exception to, or disclosure for purposes of, such
other Section or subsection is reasonably apparent on its face), the Company hereby represents and warrants to Parent and Merger Sub as follows:
Section 5.1 Corporate Existence. Each of the Company and its Subsidiaries is an entity duly organized, validly existing and in
good standing (with respect to jurisdictions that recognize such concept) under the laws of its jurisdiction of organization with all requisite corporate power and authority to own, lease and operate its properties and assets as they are now being
owned, leased or operated and to carry on its business as presently conducted. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation or other legal entity and is in good standing (with respect to
jurisdictions that recognize such concept) in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of the business transacted by it requires it to be so qualified or in good standing, except where the
failure to be so qualified and in good standing would not have a Company Material Adverse Effect. The Company has made available to Parent complete copies of the Organizational Documents of the Company and each Significant Subsidiary (within the
meaning of Rule 1-02 of Regulation S-X promulgated under the Securities Act) of the Company as of the date hereof and as currently in effect, and the Company and each of its Subsidiaries is not in violation of any provisions of its Organizational
Documents in any material respect.
Section 5.2 Authorization. The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and, subject to adoption of this Agreement by the holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon (the “Company
Stockholder Approval”), the delivery of the notice required to be delivered by the Company pursuant to Section 228(e) of the DGCL (the “Section 228 Notice”) following receipt of the Company Stockholder Approval and the
filing of the Certificate of Merger pursuant to the DGCL, to consummate the transactions contemplated to be consummated by the Company hereby. Except for the approvals described in the following sentence, the execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the transactions contemplated to be consummated by the Company hereby have been duly and validly authorized by all necessary corporate action on behalf of the Company. No other
corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions to be consummated by the Company contemplated hereby, including the Merger, other than the Company Stockholder Approval, the
filing of the Certificate of Merger pursuant to the DGCL and the delivery of the Section 228 Notice following receipt of the Company Stockholder Approval. This Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by each other party hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles.
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Section 5.3 Company Financial Statements.
(a) Attached to Section 5.3(a) of the Company Disclosure Letter are accurate and complete copies of: (i) audited consolidated
financial statements of Accellent Inc. (the “Operating Company”) and its Subsidiaries for the years ended January 3, 2015, December 31, 2013 and December 31, 2012 (consisting of balance sheets, statements of
operations, statements of comprehensive loss, a statement of stockholders’ equity, and statements of cash flows) (the “Annual Financial Statements”); and (ii) unaudited interim consolidated financial statements for the
Operating Company and its Subsidiaries for the three months ended April 4, 2015 (consisting of a balance sheet and a statement of operations, loss and stockholders’ equity) (the “Interim Financial Statements” and together
with the Annual Financial Statements the “Company Financial Statements”). The balance sheet as of April 4, 2015 (the “Balance Sheet Date”) included in the Interim Financial Statements is hereinafter referred to
as the “Balance Sheet.”
(b) Each of the Company Financial Statements was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved and fairly presented in all material respects, as applicable, the consolidated financial position of the Operating Company and its Subsidiaries as of the respective dates thereof and the consolidated
results of the Operating Company’s and its Subsidiaries’ operations and cash flows for the periods indicated (except that the unaudited interim financial statements are subject to normal year end and quarter end adjustments which are not
expected to be material). The unaudited interim consolidated financial statements for the Operating Company and its Subsidiaries for the six months ended July 4, 2015 (consisting of a balance sheet and a statement of operations, loss and
stockholders’ equity) will be, when issued, prepared in accordance with GAAP applied on a consistent basis throughout the period involved and will, when issued, fairly present in all material respects, as applicable, the consolidated financial
position of the Operating Company and its Subsidiaries as of the respective dates thereof and the consolidated results of the Operating Company’s and its Subsidiaries’ operations and cash flows for the periods indicated (except that such
unaudited interim financial statements will be subject to normal year end and quarter end adjustments which are not expected to be material).
(c) The Company and its Subsidiaries have established and maintained systems of internal accounting controls with respect to their businesses
sufficient to provide reasonable assurances that (i) all transactions are executed in accordance with the general or specific authorization of the management of the Company, (ii) transactions are recorded as necessary to permit the
preparation of financial statements in conformity with GAAP and to maintain accountability for assets and (iii) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
Section 5.4 Absence of Changes or Events. Except as set forth in Section 5.4 of the
Company Disclosure Letter (other than with respect to clause (a)(ii)), (a) since the Balance Sheet Date (i) until the date of this Agreement the businesses of the Company and its Subsidiaries have been conducted only in the Ordinary Course
of Business in all material respects and (ii) there has
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not been a Company Material Adverse Effect and (b) since the Balance Sheet Date until the date of this Agreement, none of the Company or any of its Subsidiaries has taken any action, or
failed to take any action, that, if such action were to be taken after the date hereof and prior to the Closing Date, would constitute a breach of any of the covenants contained in sub-clauses (ii)(B), (iii), (iv) (but, in the case of clause
(iv), only with respect to incurrence of Funded Debt), (v), (viii), (x), (xii) or (xxi) of Section 7.1(b).
Section 5.5 Capitalization.
(a) Section 5.5(a)(i) of the Company Disclosure Letter sets forth for the Company its authorized capital stock and the amount of its
outstanding capital stock as of the date of this Agreement. Section 5.5(a)(ii) of the Company Disclosure Letter sets forth for each Subsidiary of the Company the percentage of capital stock or other equity interests of each such Subsidiary
directly or indirectly owned by the Company as of the date of this Agreement. Except as set forth in Section 5.5(a)(ii) of the Company Disclosure Letter, there are no shares of capital stock of or equity interests in a Subsidiary of the Company
issued, reserved for issuance or outstanding. All of the outstanding capital stock or other equity interests of each of the Company and its Subsidiaries have, to the extent applicable, been duly authorized and validly issued and are fully paid and
non-assessable. All of the outstanding capital stock or other equity interests of each of the Company’s Subsidiaries are owned by the Company or another Subsidiary of the Company free and clear of all Encumbrances (other than Permitted
Encumbrances).
(b) Section 5.5(b) of the Company Disclosure Letter contains a complete and correct list, as of the date of this
Agreement, of (i) each holder of Company Common Stock, including the number of shares of Company Common Stock held by such holder, and (ii) each holder of Restricted Stock Units, Company Options and awards under the Directors’
Deferred Compensation Plan, specifying, on a holder-by-holder basis (A) the name of each holder and (B) the number of shares of Company Common Stock subject to each such award. Except as set forth in Section 5.5(b) of the Company
Disclosure Letter, as of the date of this Agreement, none of the Company or any of its Subsidiaries has outstanding, or is bound by, any subscription, option, warrant, restricted stock units or other right, call, or commitment to issue, or any
obligation or commitment to purchase or redeem, any of its authorized capital stock or other equity interests or any securities convertible into or exercisable or exchangeable for any of its authorized capital stock or other equity interests. Except
as set forth in Section 5.5(b) of the Company Disclosure Letter, (i) there are no outstanding or authorized equity equivalents, restricted stock awards, restricted stock units, leveraged share awards, stock appreciation, phantom stock,
dividend equivalent rights, profit participation, or other equity awards of the Company or any of its Subsidiaries, and (ii) there are no voting trusts, stockholder agreements, proxies, or other similar Contracts with respect to the voting of
the capital stock or other voting equity interest of the Company or any of its Subsidiaries to which the Company or any of its Subsidiaries is a party.
(c) Except (x) as set forth in Section 5.5(c)(i) of the Company Disclosure Letter, (y) for the interests in the Subsidiaries of
the Company and (z) for marketable securities and similar interests none of the Company or any of its Subsidiaries owns any material direct or indirect equity or other ownership interest in any Person or has any obligation to make any
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material investment (in the form of a capital contribution or otherwise) in any Person. Except as set forth in Section 5.5(c)(ii) of the Company Disclosure Letter, as of the date of this
Agreement, none of the Company or any of its Subsidiaries has any Funded Debt.
Section 5.6 Consents and Approvals. Neither
the execution, delivery, and performance of this Agreement by the Company nor the consummation of the transactions contemplated hereby by the Company will require any consent, approval, authorization or permit of, or filing with or notification to,
any Governmental Authority, except (a) for applicable requirements, if any, of state securities or “blue sky” laws, the notification requirements of the HSR Act or the Competition Laws set forth in Section 5.6 of the Company
Disclosure Letter (the “Required Foreign Filings”), (b) consents, approvals, authorizations, permits, filings or notifications as may arise in connection with the Financing or as a result of facts or circumstances relating to
Parent or its Affiliates or Applicable Laws or Contracts binding on Parent or its Affiliates, (c) the filing and recordation of the Certificate of Merger as required by the DGCL and delivery of the Section 228 Notice following receipt of
the Company Stockholder Approval or (d) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not have a Company Material Adverse Effect.
Section 5.7 No Violations. Except as set forth in Section 5.7 of the Company Disclosure Letter, neither the execution,
delivery, and performance of this Agreement by the Company nor the consummation of the transactions contemplated to be consummated by the Company hereby will (a) contravene or violate any Applicable Law to which the Company or any of its
Subsidiaries is subject or by which any of their respective properties or assets are bound (assuming all authorizations, approvals, consents, registrations and filings contemplated in Section 5.6 have been obtained or made, as applicable),
(b) violate or conflict with any provision of the Organizational Documents of the Company or any of its Subsidiaries, (c) violate, conflict with, result in the breach of or default under, or an event that, with or without notice or lapse
of time or both, would constitute a default under, or require the consent of any other party to, any Real Property Lease or Material Contract to which the Company or any of its Subsidiaries is a party or any Material Permit held by the Company or
any of its Subsidiaries or by which any of their respective assets or properties are bound or give any other party to such Real Property Lease or Material Contract the right to terminate, amend, cancel or accelerate the rights or obligations of the
Company or any of its Subsidiaries thereunder, or result in the loss of any benefit of the Company or any of its Subsidiaries under any Real Property Lease or Material Contract to which the Company or any of its Subsidiaries is a party or any
Material Permit held by the Company or any of its Subsidiaries or by which any of their respective assets or properties are bound, or (d) result in the creation or imposition of any Encumbrance (other than any Permitted Encumbrance) upon or
with respect to any of the properties or assets of the Company or any of its Subsidiaries, other than in the case of clauses (a), (b) (with respect to the Company’s Subsidiaries), (c) and (d), for any violation, conflict, breach,
default, consent, termination, amendment, cancellation, acceleration, loss of benefits or Encumbrances which would not have a Company Material Adverse Effect.
Section 5.8 Litigation. Except as set forth in Section 5.8 of the Company Disclosure Letter or as would not have a Company
Material Adverse Effect (a) none of the Company or any of its Subsidiaries is a party to any pending Proceeding or, to the Knowledge of the Company, any threatened Proceeding, and (b) none of the Company or any of its Subsidiaries is
subject to any Order of, settlement agreement or other similar written agreement with, any Governmental Authority under which the Company or any such Subsidiary has any outstanding obligations.
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Section 5.9 Affiliate Agreements. Section 5.9 of the Company Disclosure Letter
lists all agreements and transactions to which the Company or any of its Subsidiaries, on the one hand, and any Affiliate of the Company (other than the Company or its Subsidiaries), any immediate family member of such Affiliate or any holder of
more than 5% of the Company Common Stock, on the other hand, are parties (each, an “Affiliate Agreement”) other than employee agreements and agreements entered into under any Benefit Plan (which shall not be deemed Affiliate
Agreements). No Affiliate of the Company (other than the Company or its Subsidiaries) or stockholder of the Company owns any material asset used by the Company or any of its Subsidiaries in their respective businesses.
Section 5.10 Compliance with Laws; Permits. Except as would not have a Company Material Adverse Effect, (a) each of the
Company and its Subsidiaries is and has been since January 1, 2013 in compliance with, and not in violation of, any Applicable Law applicable to the Company or such Subsidiary or Contract to which a Governmental Authority (other than in its
capacity as a customer of the Company or any of its Subsidiaries or otherwise in its capacity as a commercial actor) and the Company or such Subsidiary is a party or by which any of the assets or properties of the Company or any of its Subsidiaries
is bound or Permit that is held by the Company or any such Subsidiaries (each a “Company Permit”) and (b) since January 1, 2013 through the date of this Agreement, none of the Company or any of its Subsidiaries has
received written notice alleging any violations of any Applicable Law, Company Permit or Contract with a Governmental Authority (other than in its capacity as a customer of the Company or any of its Subsidiaries or otherwise in its capacity as a
commercial actor) applicable to the Company or any such Subsidiary or by which any of their respective assets or properties are bound. Each of the Company and its Subsidiaries holds all Company Permits and all such Company Permits are valid and in
full force and effect, except for such Company Permits the failure of which to hold or to be valid or in full force and effect would not have a Company Material Adverse Effect. Since January 1, 2013, none of the Company or any of its
Subsidiaries has received any written notice of any Proceeding before any Governmental Authority threatening the validity, revocation, withdrawal, suspension, cancellation or modification of a Material Permit, and no such Proceeding before any
Governmental Authority is pending or to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries, except for such Company Permits that if invalid, revoked, withdrawn, suspended, canceled or modified would not have a
Company Material Adverse Effect. Notwithstanding anything contained in this Section 5.10, no representation or warranty shall be deemed to be made in this Section 5.10 in respect of compliance with ERISA, the Foreign Corrupt Practices Act,
Environmental Laws, Food and Drug Laws, Health Care Laws or Applicable Laws governing Taxes, employee benefits or the employment of labor, which are contained in other Sections of this Agreement.
Section 5.11 Absence of Undisclosed Liabilities. The Company and its Subsidiaries do not have any liabilities, whether accrued,
absolute, contingent, direct or indirect or otherwise, except for liabilities (a) disclosed, reflected or accrued on or reserved against in the Balance Sheet, (b) arising in the Ordinary Course of Business since the Balance Sheet Date,
(c) which would not have a Company Material Adverse Effect, individually or in the aggregate, or (d) incurred in connection with this Agreement or the transactions contemplated hereby. The
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Company, Accellent Holdings Corp. and Accellent Acquisition Corp. have never had business operations, have been and are non-operating holding companies and have no separate assets or liabilities
of any nature other than the Company’s ownership of outstanding shares of Accellent Holdings Corp., Accellent Holdings’ ownership of the outstanding shares of Accellent Acquisition and Accellent Acquisition’s ownership of the
outstanding shares of the Operating Company.
Section 5.12 Material Contracts.
(a) Except for this Agreement and the Real Property Leases, Section 5.12 of the Company Disclosure Letter sets forth as of the date of
this Agreement each written Contract to which the Company or any of its Subsidiaries is a party to or bound by as of the date of this Agreement, of the type described in any of the following clauses (collectively, the “Material
Contracts”):
(i) any Contract (other than between or among (x) the Company and its wholly owned Subsidiaries or
(y) wholly owned Subsidiaries of the Company) relating to outstanding Indebtedness pursuant to which the Company or any of its Subsidiaries is liable or obligated for an amount in excess of Eight Million Dollars ($8,000,000);
(ii) any Contract that (A) restricts the Company or any of its Subsidiaries from participating or competing in any line of business,
market or geographic area, (B) contains most favored customer pricing provisions in favor of the counterparty of the Company or Company Subsidiary or (C) provides for “exclusivity” or any similar requirement or “most favored
nation” or similar rights in favor of the counterparty of the Company or any Company Subsidiary, in the case of each of sub clauses (A), (B) and (C), that is material to the businesses of the Company and its Subsidiaries, taken as a whole,
except for any such Contract (x) that may be canceled without any material payment by the Company or any such Subsidiary upon notice of ninety (90) or fewer days, (y) between the Company and any of its Subsidiaries, on the one hand, and a
distributor or sales agent, sales representative or similar Person, on the other hand or (z) between or among (1) the Company and its wholly owned Subsidiaries or (2) wholly owned Subsidiaries of the Company);
(iii) any joint venture, partnership, joint research, joint development or joint marketing or similar Contract (other than between or among
(x) the Company and its wholly owned Subsidiaries or (y) wholly owned Subsidiaries of the Company), in each case, that is material to the businesses of the Company and its Subsidiaries, taken as a whole;
(iv) any Contract (A) that is a master supply agreement with any of the top ten (10) customers (determined by revenue) of the
Company and its Subsidiaries and (B) with any of the top ten (10) raw material suppliers (determined by the cost of items purchased) of the Company and its Subsidiaries, in each case on a consolidated basis for the twelve-month period
ended December 31, 2014, other than any customer, distribution or sales Contract in a form substantially similar to the form of any such agreement made available to Parent;
(v) any license (other than between or among (x) the Company and its wholly owned Subsidiaries or (y) wholly owned Subsidiaries of
the Company) that is material to
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the business of the Company and its Subsidiaries, taken as a whole, pursuant to which the Company or any of its Subsidiaries has (A) acquired the right to use any Intellectual Property from
any third party (but excluding licenses for commercially available software or software-as- a-service), or (B) granted to any third party any license to use any Owned Company Intellectual Property, other than, in the case of each of sub-clauses
(A) and (B), licenses or grants of rights ancillary to commercial agreements (including manufacturing, customer, supply, distribution, retail, development, marketing and similar agreements) entered into in the Ordinary Course of Business;
(vi) any Contract (other than between or among (x) the Company and its wholly owned Subsidiaries or (y) wholly owned Subsidiaries of
the Company) with respect to (A) a merger, acquisition or disposition of capital stock or other equity interest of any Person or (B) an acquisition or disposition of assets of any Person, in each case, for aggregate consideration in excess of Five
Million Dollars ($5,000,000) (other than any Contract relating to a transaction that has been consummated or terminated without any material continuing obligations or liabilities);
(vii) any Collective Bargaining Agreements; or
(viii) any Contract under which payments by or to the Company or any of its Subsidiaries were made in excess of $2,500,000 for the
twelve-month period ended December 31, 2014 and under which the Company or any of its Subsidiaries has any “take or pay” or minimum purchase obligation, in each case, that is material to the businesses of the Company and its
Subsidiaries, taken as a whole, except for any such Contract that may be canceled without any payment by the Company or any such Subsidiary upon notice of ninety (90) or fewer days.
(b) (i) Each Material Contract is in full force and effect and constitutes the legal, valid and binding obligation of the Company and its
Subsidiaries party thereto, as applicable, and, to the Knowledge of the Company, of each other party thereto, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles, (ii) none of the Company or any of its Subsidiaries party to or, to the Knowledge of the Company, any
other party to a Material Contract is in default under or in breach or violation in any material respect of any such Material Contract, (iii) there has not occurred any event or events that, with notice or lapse of time or both, would
constitute a default, breach or violation in any material respect by the Company or any of its Subsidiaries or, to the Knowledge of the Company, any other party, under any Material Contract and (iv) none of the Company or any of its
Subsidiaries has received any written claim or notice of default, termination or cancellation under any Material Contract (other than a notice of termination or cancellation upon the expiration or lapse of a Material Contract in accordance with the
terms thereof). A true, correct and complete copy of each written Material Contract has been made available to Parent; provided, however, that the Company may redact any competitively sensitive information from any such copy.
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Section 5.13 Employee Benefit Matters.
(a) Section 5.13(a) of the Company Disclosure Letter lists each “employee benefit plan,” as defined in Section 3(3) of
ERISA, and all other material employee benefit, employment, pension, retention, bonus, incentive, equity incentive, deferred compensation, stock purchase, stock option, severance, change in control, medical and other welfare and fringe benefit
plans, agreements, contracts, schemes, programs, funds, commitments or arrangements, whether written or oral, qualified or nonqualified, funded or unfunded, which provide compensation or benefits to any current or former employee, director, officer,
consultant, independent contractor, independent sales personnel or distributor of the Company or any of its Subsidiaries in the United States and (i) which are maintained or contributed to or required to be maintained or contributed to by the
Company or any of its Subsidiaries, (ii) to which the Company or any of its Subsidiaries is a party or (iii) to which the Company or any of its Subsidiaries may otherwise have any liability (contingent or otherwise), in each case other
than Non-U.S. Benefit Plans (collectively, the “Benefit Plans”). With respect to each Benefit Plan, the Company has made available to Parent a true and complete copy of the following, to the extent applicable: (A) the most
recent summary plan description for each Benefit Plan for which a summary plan description is required; (B) such Benefit Plan, and each trust, annuity contract, insurance contract or other funding arrangement and administrative services
agreement relating to such Benefit Plan; (C) the most recent annual report (Form 5500) for each Benefit Plan for which such report is required to be filed; (D) the most recent actuarial report for each Benefit Plan for which such a report
is required under ERISA; (E) the most recent determination letter issued by the IRS with respect to each Benefit Plan intended to qualify under Section 401(a) of the Code; (F) the most recent coverage and nondiscrimination test
performed under the Code (including 401(k) and 401(m) tests); (G) all other filings made with any Governmental Authority during the prior three years, including, but not limited to, any filings under the Voluntary Compliance Resolution or
Closing Agreement Program, the Department of Labor Delinquent Filer Voluntary Compliance Program, or the Department of Labor Voluntary Fiduciary Correction Program.
(b) Each Benefit Plan has been operated in all material respects in accordance with its terms, Applicable Laws, and any other applicable
instruments. The Company or its Subsidiaries have made all required contributions under each Benefit Plan on a timely basis or, if not yet due or if an unfunded Benefit Plan, adequate accruals therefore have been provided for in the Company
Financial Statements. Each Benefit Plan intended to be qualified under Section 401(a) of the Code, and the trust (if any) forming a part thereof, has received a favorable determination letter from the IRS and, to the Knowledge of the Company,
no events or omissions have occurred that would adversely affect the qualified status of any Benefit Plan. There are no Proceedings by a Governmental Authority or claims (other than routine claims for benefits) pending or, to the Knowledge of the
Company, threatened against the Benefit Plans, or any administrator or fiduciary thereof, which could result in any material liability to the Company or any of its Subsidiaries. Each Benefit Plan which is a “nonqualified deferred compensation
plan” (within the meaning of Section 409A of the Code) is, or will prior to Closing be, in documentary compliance with and has been operated and administered in compliance with Section 409A of the Code and any proposed and final
guidance under Section 409A of the Code. Each Company Option was granted with an exercise price that was not less than the fair market value of the underlying common stock on the date the Company Option was granted based upon a reasonable
valuation method.
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(c) Except as set forth in Section 5.13(c) of the Company Disclosure Letter, none of the
Company or any of its Subsidiaries nor any of their ERISA Affiliates has maintained, contributed to, or otherwise has had any liability (contingent or otherwise) in the past six years with respect to any plans that are subject to Title IV of ERISA.
None of the Company or any of its Subsidiaries nor any of their ERISA Affiliates has in the past six years maintained, been a participating employer, contributed to, or had any obligation to contribute to, or has had in the past six years any
liability (contingent or otherwise) with respect to any multiemployer plan (as defined in Section 3(37) or Section 4001(a)(3) of ERISA or Section 414(f) of the Code).
(d) None of the Company or any of its Subsidiaries has any material liability in respect of, or obligation to provide, post-employment welfare
benefits (including health, medical or life insurance) for former employees of the Company or any of its Subsidiaries except (i) continuation coverage required under Section 4980B of the Code, (ii) coverage or benefits the entire cost of
which is borne by the former employee (or eligible dependents or beneficiaries) or (iii) coverage or benefits under the Benefit Plans.
(e)
Except as set forth in Section 5.13(e) of the Company Disclosure Letter, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby or thereby, will (either alone or together with any other event)
(i) constitute a stated triggering event under any Benefit Plan that will result in any payment (whether of severance pay or otherwise) becoming due to any employee of the Company or any of its Subsidiaries, (ii) result in an increase in
the amount of compensation or benefits or the acceleration of the vesting or timing of payment of any compensation or benefits payable to or in respect of any employee of the Company or any of its Subsidiaries, (iii) cause any individual to
accrue or receive additional benefits, services or accelerated rights to payment of benefits under any Benefit Plan, (iv) directly or indirectly cause the Company or any of its Subsidiaries to transfer or set aside any assets to fund or otherwise
provide for benefits for any individual, (v) trigger or impose any restrictions or limitations on the right of the Company or any of its Subsidiaries to amend or terminate any Benefit Plan, or (vi) result in the payment of any amount that
could, individually or in combination with any other such payment, constitute an “excess parachute payment,” as defined in Section 280G(b)(1) of the Code.
(f) Except as would not result in or reasonably be expected to result in a material liability to the Company or any of its Subsidiaries, none
of the Company or any of its Subsidiaries nor any of their ERISA Affiliates nor any of their employees, members, managers, stockholders or directors has engaged in any transaction in connection with which any of them would be subject either to a
civil penalty assessed pursuant to Section 502 of ERISA or a Tax imposed by Section 4975 of the Code.
(g) Section 5.13(g)
of the Company Disclosure Letter lists each Non-U.S. Benefit Plan. Each Non-U.S. Benefit Plan is in compliance in all material respects with Applicable Law and has been administered and operated in all material respects in accordance with its terms.
To the Knowledge of the Company, each Non-U.S. Benefit Plan that is intended to qualify for special tax treatment meets the requirements for such treatment and no event has
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occurred and no condition exists that would reasonably be expected to result in the loss or revocation of such status. Except as would not result in or reasonably be expected to result in a
material liability to the Company or any of its Subsidiaries: (i) none of the Company or any of its Subsidiaries, nor, to the Knowledge of the Company, any other person has breached any fiduciary duty under Applicable Law with respect to any
Non-U.S. Benefit Plan, (ii) no claim, action or litigation has been made, commenced or, to the Knowledge of the Company, threatened in writing with respect to any Non-U.S. Benefit Plan (other than routine claims for benefits payable in the
ordinary course, and appeals of such denied claims), (iii) each Non-U.S. Benefit Plan that provides for pension benefits is funded in compliance with all Applicable Laws and (iv) to the Knowledge of the Company, each Non-U.S. Benefit Plan
required to be registered with applicable Governmental Authorities has been so registered and has been maintained in good standing with the applicable Governmental Authorities.
Section 5.14 Environmental Matters. Except as set forth in Section 5.14 of the Company Disclosure Letter or as would not have
a Company Material Adverse Effect:
(a) the Company and its Subsidiaries are, and since January 1, 2013 have been in compliance with
Environmental Laws, and have obtained, and are in compliance with, all Permits required of them under any Environmental Law;
(b) to the
Knowledge of the Company, no transfers of any Permits issued under any Environmental Law, and no consents necessary for such transfer of any Permit under any Environmental Law, will be required to permit Parent to conduct the business and operations
of the Company and its Subsidiaries, in compliance with all applicable Environmental Laws as of the Closing Date;
(c) since
January 1, 2013, none of the Company or any of its Subsidiaries has received any written notice or demand letter (i) regarding any Release or threatened Release of Hazardous Substances or (ii) alleging any violation of any
Environmental Law or the terms or conditions of any environmental Permit, in each case which matter remains unresolved;
(d) there are no
Proceedings pending, or, to the Knowledge of the Company, threatened in writing before or by any Governmental Authority, against the Company or any of its Subsidiaries with respect to any violation of any Environmental Law or any terms or conditions
of any environmental Permit;
(e) none of the Company or any of its Subsidiaries has assumed, by Contract or operation of Applicable Law,
any obligation or liability of any other Person under any Environmental Law, or is subject to any Order under any Environmental Law; and
(f) as of the date of this Agreement, to the Knowledge of the Company, no facts, circumstances or conditions exist with respect to any real
property at any time owned, leased or operated by the Company or any of its Subsidiaries or with respect to the past or present business or operations of the Company or any of its Subsidiaries which would reasonably be expected to give rise to
liability under any Environmental Law.
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Section 5.15 Property and Assets.
(a) Section 5.15(a) of the Company Disclosure Letter sets forth a correct and complete list of all real property owned in fee by the
Company or any of its Subsidiaries as of the date of this Agreement (the “Owned Real Property”). The Company and its Subsidiaries have good and marketable fee simple title, as applicable, in and to the Owned Real Property, free and
clear of all Encumbrances, other than Permitted Encumbrances, and enjoy peaceful and undisturbed possession of the Owned Real Property. As of the date of this Agreement, to the Knowledge of the Company, no condemnation, requisition or taking by any
public authority has been threatened in writing or contemplated, and the Company has not received any written notice of any such condemnation, requisition or taking by a Governmental Authority with respect to the Owned Real Property. Except for this
Agreement, (i) none of the Owned Real Property is subject to any commitment for sale and (ii) except as would not have a Company Material Adverse Effect, the buildings and material improvements on the Owned Real Property (including,
without limitation, the heating, air conditioning, mechanical, electrical and other systems used in connection therewith) are in a reasonable state of repair (normal wear and tear excepted).
(b) Section 5.15(b) of the Company Disclosure Letter sets forth a correct and complete list of all leases, subleases, rental or occupancy
agreements with respect to any Real Property to which the Company or any of its Subsidiaries is a party as of the date hereof, whether as landlord or as tenant under which the base annual rental payments exceed $500,000 (collectively, “Real
Property Leases”). Each Real Property Lease represents, as of the date of this Agreement, the entire agreement between the tenants and the landlords thereunder with respect to the respective leasehold demised by a Real Property Lease (each,
a “Leased Real Property”). Correct and complete copies of each Real Property Lease have been made available to Parent. Except as set forth on Section 5.15(b) of the Company Disclosure Letter or as would not have a Company
Material Adverse Effect, (i) the Company and its Subsidiaries that are tenants have good and valid leasehold interests in the Leased Real Property, free and clear of all Encumbrances, other than Permitted Encumbrances, (ii) each Real
Property Lease is in full force and effect and constitutes the legal, valid and binding obligation of the Company and its Subsidiaries, as applicable, and, to the Knowledge of the Company, of each other party thereto, enforceable in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles and
(iii) none of the Company or any of its Subsidiaries and, to the Knowledge of the Company, no other party to a Real Property Lease is in default under or in breach of any such Real Property Lease, there has not occurred any event or events
which, with the lapse of time or the giving of notice, or both, would constitute a default by the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any other party under any such Real Property Leases.
(c) Except (x) as would not have a Company Material Adverse Effect or (y) as disposed of after the date hereof in the Ordinary Course
of Business or in accordance with Section 7.1(b)(xi), each of the Company and its Subsidiaries has valid title to, or valid leasehold or sublease interests or other comparable contract rights in, all of its tangible properties and assets that
do not constitute real property and that are owned or leased by it and necessary for the conduct of its business as currently conducted, free and clear of all Encumbrances, other than Permitted Encumbrances.
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Section 5.16 Employment and Labor.
(a) Except as would not have a Company Material Adverse Effect, the Company and its Subsidiaries (i) are and, since January 1, 2013,
have been in compliance with all Collective Bargaining Agreements and all Applicable Laws related to the employment of labor, including those related to wages, hours, classification, immigration, health, safety and collective bargaining, and
(ii) are not and, since January 1, 2013, have not been engaged in any unfair labor practice.
(b) (i) None of the Company or any
of its Subsidiaries is subject to any pending, or to the Knowledge of the Company, threatened, (x) to the knowledge of the Company, union organizing or election activity or (y) strikes, slowdowns, work stoppages, unfair labor practice
charges or collective labor disputes, and (ii) no such strikes, slowdowns, work stoppages, unfair labor practice charges or collective labor disputes have occurred since January 1, 2013.
Section 5.17 Insurance. Section 5.17 of the Company Disclosure Letter lists each material insurance policy maintained by or
on behalf of the Company or its Subsidiaries and a copy of each such policy has been made available to Parent prior to the date hereof. Except as would not have a Company Material Adverse Effect, (a) each material insurance policy covering the
Company or any of its Subsidiaries is in full force and effect and (b) none of the Company or any of its Subsidiaries is in breach or default (including any such breach or default with respect to the payment of premiums or the giving of
notice), and no event has occurred which, with notice or the lapse of time or both, would constitute such a breach or default under, or permit termination or modification by the insurer of, any such insurance policy. As of the date of this
Agreement, there is no claim pending under such insurance policies as to which coverage has been questioned, denied or disputed by the insurers under such insurance policies, except for such claims which would not have a Company Material Adverse
Effect. To the Knowledge of the Company, as of the date of this Agreement, there has been no threatened termination of any of such insurance policies by any insurer thereunder, each of the Company and its Subsidiaries is, and since January 1,
2013 has been, insured with respect to its assets and properties and the conduct of its business in such amounts and against such risks as are in its reasonable judgment sufficient for compliance with Applicable Law and as are adequate to protect
its assets and properties and the conduct of its business.
Section 5.18 Intellectual Property Matters.
(a) Section 5.18(a)(i) of the Company Disclosure Letter contains a correct and complete list of all registrations and applications for
Owned Company Intellectual Property.
(b) Except as would not have a Company Material Adverse Effect, the Company and its Subsidiaries
solely own or co-own, or have a valid license to use, all of the Company Intellectual Property free and clear of all Encumbrances, other than Permitted Encumbrances.
(c) Except as would not have a Company Material Adverse Effect, to the Knowledge of the Company, (i) all Company Registered Intellectual
Property is valid, subsisting
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and enforceable and (ii) none of the Company Registered Intellectual Property is the subject of any Proceeding or other challenge before any Governmental Authority to the validity,
subsistence or enforceability of such Company Registered Intellectual Property except in connection with the prosecution in the Ordinary Course of Business of applications before the United States Patent and Trademark Office or any equivalent
Governmental Authority.
(d) Except as would not have a Company Material Adverse Effect, to the Knowledge of the Company, the use or
practice of the Company Intellectual Property in the conduct of the business of the Company and its Subsidiaries as currently conducted (including in such conduct of the business, the sale of products of the Company or any of its Subsidiaries) does
not infringe, misuse, violate or constitute misappropriation of any Intellectual Property of any other Person. Except as would not have a Company Material Adverse Effect, there are no Proceedings pending alleging the infringement, misuse, violation,
or misappropriation of any Intellectual Property of any other Person by the Company or any of its Subsidiaries. Except as would not have a Company Material Adverse Effect, since January 1, 2013, none of the Company or any of its Subsidiaries
has received any written notice of any such infringement, misuse, violation, or misappropriation, nor, to the Knowledge of the Company, are any Proceedings threatened in writing alleging any such infringement, misuse, violation, or misappropriation,
other than with respect to any such claim that has been satisfactorily resolved.
(e) Except as would not have a Company Material Adverse
Effect, to the Knowledge of the Company, no Person is infringing upon, misusing, violating, or misappropriating any Owned Company Intellectual Property.
(f) With respect to each item of Company Registered Intellectual Property, payment of all necessary registration, maintenance, annuities and
renewal fees in connection with such Company Registered Intellectual Property has been made as necessary in accordance with Applicable Law, for the purpose of maintaining the registration of such Company Registered Intellectual Property, except as
would not have a Company Material Adverse Effect.
(g) Except as would not have a Company Material Adverse Effect, to the Knowledge of the
Company, no employee, independent contractor or agent of each of the Company and its Subsidiaries is in default or breach of any employment agreement, non- disclosure agreement, assignment of invention agreement, or similar agreement or policy, in
each case relating to non-disclosure or assignment of Owned Company Intellectual Property.
(h) Except as would not have a Company Material
Adverse Effect, the Company and its Subsidiaries own or have a valid lease or license to use all computer systems, networks, hardware, middleware, firmware, servers, software, databases, websites and equipment used to process, store, maintain and
operate data, information, and functions to the extent used in connection with the Company’s and its Subsidiaries’ business operations (the “Company IT Systems”), and such Company IT Systems perform as reasonably required
in connection with the operation of the business of the Company and its Subsidiaries as now being conducted. Except as would not have a Company Material Adverse Effect, the Company and its Subsidiaries have implemented commercially reasonable
back-up, security and disaster recovery measures.
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(i) Except as would not have a Company Material Adverse Effect, since January 1, 2013:
(i) the Company and its Subsidiaries are complying and have complied with all applicable statutes and regulations relating to privacy, data protection, and the collection and use of personal information; (ii) none of the Company or any of
its Subsidiaries has received any written notice of any Proceeding alleging a violation of such statutes or regulations nor, to the Knowledge of the Company, is any such Proceeding threatened against the Company or any of its Subsidiaries; and
(iii) to the Knowledge of the Company, there has been no loss or breach of security of personally identifiable information maintained by or on behalf of the Company or any of its Subsidiaries.
Section 5.19 Taxes.
(a) Except as would not have a Company Material Adverse Effect, all Tax Returns for all periods ending on or before the Closing Date that are
or were required to be filed by, or on behalf of, the Company and its Subsidiaries have been or will be filed on a timely basis. Except as would not have a Company Material Adverse Effect, all such Tax Returns are true, correct and complete.
(b) Except as would not have a Company Material Adverse Effect, the Company and its Subsidiaries have timely paid, or made provision for the
timely payment of, all Taxes due and payable, except such Taxes, if any, that are being contested in good faith and as to which adequate reserves have been provided in accordance with the requirements of GAAP. Except as would not have a Company
Material Adverse Effect, where payment for a Tax of the Company or its Subsidiaries is not yet due, the charges, accruals and reserves with respect to Taxes on the books of the Company and its Subsidiaries are adequate in accordance with the
requirements of GAAP. None of the Company or any of its Subsidiaries has given or is subject to any waiver or extension of a statute of limitations with respect to any material Tax.
(c) All material Taxes that the Company and its Subsidiaries are or were required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the appropriate Governmental Authority.
(d) There are no tax sharing agreements
or similar arrangements (other than such an agreement or arrangement exclusively between or among the Company and its Subsidiaries), including indemnification agreements or arrangements, that will require that any material payment be made by the
Company and its Subsidiaries on or after the Closing Date with respect to Taxes imposed on any Person other than the Company and its Subsidiaries; provided, however, that this paragraph (d) shall not include any Tax payable
pursuant to any agreement or arrangement entered into in the Ordinary Course of Business of the Company and its Subsidiaries.
(e) Except
as would not have a Company Material Adverse Effect, none of the Company or any of its Subsidiaries has (i) agreed to or are required to make any adjustment pursuant to Section 481(a) of the Code, (ii) knowledge that the IRS has
proposed any such adjustment or change in accounting method with respect to the Company or any of its Subsidiaries or (iii) an application pending with any Governmental Authority requesting permission for any change in accounting method, in
each case, that would increase the Company’s or any of its Subsidiaries’ liability for Taxes in a taxable period or portion thereof beginning after the Closing Date.
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(f) The Company is not a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code.
(g) None of the Company or any of its Subsidiaries will be required to include any item of material
income or gain in, or be required to exclude any material item of deduction of loss from, any period ending after the Closing Date as a result of any (i) closing or similar agreement with any taxing authority executed on or prior to the Closing
Date, (ii) installment sale or open transaction made on or prior to the Closing Date, (iii) election under Section 108(i) of the Code or (iv) prepaid amount received prior to the Closing Date.
(h) As of the date of this Agreement, no written claim has been made by any Governmental Authority in a jurisdiction where the Company and its
Subsidiaries do not file a Tax Return, either separately or as a member of an affiliated, combined, unitary, consolidated or similar group of corporations, that the Company and its Subsidiaries, either separately or as a member of an affiliated,
combined, unitary, consolidated or similar group of corporations, is or may be subject to a material amount of Tax in that jurisdiction.
Section 5.20 Regulatory Compliance. Except as disclosed in Section 5.20 of the Company Disclosure Letter:
(a) As to each product subject to the Federal Food, Drug, and Cosmetic Act, as amended (including the rules and regulations promulgated
thereunder, the “FDCA”), or similar Applicable Laws in any foreign jurisdiction (the FDCA and such similar Applicable Laws, collectively, the “Regulatory Laws”) that is developed, manufactured, tested, distributed
or marketed by the Company or any of its Subsidiaries (or, for purposes of Section 6.14, developed, manufactured, tested, distributed or marketed by Parent or any of its Subsidiaries, in each case as the context so requires, a “Medical
Device”), each such Medical Device is being developed, manufactured, tested, distributed or marketed in compliance with all applicable requirements under the Regulatory Laws, including those relating to investigational use, premarket
clearance or marketing approval to market a Medical Device, good manufacturing practices, labeling, advertising, record keeping, filing of reports and security, except for failures to be in compliance that would not have a Company Material Adverse
Effect. As of the date of this Agreement, none of the Company or any of its Subsidiaries has received any written notice from the Federal Food and Drug Administration (the “FDA”) or any other Governmental Authority that remains
uncured and unresolved (i) contesting the premarket clearance or approval of, the uses of or the labeling and promotion of any products of the Company or any of its Subsidiaries or (ii) otherwise alleging any material violation of any
Regulatory Law applicable to any Medical Device.
(b) (i) Since January 1, 2013, no Medical Device has been recalled, withdrawn,
suspended, seized or discontinued (other than for commercial or other business reasons) by the Company or any of its Subsidiaries in the United States or outside the United States (whether voluntarily or otherwise), except for a recall, withdrawal,
suspension, seizure or discontinuation that would not have a Company Material Adverse Effect and (ii) to the
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Company’s Knowledge, none of the actions described in the immediately preceding clause (i) is under consideration with respect to any Medical Device. As of the date of this Agreement,
there is no Proceeding against the Company or any of its Subsidiaries in the United States or outside of the United States seeking the recall, withdrawal, suspension, seizure or discontinuance of any Medical Device.
(c) The Company and its Subsidiaries are in compliance with all applicable registration and listing requirements set forth in Sec. 510 of the
FDCA (21 U.S.C. § 360) and 21 C.F.R. Part 807 and all other Regulatory Laws, except for failures to be in compliance that would not have a Company Material Adverse Effect.
(d) None of the Company or any of its Subsidiaries, nor, to the Knowledge of the Company, any officer, employee or agent of the Company or any
of its Subsidiaries, has made an untrue statement of a material fact or fraudulent statement to the FDA, failed to disclose a material fact required to be disclosed to the FDA, or committed an act, made a material statement, or failed to make a
material statement that, at the time such disclosure was made, would reasonably be expected to provide a basis for the FDA or any other Governmental Authority to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery,
and Illegal Gratuities”, set forth in the FDA’s Compliance Policy Guide, Section 120.100 (CPG 7150.09). None of the Company or any of its Subsidiaries, nor, to the Knowledge of the Company, any officer, employee or agent of the
Company or any of its Subsidiaries, has been convicted of any crime or engaged in any conduct for which debarment is mandated by Sec. 306 of the FDCA (21 U.S.C. § 335a(a)) or authorized by Sec. 306 of the FDCA (21 U.S.C. § 335a(b)). None
of the Company or any of its Subsidiaries nor, to the Knowledge of the Company, any officer, employee or agent of the Company or any of its Subsidiaries, has been convicted of any crime or engaged in any conduct for which such Person or entity could
be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act of 1935, as amended (the “Social Security Act”).
(e) Since January 1, 2013 through the date of this Agreement, none of the Company or any of its Subsidiaries has received any written
notice that the FDA or any other Governmental Authority has commenced, or threatened to initiate, any action to (i) withdraw its approval of any Medical Device, (ii) enjoin production of any Medical Device or (iii) enjoin the
production of any Medical Device produced at any facility where any Medical Device is manufactured, tested or packaged.
Section 5.21
Foreign Corrupt Practices Act.
(a) None of the Company or any of its Subsidiaries, any of their respective officers or employees,
or, to the Knowledge of the Company, any supplier, distributor, licensee or agent or any other Person acting on behalf of the Company or any of its Subsidiaries, directly or indirectly, has, since January 1, 2013, (i) made or offered to
make or received any direct or indirect payments in material violation of any Applicable Law (including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010), including any contribution, payment, commission, rebate, promotional
allowance or gift of funds or property or any other economic benefit or thing of value to or from any employee, official or agent of any Governmental Authority where either the contribution, payment, commission, rebate, promotional allowance,
40
gift or other economic benefit or thing of value, or the purpose thereof, was illegal in any material respect under any Applicable Law (including the United States Foreign Corrupt Practices Act),
or (ii) provided or received any product or services in material violation of any Applicable Law (including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010). There are no pending internal investigations by the Company or
any of its Subsidiaries and, to the Knowledge of the Company, no pending Proceedings, in each case, regarding any action or any allegation of any action described above in this Section 5.21(a).
(b) The operations of the Company and its Subsidiaries are and have been conducted at all times since January 1, 2013 in compliance in all
material respects with applicable financial recordkeeping, reporting and internal control requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “Money Laundering Laws”). No Proceeding by or before any
Governmental Authority that is material to the Company and its Subsidiaries with respect to the Money Laundering Laws is pending or, to the Knowledge of the Company, threatened, nor, to the Knowledge of the Company, is any investigation by or before
any Governmental Authority involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws pending or threatened.
(c) None of the Company or any of its Subsidiaries nor any of their respective Representatives or Affiliates (nor any Person or entity acting
on behalf of any of the foregoing) is currently subject to any material sanctions administered by the Office of Foreign Assets Control of the United States Department of the Treasury. No Proceeding by or before any Governmental Authority that is
material to the Company and its Subsidiaries with respect to any such sanctions is pending or, to the Knowledge of the Company, threatened, nor, to the Knowledge of the Company, is any investigation by or before any Governmental Authority involving
the Company or any of its Subsidiaries with respect to any such sanctions pending or threatened.
Section 5.22 State Takeover
Statutes. Prior to the date of this Agreement, the Company and its board of directors have taken all action necessary to exempt under or make not subject to (i) the provisions of Section 203 of the DGCL, (ii) any other applicable
Takeover Law or (iii) any provision of the Organizational Documents of the Company and its Subsidiaries that would require any corporate approval other than that otherwise required by the DGCL or other Applicable Law, each of the execution of
this Agreement, the Merger and any of the other transactions contemplated by this Agreement. The Company does not have in effect any “poison pill” or shareholder rights plan.
Section 5.23 No Brokers. No broker, investment banker or finder is entitled to any brokerage or finder’s fee or other
commission from the Company or any of its Subsidiaries in connection with the transactions contemplated by this Agreement.
Section 5.24 No Additional Representations. Except as otherwise expressly set forth in this ARTICLE V, neither the Company nor any
of its Subsidiaries, nor any other Person acting on their behalf, makes any representations or warranties of any kind or nature, express or implied, in connection with the transactions contemplated by this Agreement, including any
41
representations or warranties with respect to any projections, forecasts, estimates or budgets of future revenues, future results of operations or future financial condition (or any component
thereof) of any of the Company or any of its Subsidiaries
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as disclosed in the Parent Disclosure Letter (each section or subsection of the Parent Disclosure Letter qualifies the Section or
subsection of this Agreement to which it corresponds in number and each other Section or subsection of this Agreement or the Parent Disclosure Letter where its applicability to, relevance as an exception to, or disclosure for purposes of, such other
Section or subsection is reasonably apparent on its face), Parent and Merger Sub hereby jointly and severally represent and warrant to the Company as follows:
Section 6.1 Corporate Existence. Each of Parent and its Subsidiaries is an entity duly organized, validly existing and in good
standing (with respect to jurisdictions that recognize such concept) under the laws of its jurisdiction of organization with all requisite corporate power and authority to own, lease and operate its properties and assets as they are now being owned,
leased or operated and to carry on its business as presently conducted. Each of Parent and its Subsidiaries is duly qualified to do business as a foreign corporation or other legal entity and is in good standing (with respect to jurisdictions that
recognize such concept) in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of the business transacted by it requires it to be so qualified or in good standing, except where the failure to be so
qualified and in good standing would not have a Parent Material Adverse Effect. Parent has made available to Company complete copies of the Organizational Documents of Parent and each of its Subsidiaries as of the date hereof and as currently in
effect, and none of Parent and its Subsidiaries is in violation of any provisions of such Organizational Documents in any material respect.
Section 6.2 Authorization. Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on behalf of Parent and Merger Sub. No other corporate proceedings on the part of Parent and Merger Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, including the Merger, other than the filing of the Certificate of Merger pursuant to the DGCL. No vote of the holders of any class or series of capital stock or other equity interests
or securities of Parent or any of its Subsidiaries is necessary to adopt this Agreement or consummate any of the transactions contemplated by this Agreement, including the issuance of the shares of Parent Common Stock to be issued in the Merger.
This Agreement has been duly and validly executed and delivered by Parent and Merger Sub, as applicable, and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Parent and
Merger Sub, enforceable against Parent and Merger Sub, as applicable, in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors’ rights or by general equity principles.
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Section 6.3 Absence of Changes or Events. Since December 31, 2014,
(i) until the date of this Agreement, the businesses of Parent and its Subsidiaries have been conducted in the Ordinary Course of Business in all material respects and (ii) there has not been a Parent Material Adverse Effect.
Section 6.4 Parent SEC Documents.
(a) Since January 1, 2013, Parent has filed with, or furnished to, as applicable, the Commission all registration statements,
prospectuses, reports, forms, statements, schedules, certifications and other documents required to be filed by Parent with the Commission (together with all exhibits and schedules thereto and all information incorporated therein by reference,
collectively, the “Parent SEC Documents”). As of their respective dates, or if amended, as of the date of the last such amendment, the Parent SEC Documents (i) complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the Sarbanes Act (to the extent applicable) and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in the Parent SEC Documents, including each Parent SEC Document filed after the date hereof until the Closing, (i) complied, as of their respective dates of filing with
the Commission, in all material respects with the published rules and regulations of the Commission with respect thereto, (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and
(iii) fairly presented in all material respects, as applicable, the consolidated financial position of Parent and its Subsidiaries as of the respective dates thereof and the consolidated results of Parent’s and its Subsidiaries’
operations and cash flows for the periods indicated.
(c) Parent maintains a system of internal accounting controls sufficient to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Parent has (A) reasonably designed disclosure controls and procedures (within the
meaning of Rules 13a- 15(e) and 15d-15(e) of the Exchange Act) to ensure that material information is made known to the Chief Executive Officer and the Chief Financial Officer of Parent and (B) disclosed, based on its most recent evaluation
prior to the date of this Agreement, to its auditors and the audit committee of its board of directors (1) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined
in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect in any material respect its ability to record, process, summarize and report financial data and (2) any fraud, whether or not material, that involves
management or other employees who have a significant role in its internal controls.
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(d) There are no unresolved comments in comment letters received from the Commission staff with
respect to the Parent SEC Documents filed or furnished on or prior to the date hereof.
Section 6.5 Capitalization of Parent and
Merger Sub.
(a) Section 6.5(a)(i) of the Parent Disclosure Letter sets forth Parent’s authorized capital stock, the amount
of its outstanding capital stock and the number of shares of its capital stock subject to, and reserved for issuance in connection with, equity incentive plans of Parent, in each case, as of the date which is two Business Days prior to the date of
this Agreement. Except as set forth in Section 6.5(a)(ii) of the Parent Disclosure Letter, as of the date of this Agreement, there are no shares of capital stock, or equity interests in, a Subsidiary of Parent issued, reserved for issuance or
outstanding. All of the outstanding capital stock or other equity interests of each of Parent and its Subsidiaries have been duly authorized and validly issued and, to the extent applicable, are fully paid and non-assessable. Except as described in
Parent’s quarterly report on Form 10-Q filed with the SEC on August 11, 2015 (the “Latest SEC Report”), all of the outstanding capital stock or other equity interests of each of Parent’s Subsidiaries are owned by
Parent or another Subsidiary of Parent, free and clear of all Encumbrances, other than Permitted Encumbrances.
(b) Except as set forth in
Section 6.5(b) of the Parent Disclosure Letter, as of the date which is two Business Days prior to the date of this Agreement, none of Parent or any of its Subsidiaries has outstanding, or is bound by, any subscription, option, warrant,
restricted stock units, or other right, call, or commitment to issue, or any obligation or commitment to purchase or redeem, any of its authorized capital stock or other equity interests or any securities convertible into or exercisable or
exchangeable for any of its authorized capital stock or other equity interests. Except as set forth in Section 6.5(b) of the Parent Disclosure Letter, (i) there are no outstanding or authorized equity equivalents, restricted stock awards,
restricted stock units, leveraged share awards, stock appreciation, phantom stock, dividend equivalent rights, profit participation, or other equity awards of Parent or any of its Subsidiaries, and (ii) there are no voting trusts, stockholder
agreements, proxies, or other similar Contracts with respect to the voting of the capital stock of Parent or any of its Subsidiaries to which Parent or any of its Subsidiaries is a party.
(c) As of the date of this Agreement, the authorized capital stock of Merger Sub consists of 3,000 shares of common stock, par value $0.01 per
share, all of which shares are validly issued and outstanding. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, owned by Parent or a direct or indirect wholly owned Subsidiary of Parent. Merger Sub
has not conducted any business prior to the date hereof and has no, and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the
Merger and the other transactions contemplated by this Agreement.
(d) The shares of Parent Common Stock to be issued pursuant to the
Merger in accordance with ARTICLE IV will be duly authorized, validly issued, fully paid and non- assessable and not subject to, or issued in violation of, any purchase option, call option, right of first refusal, preemptive rights, subscription
right or any similar right created by Applicable Law,
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Parent’s Organizational Documents or any Contract to which Parent or any of its Subsidiaries is a party or is bound. Such shares will be issued in material compliance with all applicable
state and federal Laws concerning the issuance of securities.
Section 6.6 Consents and Approvals. Neither the execution,
delivery, and performance of this Agreement by Parent or Merger Sub nor the consummation of the transactions contemplated hereby by Parent or Merger Sub will require any consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, except (a) for applicable requirements, if any, of state securities or “blue sky” laws, the notification requirements of the HSR Act or the Required Foreign Filings, (b) the filing and recordation of
the Certificate of Merger as required by the DGCL, (c) the applicable requirements of the Exchange Act and the New York Stock Exchange, (d) consents, approvals, authorizations, permits, filings or notifications as a result of facts and
circumstances relating to the Company or its Affiliates or Applicable Laws or Contracts binding on the Company or its Affiliates, or (e) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not have a Parent Material Adverse Effect.
Section 6.7 No Violations. Neither the execution, delivery,
and performance of this Agreement by Parent or Merger Sub nor the consummation of the transactions contemplated hereby by Parent or Merger Sub, as applicable, will (a) contravene or violate any Applicable Law to which Parent or any of its
Subsidiaries is subject or by which any of their respective properties or assets are bound (assuming all authorizations, approvals, consents, registrations and filings contemplated in Section 6.6 have been obtained or made, as applicable),
(b) violate or conflict with any provision of the Organizational Documents of Parent or any of its Subsidiaries, (c) violate, conflict with, result in the breach of or default under, or an event that, with or without notice or lapse of time or
both, would constitute a default under, or require the consent of any other party to, any material Contract to which Parent or any of its Subsidiaries is a party or any Parent Material Permit held by Parent or any of its Subsidiaries or by which any
of their respective assets or properties are bound or give any other party to such material Contract or Parent Material Permit the right to terminate, amend, cancel or accelerate the rights or obligations of Parent or any of its Subsidiaries
thereunder, or result in the loss of any benefit of Parent or any of its Subsidiaries under any material Contract to which Parent or any of its Subsidiaries is a party or any Parent Material Permit held by Parent or any of its Subsidiaries or by
which any of their respective assets or properties are bound, or (d) result in the creation or imposition of any Encumbrance (other than any Permitted Encumbrance) upon or with respect to any of the properties or assets of Parent or any of its
Subsidiaries, other than in the case of clauses (a), (b) (with respect to Parent’s Subsidiaries), (c) and (d), for any violation, conflict, breach, default, consent, termination, amendment, cancellation, acceleration, loss of benefits
or Encumbrances which would not have a Parent Material Adverse Effect.
Section 6.8 Litigation. Except as would not have a
Parent Material Adverse Effect or as disclosed in the Latest SEC Report, (a) none of Parent or any of its Subsidiaries is a party to any pending Proceeding or, to the Knowledge of Parent, any threatened Proceeding, and (b) none of Parent
or any of its Subsidiaries is subject to any Order of, settlement agreement or other similar written agreement with, any Governmental Authority under which Parent or any such Subsidiary has any outstanding obligations.
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Section 6.9 Compliance with Laws; Permits. Except as would not have a Parent Material
Adverse Effect, each of Parent and its Subsidiaries is and has been since January 1, 2013 in compliance with and not in violation of any Applicable Law applicable to Parent or such Subsidiary or Contract to which a Governmental Authority (other
than in its capacity as a customer of Parent or any of its Subsidiaries or otherwise in its capacity as a commercial actor) and Parent or such Subsidiary is a party or by which any of the assets or properties of Parent or any of its Subsidiaries is
bound or Permit that is held by Parent or any of its Subsidiaries that is material to Parent and its Subsidiaries, taken as a whole (a “Parent Material Permit”) and (b) since January 1, 2013, none of Parent or any of its
Subsidiaries has received written notice alleging any violations of any Applicable Law, Parent Material Permit or Contract with a Governmental Authority (other than in its capacity as a customer of Parent or any of its Subsidiaries or otherwise in
its capacity as a commercial actor) applicable to Parent or any such Subsidiary or by which any of their respective assets or properties are bound. Each of Parent and its Subsidiaries holds all Parent Material Permits and all such Permits are valid
and in full force and effect, except for such Parent Material Permits the failure of which to hold or to be valid or in full force and effect would not have a Parent Material Adverse Effect. Since January 1, 2013 through the date of this
Agreement, none of Parent or any of its Subsidiaries has received any written notice of any Proceeding before any Governmental Authority threatening the validity, revocation, withdrawal, suspension, cancellation or modification of a Parent Material
Permit, and no such Proceeding before any Governmental Authority is pending or to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries, except for such Parent Material Permits that if invalid, revoked, withdrawn, suspended,
cancelled or modified would not have a Parent Material Adverse Effect.
Section 6.10 Absence of Undisclosed Liabilities.
Parent and its Subsidiaries do not have any liabilities, whether accrued, absolute, contingent, direct or indirect or otherwise, except for liabilities (a) disclosed, reflected or accrued on or reserved against in the audited or unaudited
financial statements of Parent contained in the Parent SEC Documents filed or furnished to the Commission prior to the date of this Agreement, (b) arising in the Ordinary Course of Business since the date of the most recent balance sheet
contained in the Latest SEC Report, (c) which would not have a Parent Material Adverse Effect or (d) incurred in connection with this Agreement or the transactions contemplated hereby.
Section 6.11 Taxes.
(a) Except as would not have a Parent Material Adverse Effect, all Tax Returns that were required to be filed by, or on behalf of, Parent and
its Subsidiaries have been filed on a timely basis. All such Tax Returns are true, correct and complete in all material respects.
(b)
Except as would not have a Parent Material Adverse Effect, each of Parent and its Subsidiaries have timely paid, or made provision for the timely payment of, all Taxes due and payable, except such Taxes, if any, that are being contested in good
faith, have not been finally determined and as to which adequate reserves have been provided in accordance with the requirements of GAAP. Where payment for a Tax of Parent or its Subsidiaries is not yet due, the charges, accruals and reserves with
respect to such Tax on the books of Parent and its Subsidiaries are adequate in accordance with the requirements of GAAP, except as would not
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have a Parent Material Adverse Effect. None of Parent or any of its Subsidiaries has given or is subject to any waiver or extension of a statute of limitations with respect to any material Tax.
There are no disputes pending, or claims asserted, for Taxes or assessments upon Parent or any of its Subsidiaries for which Parent does not have reserves that are adequate in accordance with the requirements of GAAP.
Section 6.12 Availability of Funds. Parent has delivered to the Company a true and complete copy of an executed commitment letter
among Greatbatch Ltd., Manufacturers and Traders Trust Company, Credit Suisse AG, Credit Suisse Securities (USA) LLC, and Credit Suisse AG, KeyBank National Association and KeyBanc Capital Markets Inc. (such parties, other than Greatbatch Ltd.,
collectively, the “Debt Providers”), including all exhibits, schedules and annexes thereto, and the Fee Letter referred to (and as defined) therein (which Fee Letter shall be redacted with respect to fees, pricing caps, “market
flex” provisions and other terms (other than any terms affecting conditionality) in a manner reasonably acceptable to the Debt Providers) regarding the terms of the debt financing to be provided thereby (collectively, the “Commitment
Letter”), pursuant to which certain of the Debt Providers have committed to provide, subject to the terms and conditions set forth therein, debt financing in the amounts set forth therein (the “Debt Financing”). The Commitment
Letter is (A) in full force and effect and represents a legal, valid and binding obligation of Parent and, to the Knowledge of Parent, each of the other parties thereto and (B) enforceable in accordance with its terms against Parent and,
to the Knowledge of Parent, each of the other parties thereto, in each case except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Applicable Laws of general application affecting
enforcement of creditors’ rights or by principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). None of the respective obligations and commitments contained in the Commitment Letter have been
withdrawn, terminated or rescinded in any respect, and no such amendment, modification, withdrawal, termination or rescission is contemplated by Parent or, to the Knowledge of Parent, by any other party thereto. Assuming the accuracy of the
representations and warranties of the Company set forth herein, no event has occurred which (with or without notice or lapse of time, or both) would or would reasonably be expected to constitute a default or breach or a failure to satisfy a
condition precedent on the part of Parent or, to the Knowledge of Parent, any other parties thereto under the Commitment Letter. There are not, and there are not contemplated to be, any side letters or other contracts or arrangements related to the
Debt Financing other than as expressly contemplated by the Commitment Letter delivered to the Company at or prior to the execution and delivery of this Agreement and other than any related engagement letters. There are no conditions precedent
related to the funding of the full amount of the Debt Financing other than those expressly set forth in the Commitment Letter as in effect on the date hereof. Parent has no reason to believe that, (i) it or any other party thereto will be
unable to satisfy on a timely basis any term of the Commitment Letter, (ii) any of the conditions precedent to the Debt Financing will not be satisfied or (iii) the Debt Financing will not be made available to Parent on the Closing Date.
Parent has fully paid any and all commitment fees or other fees in connection with the Commitment Letter that are payable on or prior to the date hereof, and will pay in full any such amounts due on or before the Closing Date. Subject to the terms
and conditions of the Commitment Letter, subject to the terms and conditions of this Agreement, and assuming that the Debt Financing is funded in accordance with the Commitment Letter, Parent has, or will have at Closing, sufficient funds for Parent
and Merger Sub to consummate the transactions contemplated hereby, including to (1) pay the Aggregate Cash
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Consideration, (2) pay the Debt Payoff Amount, (3) pay the Company Transaction Expenses, and (4) satisfy all of the other payment obligations of Parent and Merger Sub contemplated by
this Agreement (such amounts referred to in clauses (1), (2), (3) and (4), in the aggregate, the “Required Amount”).
Section 6.13 Operations of Merger Sub. Merger Sub has been formed solely for the purpose of engaging in the transactions
contemplated hereby.
Section 6.14 Regulatory Compliance.
(a) Each Medical Device is being developed, manufactured, tested, distributed or marketed in compliance with all applicable requirements under
the Regulatory Laws, including those relating to investigational use, premarket clearance or marketing approval to market a Medical Device, good manufacturing practices, labeling, advertising, record keeping, filing of reports and security, except
for failures to be in compliance that would not have a Parent Material Adverse Effect. As of the date of this Agreement, none of Parent or any of its Subsidiaries has received any written notice from the FDA or any other Governmental Authority that
remains uncured and unresolved (i) contesting the premarket clearance or approval of, the uses of or the labeling and promotion of any products of Parent or any of its Subsidiaries or (ii) otherwise alleging any material violation of any
Regulatory Law applicable to any Medical Device.
(b) (i) Since January 1, 2013, no Medical Device has been recalled, withdrawn,
suspended, seized or discontinued (other than for commercial or other business reasons) by Parent or any of its Subsidiaries in the United States or outside the United States (whether voluntarily or otherwise), except for a recall, withdrawal,
suspension, seizure or discontinuation that would not have a Parent Material Adverse Effect and (ii) to the Parent’s Knowledge, none of the actions described in the immediately preceding clause (i) is under consideration with respect
to any Medical Device. As of the date of this Agreement, there is no Proceeding against Parent or any of its Subsidiaries in the United States or outside of the United States seeking the recall, withdrawal, suspension, seizure or discontinuance of
any Medical Device.
(c) Parent and its Subsidiaries are in compliance with all applicable registration and listing requirements set forth
in Sec. 510 of the FDCA (21 U.S.C. § 360) and 21 C.F.R. Part 807 and all other Regulatory Laws, except for failures to be in compliance that would not have a Parent Material Adverse Effect.
(d) None of Parent or any of its Subsidiaries, nor, to the Knowledge of Parent, any officer, employee or agent of Parent or any of its
Subsidiaries, has made an untrue statement of a material fact or fraudulent statement to the FDA, failed to disclose a material fact required to be disclosed to the FDA, or committed an act, made a material statement, or failed to make a material
statement that, at the time such disclosure was made, would reasonably be expected to provide a basis for the FDA or any other Governmental Authority to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities”, set forth in the FDA’s Compliance Policy Guide, Section 120.100 (CPG 7150.09). None of Parent or any of its Subsidiaries, nor, to the Knowledge of Parent, any officer, employee or agent of Parent or any of
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its Subsidiaries, has been convicted of any crime or engaged in any conduct for which debarment is mandated by Sec. 306 of the FDCA (21 U.S.C. § 335a(a)) or authorized by Sec. 306 of the
FDCA (21 U.S.C. § 335a(b)). None of Parent or any of its Subsidiaries nor, to the Knowledge of Parent, any officer, employee or agent of Parent or any of its Subsidiaries, has been convicted of any crime or engaged in any conduct for which such
Person or entity could be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act.
(e) Since January 1, 2013 through the date of this Agreement, none of Parent or any of its Subsidiaries has received any written notice
that the FDA or any other Governmental Authority has commenced, or threatened to initiate, any action to (i) withdraw its approval of any Medical Device, (ii) enjoin production of any Medical Device or (iii) enjoin the production of
any Medical Device produced at any facility where any Medical Device is manufactured, tested or packaged.
Section 6.15 No
Brokers. Except for Piper Jaffray & Co., Inc., whose fees and expenses are the sole responsibility of Parent, no broker, investment banker or finder is entitled to any brokerage or finder’s fee or other commission in connection
with the transactions contemplated by this Agreement based on any Contract made by or on behalf of Parent or any of its Subsidiaries.
Section 6.16 No Additional Representations. Except as otherwise expressly set forth in this ARTICLE VI, neither Parent nor any of
its Subsidiaries, nor any other Person acting on their behalf, makes any representations or warranties of any kind or nature, express or implied, in connection with the transactions contemplated by this Agreement, including any representations or
warranties with respect to any projections, forecasts, estimates or budgets of future revenues, future results of operations or future financial condition (or any component thereof) of any of Parent or any of its Subsidiaries.
ARTICLE VII
COVENANTS
Section 7.1 Conduct of Business by the Company Pending the Closing.
(a) Except as expressly contemplated or permitted by this Agreement, from the date of this Agreement until the earlier to occur of the Closing
and the termination of this Agreement pursuant to ARTICLE IX, unless Parent shall otherwise consent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), or except as required by Applicable Law, the Company shall,
and shall cause its Subsidiaries to, conduct their business in the Ordinary Course of Business in all material respects and, to the extent not inconsistent therewith, use commercially reasonable efforts to (i) preserve substantially intact
their current business organizations, (ii) preserve in all material respects their relationships with customers, suppliers, licensors, licensees, distributors and other third parties that are material to the operation of the business and
(iii) keep available their present officers and key employees; provided, that, in the case of the immediately preceding clauses (i), (ii) and (iii), commercially reasonable efforts shall not be deemed to require the Company or any
of its Subsidiaries to exert any efforts with respect to a particular matter that are greater than the level of efforts exerted by the Company or such Subsidiary with respect to such matter prior to the date of this Agreement;
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provided, further, that (i) no action or inaction by the Company or any of its Subsidiaries with respect to any of the matters specifically addressed by another provision of
this Section 7.1 shall be deemed to be a breach of the portion of this sentence preceding this proviso unless such action or inaction would constitute a breach of such other provision and (ii) the failure of Parent to take any action
prohibited by Section 7.2(b) shall not be deemed to be a breach of this Section 7.1(a)(i), (ii) or (iii).
(b) From the date
of this Agreement until the earlier to occur of the Closing and the termination of this Agreement pursuant to ARTICLE IX, except (1) as required by Applicable Law or (2) as expressly contemplated or permitted by this Agreement, the Company
shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned):
(i) amend or modify the Organizational Documents of the Company or any of its Subsidiaries;
(ii) directly or indirectly (A) split, combine or reclassify its capital stock or any equity securities or obligations convertible into
or exchangeable for, or any other right to acquire, any shares of its capital stock, (B) make, declare or pay any dividend or distribution (other than dividends and distributions made, declared or paid to the Company or a Subsidiary of the
Company by another Subsidiary of the Company) on, or redeem, purchase or otherwise acquire, any shares of its capital stock or any equity securities or obligations convertible into or exchangeable for, or any other right to acquire, any shares of
its capital stock or such securities (other than (1) pursuant to Contracts set forth on Section 7.1(b)(ii) of the Company Disclosure Letter and (2) the redemption, purchase or acquisition of any such shares, securities, obligations or
rights of any wholly owned Subsidiary of the Company by the Company or another wholly owned Subsidiary of the Company, (C) grant any Person any right or option to acquire any shares of its capital stock or other equity securities or any other
equity- based compensation award based on shares of its capital stock (other than (1) pursuant to any Benefit Plan in effect on the date of this Agreement and (2) to the Company or a wholly owned Subsidiary of the Company by another wholly
owned Subsidiary of the Company) or other equity securities, (D) issue, deliver, sell, grant, pledge, dispose of or encumber (other than Permitted Encumbrances) any shares of its capital stock or any equity securities or obligations convertible
into or exchangeable or exercisable for, or any other right to acquire, any shares of its capital stock or such equity securities (other than (1) pursuant to any Benefit Plan in effect on the date of this Agreement and (2) to the Company
or any wholly owned Subsidiary of the Company by another wholly owned Subsidiary of the Company) and except for the issuance or delivery of shares of Company Common Stock pursuant to the exercise or settlement of the Company Options, the Restricted
Stock Units and awards under the Directors’ Deferred Compensation Plan that are outstanding as of the date of this Agreement and in accordance with the existing terms thereof or (E) enter into any Contract with respect to the sale, voting,
registration or repurchase of its capital stock or other equity securities;
(iii) merge with, enter into a consolidation with or acquire
a substantial portion of the stock or other equity securities, assets or business of any Person or any division or line of business thereof, other than (A) in the case of any asset acquisition, the acquisition of inventory, supplies, equipment
and raw materials in the Ordinary Course of Business, (B) capital
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expenditures, which shall be subject to the provisions of clause (xiv) below, (C) transactions for consideration (including the assumption of debt) not exceeding $5,000,000 in the
aggregate and (D) transactions between or among the Company and any wholly owned Subsidiary of the Company or between or among wholly owned Subsidiaries of the Company;
(iv) incur any Indebtedness (other than accruing interest in connection with existing Indebtedness), except for (A) borrowings under the
Company’s or any of its Subsidiaries’ existing credit facilities as in effect on the date of this Agreement, (B) the incurrence of any Indebtedness that will be repaid by the Company or any of its Subsidiaries at or prior to the
Closing, (C) commodity swap agreements, commodity cap agreements, interest rate cap agreements, interest rate swap agreements, foreign currency exchange agreements and other similar agreements entered into in the Ordinary Course of Business,
(D) inter-company Indebtedness, (E) Indebtedness incurred to replace, renew, extend, refinance or refund any existing Indebtedness on terms no less favorable to the Company and its Subsidiaries than the terms of such existing Indebtedness,
and (F) equipment financing and similar arrangements permitted under the Company’s or any of its Subsidiaries’ existing credit facilities as in effect on the date of this Agreement and entered into in the Ordinary Course of Business,
or make any loans, advances or capital contributions to, or investments in, any Person other than the Company or any of its Subsidiaries and other than (1) reimbursements or advancements of employee or director expenses in the Ordinary Course
of Business and (2) transactions required to be entered into by the Company or any of its Subsidiaries pursuant to existing Contracts;
(v) make any material change in accounting or financial reporting methods, principles or practices used by the Company or any of its
Subsidiaries, except to the extent required by GAAP, any other applicable generally accepted accounting principles or Applicable Law;
(vi) (A) adopt any plan that would be a Benefit Plan if it had been in existence on the date of this Agreement, (B) materially amend any
Benefit Plan or (C) other than in the Ordinary Course of Business, pay any bonus, remuneration or noncash benefits, except pursuant to any Benefit Plan or Collective Bargaining Agreement;
(vii) other than in the Ordinary Course of Business, grant or pay any severance or termination pay or benefits (or increase any severance or
termination benefit obligations) except for any payments required under the terms of any Benefit Plans listed on Section 5.13(a) of the Company Disclosure Letter, any Collective Bargaining Agreement or Applicable Law;
(viii) increase the compensation or benefits of any directors, officers, employees, or in respect of consideration for personal services
rendered, independent contractors, independent sales personnel or distributors, except as required by any Collective Bargaining Agreement, Applicable Law or in the Ordinary Course of Business;
(ix) enter into, adopt, amend or terminate any Collective Bargaining Agreement, except as required by Applicable Law;
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(x) (A) make or change any material Tax election, (B) change any material annual Tax
accounting period or method of accounting, (C) file any amended Tax Return that is material, (D) enter into any material closing agreement as to Taxes, (E) settle any material Tax claim or assessment or (F) surrender any right to
claim a Tax refund to the extent such refund is reflected as an asset on the Company Financial Statements as of the Balance Sheet Date, in each case, that would materially increase the Company’s or any of its Subsidiaries’ liability for
Taxes in a taxable period or portion thereof beginning after the Closing Date and that is not in the Ordinary Course of Business or required by Applicable Law;
(xi) sell, lease, pledge or dispose of to any Person, or permit the imposition of any Encumbrance (other than Permitted Encumbrances) on, any
of its material properties, assets or lines of business, other than (A) the sale, lease, pledge or disposition or encumbrance of inventory, raw materials, equipment and supplies in the Ordinary Course of Business, (B) transactions for
consideration not exceeding $5,000,000 in the aggregate, (C) transactions between or among the Company and wholly owned Subsidiaries of the Company or between or among wholly owned Subsidiaries of the Company and (D) any transactions
required to be consummated by the Company or any Subsidiary of the Company pursuant to an existing Contract;
(xii) adopt a plan of
complete or partial liquidation or dissolution or otherwise dissolve, wind-up or effect any restructuring or other reorganization;
(xiii)
other than in the Ordinary Course of Business, (A) modify, amend, fail to renew or terminate any Material Contract or Real Property Lease (other than the lapse or expiration of any Material Contract or such Real Property Lease in accordance
with the terms thereof) or (B) enter into any Contract that would have been a Material Contract if it had been entered into prior to the date of this Agreement or enter into any Real Property Lease (other than as a result of the lapse or
expiration of a Real Property Lease);
(xiv) make any capital expenditures, capital additions or capital improvements, other than such
expenditures, additions or improvements made in the Ordinary Course of Business or not in excess of $5,000,000 in the aggregate;
(xv)
materially delay the payment of any account payable or Taxes beyond the date when such account payable or Taxes would have been paid in the Ordinary Course of Business;
(xvi) materially accelerate the collection of any account or note receivable in advance of the date when such account or note would have been
collected in the Ordinary Course of Business;
(xvii) settle, compromise, waive or terminate any Proceeding, other than in the Ordinary
Course of Business or in the case where the sole obligation of Company and its Subsidiaries is the payment of money in an amount not in excess of $2,500,000 individually or $5,000,000 in the aggregate;
(xviii) enter into any new line of business that is material to the Company and its Subsidiaries other than in the Ordinary Course of
Business;
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(xix) (A) modify or amend any Affiliate Agreement, (B) enter into any new Affiliate
Agreement, or (C) enter into any other business relationship with any Affiliate (other than the Company or any of its Subsidiaries or in connection with an Affiliate Agreement existing as of the date of this Agreement in accordance with its
terms);
(xx) cancel, terminate, fail to keep in place or reduce the amount of any insurance coverage provided by existing insurance
policies without obtaining substantially equivalent (in the aggregate) substitute insurance coverage, other than in the Ordinary Course of Business or if the Company, in its reasonable judgment, determines that such cancellation, termination or
failure to keep in place would not result in the Company and its Subsidiaries having inadequate coverage, including after giving effect to any insured self-retention or co- insurance feature;
(xxi) pay any management or similar fees to any Sponsor or any of their Affiliates, except pursuant to the Contracts set forth on
Section 7.1(b)(xxi) of the Company Disclosure Letter;
(xxii) take any action that is reasonably likely to prevent or materially
delay or materially impair the consummation of the Merger or any of the other transactions contemplated by this Agreement; or
(xxiii)
agree or commit to take any of the foregoing actions.
Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement
shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of the Company or any of its Subsidiaries prior to the Closing. Prior to the Closing, the Company and its Subsidiaries shall exercise, consistent
with the terms and conditions of this Agreement, complete control and supervision of their respective operations.
Section 7.2
Conduct of Business by Parent Pending the Closing.
(a) Except as expressly contemplated or permitted by this Agreement, from the
date of this Agreement until the earlier to occur of the Closing and the termination of this Agreement pursuant to ARTICLE IX, unless the Company shall otherwise consent in writing (which consent shall not be unreasonably withheld, delayed or
conditioned), or except as required by Applicable Law, Parent shall, and shall cause its Subsidiaries to, conduct their business in the Ordinary Course of Business in all material respects and, to the extent not inconsistent therewith, use
commercially reasonable efforts to (i) preserve substantially intact their current business organizations, (ii) preserve in all respects their relationships with customers, suppliers, licensors, licensees, distributors and other third
parties that are material to the operation of the business and (iii) keep available their present officers and key employees; provided, that, in the case of the immediately preceding clauses (ii) and (iii), commercially reasonable efforts
shall not be deemed to require Parent or any of its Subsidiaries to exert any efforts with respect to a particular matter that are greater than the level of efforts exerted by Parent or such Subsidiary with respect to such matter prior to the date
of this Agreement; provided, further, that no action or inaction by Parent or any of its Subsidiaries with respect to any of the matters specifically addressed by another provision of this Section 7.2 shall be deemed to be a breach of the
portion of this sentence preceding this proviso unless such action or inaction would constitute a breach of such other provision.
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(b) From the date of this Agreement until the earlier to occur of the Closing and the termination
of this Agreement pursuant to ARTICLE IX, except (1) as required by Applicable Law or Order or (2) as expressly contemplated or permitted by this Agreement, Parent shall not, and shall cause each of its Subsidiaries not to, without the
prior written consent of the Company (which consent shall not be unreasonably withheld, delayed or conditioned):
(i) Parent; amend or
otherwise change the Organizational Documents of
(ii) merge or consolidate with any other Person or acquire a material amount of the
stock or assets of any other Person or effect any business combination, recapitalization or similar transaction (other than the Merger) if such action would reasonably be expected to materially delay or prevent the satisfaction of the conditions set
forth in Section 8.1(b);
(iii) declare or pay any dividend on shares of Parent Common Stock, including any dividend consisting of
the equity interests in QiG Group, LLC (to be renamed Nuvectra Corporation);
(iv) engage in any action or activity (including redeeming
or buying back any Parent Common Stock) that would require Parent to obtain the approval of its stockholders in connection with the consummation of the transactions contemplated by this Agreement prior to Closing; or
(v) agree or commit to take any of the foregoing actions.
Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement shall give the Company, directly or
indirectly, the right to control or direct the operations of Parent or any of its Subsidiaries prior to the Closing. Prior to the Closing, Parent and its Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision of their respective operations.
Section 7.3 Antitrust Matters; Third Party Consents.
(a) Each party shall use their reasonable best efforts to take or cause to be taken all appropriate action, and to do, or cause to be done, all
things necessary to consummate and make effective the transactions contemplated under this Agreement, including using their reasonable best efforts to obtain, or cause to be obtained, all waivers, permits, consents, approvals, authorizations,
qualifications and Orders of all Governmental Authorities and parties to Material Contracts or Real Property Leases with the Company or any of its Subsidiaries that are required in connection with the consummation of the transactions contemplated
hereby. Notwithstanding the foregoing, none of the Company, any of its Subsidiaries or any of their respective Affiliates or Representatives thereof shall have any obligation to agree to amend or modify any Contract or Real Property Lease which
amendment or modification would be effective prior to the Effective Time or pay any fees, costs or expenses to any third party in
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connection with obtaining any such waivers, permits, consents, approvals, authorizations, qualifications or Orders. The parties shall cooperate and assist one another in good faith (i) in
connection with all actions to be taken pursuant to this Section 7.3(a), including the preparation and making of the filings referred to herein and, if requested, amending or furnishing additional information hereunder, and (ii) in
seeking, as promptly as reasonably practicable, to obtain all such waivers, permits, consents, approvals, authorizations, qualifications and Orders. Upon the terms and subject to the conditions set forth in this Agreement (including
Section 7.3(b)), each party agrees to make any filings required to be made pursuant to the HSR Act with respect to the transactions contemplated by this Agreement as promptly as practicable (and in no event later than 10 Business Days after the
date hereof) and other applicable Competition Laws with respect to the transactions contemplated by this Agreement as promptly as reasonably practicable (and in no event later than the date set forth on Section 7.3(a) of the Company Disclosure
Letter with respect to each Required Foreign Filing) and to supply as promptly as reasonably practicable to the appropriate Governmental Authorities any additional information and documentary material that may be requested by such Governmental
Authorities pursuant to the HSR Act and such other applicable Competition Laws. All such antitrust filings to be made shall be made in substantial compliance with the requirements of the HSR Act and such other applicable Competition Laws.
(b) In furtherance and without limiting the generality of the foregoing, the parties shall use their reasonable best efforts to
(i) cooperate with and assist each other in good faith to (A) provide or cause to be provided as promptly as reasonably practicable to the other party all necessary information and assistance as any Governmental Authority may from time to
time require of such party in connection with obtaining the relevant waivers, permits, consents, approvals, authorizations, qualifications, Orders or expiration of waiting periods in relation to such filings or in connection with any other review or
investigation of the transactions contemplated by this Agreement by a Governmental Authority pursuant to the HSR Act and other applicable Competition Laws and (B) provide or cause to be provided as promptly as reasonably practicable all
assistance and cooperation to allow the other party to prepare and submit any such filings or submissions required to be submitted under the HSR Act and other applicable Competition Laws, including providing to the other party any information that
the other party may from time to time require for the purpose of any filing with, notification to, application with, or request for further information made by, any Governmental Authority in respect of any such filing and
(ii) (A) cooperate with and assist each other in good faith to devise and implement a joint strategy for making such filings, including the timing thereof, and for obtaining any related antitrust, competition, fair trade or similar
clearances, (B) consult in advance with the other party and in good faith take the other party’s views into account regarding the overall strategic direction of obtaining such antitrust, competition, fair trade or similar clearances and
(C) consult with the other party prior to taking any material substantive position in any written submissions or, to the extent practicable, in any discussions with Governmental Authorities with respect to such antitrust, competition, fair
trade or similar clearances; provided, that in the event Parent and the Company disagree in good faith with respect to any matter described in the foregoing clauses (i) or (ii), as may be applicable, despite the good faith cooperation,
assistance and consultation of the parties as required herein and compliance with their other obligations under this Section 7.3, Parent shall, subject to and without limiting Parent’s obligations under Section 7.3(c) and the other
provisions of this Section 7.3, be permitted to implement its strategy and otherwise pursue its position as to which it has (x) previously discussed and consulted with the Company, (y) taken the Company’s views into
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account in good faith and (z) developed, implemented and pursued with a view to obtaining any necessary antitrust, competition, fair trade or similar clearances as promptly as reasonably
practicable (and in any event by the Outside Date); provided, further, that in such instances where Parent is permitted to implement its strategy and otherwise pursue its position pursuant to the immediately preceding proviso, the
Company shall not take a position in any filing, meeting or communication with any Governmental Authority that is contrary to or inconsistent with such strategy and position. Parent shall be permitted to take the lead in all joint meetings and
communications with any Governmental Authority in connection with obtaining any necessary antitrust, competition, fair trade or similar clearances; provided, that Parent shall have complied with its obligations under the immediately preceding
clause (ii) and the other provisions of this Section 7.3. Each party shall permit the other party to review and discuss in advance, and shall consider in good faith the views of the other party in connection with, any analyses,
presentations, memoranda, briefs, written arguments, opinions, written proposals or other materials to be submitted to the Governmental Authorities. Each party shall keep the other apprised of the material content and status of any material
communications with, and material communications from, any Governmental Authority with respect to the transactions contemplated by this Agreement, including promptly notifying the other of any material communication it receives from any Governmental
Authority relating to any review or investigation of the transactions contemplated by this Agreement under the HSR Act and other applicable Competition Laws. The parties shall, and shall use their reasonable best efforts to cause their respective
Affiliates to use their reasonable best efforts to, provide each other with copies of all material, substantive correspondence, filings or communications between them or any of their respective Representatives, on the one hand, and any Governmental
Authority or members of its staff, on the other hand, with respect to this Agreement and the transactions contemplated by this Agreement; provided, however, that materials may be redacted (1) to remove references concerning the
valuation of the Company and its Subsidiaries or Parent and its Subsidiaries, as applicable, (2) as necessary to comply with any Contract or Applicable Laws or Orders, and (3) as necessary to address reasonable attorney-client or other
privilege or confidentiality concerns.
(c) Parent and the Company shall, and shall cause each of their respective Subsidiaries to, take
any and all steps reasonably necessary to obtain approval of the consummation of the transactions contemplated by this Agreement by any antitrust or competition Governmental Authority, including taking all steps necessary to avoid or eliminate each
and every legal impediment under any applicable state, federal, foreign or supranational antitrust, competition, fair trade or similar Applicable Law that may be asserted by any antitrust or competition Governmental Authority or any other Person so
as to enable the parties hereto to close the transactions contemplated by this Agreement as promptly as reasonably practicable, and in any event prior to the Outside Date, including proposing, negotiating, accepting, committing to and effecting, by
consent decree, hold separate orders, or otherwise, the sale, divestiture or disposition of their Subsidiaries, assets, properties or businesses, the entrance into, or the amendment, modification or termination of, any Contracts or other
arrangements, and other remedies in order to obtain such approvals and to avoid the entry of, and to avoid the commencement of litigation or other Proceedings seeking the entry of, or to effect the dissolution of, any injunction, temporary
restraining order or other Applicable Law in any suit or other Proceeding, which could otherwise have the effect of materially delaying or preventing the consummation of any of the transactions contemplated by this Agreement. In addition, Parent
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and the Company shall, and shall cause each of their respective Subsidiaries to, defend through litigation on the merits so as to enable the parties hereto to close the transactions contemplated
by this Agreement as promptly as reasonably practicable (and in any event prior to the Outside Date) any claim asserted in court or an administrative or other tribunal by any antitrust or competition Governmental Authority or other Person under
applicable antitrust, competition, fair trade or similar Applicable Laws in order to avoid entry of, or to have vacated or terminated, any decree, order or judgment (whether temporary, preliminary or permanent) or other Applicable Law that could
prevent or materially delay the Closing from occurring as promptly as reasonably practicable; provided, however, that for the avoidance of doubt, such litigation shall in no way limit the obligations of the parties to comply with their
obligations under the terms of this Section 7.3. Notwithstanding anything in this Agreement to the contrary, Parent shall not commence any litigation with respect to the matters that are the subject of this Section 7.3 without the prior
written consent of the Company (such consent not to be unreasonably withheld, delayed or conditioned). Parent and the Company shall jointly direct and control any litigation described in either of the immediately preceding sentences, with counsel of
their own choosing; provided, however, that without limiting the generality of Section 7.3(b), in the event the parties disagree in good faith with respect to the defense or prosecution of such litigation (or the strategy with
respect thereto) despite the good faith cooperation, assistance and consultation of the parties as required herein and compliance with their other obligations under this Section 7.3, Parent shall, subject to and without limiting Parent’s
obligations under the other provisions of this Section 7.3, be permitted to implement its strategy and otherwise pursue its position in good faith with respect to such litigation as to which it has (x) consulted in advance with the
Company, (y) in good faith taken the Company’s views into account, including with respect to the overall strategic direction of the defense or prosecution of any such litigation and (z) consulted with the Company prior to taking any
material substantive positions, making dispositive motions or other material substantive filings or entering into any negotiations concerning such litigation; provided, that such strategy is designed to obtain approval of the consummation of
the transactions contemplated by this Agreement by any antitrust or competition Governmental Authority as promptly as reasonably practicable, and in any event prior to the Outside Date; provided, further, that in such instances where Parent
is permitted to implement its strategy and otherwise pursue its position, the Company shall not take a position that is contrary to or inconsistent with Parent’s strategy and position in any filing, meeting or communication with any
Governmental Authority.
Notwithstanding the foregoing provisions of this Section 7.3 or any other provision of this Agreement,
(i) none of Parent, the Company or any of their respective Subsidiaries shall be required to agree to any sale, transfer, license, separate holding, divestiture or other disposition of, or to any prohibition of or any limitation on the
acquisition, ownership, operation, effective control or exercise of full rights of ownership, or other modification of rights in respect of, any assets or businesses of the Company or any of its Subsidiaries or of Parent or any of its Subsidiaries,
or other remedy (each, a “Divestiture”) (x) that is not conditioned upon the consummation of the Merger or (y) if such Divestiture would reasonably be expected to have, individually or in the aggregate, a material adverse
effect on Parent and its Subsidiaries (including the Surviving Corporation), taken as a whole and (ii) the Company shall agree to and effect any Divestiture with respect to its assets or businesses or the assets or businesses of any of its
Subsidiaries that may be requested by Parent or that Parent may consent to so long as such Divestiture is conditioned on the consummation of the Merger. In the event of any conflict
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between subsections (a), (b) or (c) of this Section 7.3, the provisions of this subsection (c) of this Section 7.3 shall, which respect to the matters addressed in this
subsection (c) of this Section 7.3, supersede the provisions of subsection (a) and (b) of this Section 7.3.
(d)
Each party shall and shall cause his, her or its respective Subsidiaries to respond as promptly as reasonably practicable to any inquiries or requests for information and documentary material received from any Governmental Authority in connection
with any antitrust or competition matters related to this Agreement and the transactions contemplated hereby. The Company and its Subsidiaries shall not, but Parent may, if in its good faith judgment it determines (after consulting in advance with
the Company and in good faith taking the Company’s views into account) that the taking of such action would enhance the likelihood of obtaining any necessary antitrust, competition, fair trade or similar clearance as promptly as reasonably
practicable and in any event by the Outside Date, extend any waiting period or agree to refile under the HSR Act and any other applicable Competition Laws.
Section 7.4 Information Pending Closing; Access. From the date hereof through the earlier to occur of the Closing and the
termination of this Agreement pursuant to ARTICLE IX, upon the reasonable advance written request of Parent, the Company shall, and shall cause its Subsidiaries and its and their respective Representatives to, at Parent’s sole cost and expense,
(a) afford to Parent and its Representatives reasonable access, during normal business hours and in such manner as not to unreasonably interfere with the normal operation of the businesses of the Company and its Subsidiaries, to the properties,
books, Contracts, data, files, information and records of the Company and its Subsidiaries, (b) provide such information regarding the Company and its Subsidiaries and their respective operations to Parent and its Representatives as Parent may
reasonably request and (c) use commercially reasonable efforts to make available the appropriate Representatives of the Company and its Subsidiaries and instruct such Representatives to reasonably cooperate with Parent and its Representatives;
provided, that the foregoing shall not require the Company or its Affiliates or any of its or their respective Representatives to (i) violate any confidentiality obligations of the Company or any of its Affiliates or any of their
respective Representatives to any third party (provided, that the Company and its Affiliates shall use reasonable best efforts to, at the sole cost and expense of Parent, obtain, or cause to be obtained, waivers or enter into other
arrangements to avoid such violations so that this clause (i) does not apply), (ii) violate any privacy or other Applicable Laws, (iii) make any disclosure of information that would reasonably be expected, as a result of such
disclosure, and upon the advice of counsel, to have the effect of causing the waiver of any privilege (including the attorney-client and work product privileges) (provided, that if a joint defense agreement or other commercially reasonable
action would maintain such privilege, then the Company and its Affiliates shall use commercially reasonable efforts to enter into, at the sole cost and expense of Parent, or cause to be entered into, a joint defense agreement on customary terms with
Parent or take such other commercially reasonable action if so reasonably requested by Parent, at the sole cost and expense of Parent, so that this clause (iii) does not apply), or (iv) furnish any information that could be harmful to the
Company’s competitive position or otherwise detrimental to the Company if the Closing does not occur (provided, that the Company shall attempt, in good faith, to make reasonable alternative arrangements as may be reasonably necessary to
produce the relevant information in a way that would not be so harmful or detrimental). Subject to Section 7.5(a), Parent shall hold, and shall cause its Affiliates and Representatives to hold, in confidence all such information on the terms
and subject to the
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conditions contained in the Mutual Non-Disclosure Agreement, dated as of March 12, 2015, by and between Parent and the Operating Company (the “Confidentiality Agreement”).
All access and investigation pursuant to this Section 7.4 shall be coordinated through the General Counsel or Chief Financial Officer of the Company or their designees. No access or information provided pursuant to this Section 7.4 or
information provided or received by any Person pursuant to this Agreement will affect any of the representations or warranties of the Company contained in this Agreement or the conditions hereunder to the obligations of Parent. The Company shall be
entitled to have its Representatives present at all times during any access pursuant to this Section 7.4. Notwithstanding anything in this Section 7.4 or any other provision of this Agreement to the contrary, no party nor any of its
Representatives (A) shall contact or have any discussions with any of the customers, distributors, sales representatives, vendors, suppliers, licensees, sub-licensees, landlords or sub-landlords or tenants or sub-tenants of any other party or
its Subsidiaries regarding such party or its Subsidiaries or the transactions contemplated by this Agreement, without prior written consent of the other party or (B) except for Phase I environmental reviews conducted at Parent’s sole
expense, perform any onsite procedure or investigation (including any onsite environmental investigation or study) that involves physical disturbance or damage to any asset or property or any portions thereof.
Section 7.5 Confidentiality and Announcements.
(a) Each of Parent and the Company acknowledges that the information being provided in connection with this Agreement is subject to the terms
and conditions of the Confidentiality Agreement. The terms of the Confidentiality Agreement shall continue in full force and effect in accordance with its terms; provided, that from and after the Closing Date, any Confidential Information (as
defined in the Confidentiality Agreement) to the extent relating exclusively to the businesses of the Company and its Subsidiaries (other than any Confidential Information of the holders of shares of Company Common Stock) shall be deemed to be
Confidential Information of Parent for all purposes under the Confidentiality Agreement. If this Agreement is, for any reason, terminated prior to the Closing Date, the Confidentiality Agreement shall continue in full force and effect in accordance
with its terms.
(b) None of the parties shall issue or make, or permit to be issued or made, any press release or other public
announcement, statement or disclosure relating to the transactions contemplated by this Agreement, other than (i) with the prior written consent of Parent and the Company (such consent not to be unreasonably withheld, delayed or conditioned) or
(ii) as required by any Applicable Law, any Governmental Authority or the rules and regulations of any applicable securities exchange upon prior notice to the other parties hereto (or requested by any Governmental Authority or applicable
securities exchange); provided, that the disclosing party required to issue or make, or permitted to be issued or made, any such press release or other public announcement, statement or disclosure shall promptly notify the other party and
allow such other party a reasonable opportunity to comment on such press release or other public announcement, statement or disclosure. Notwithstanding the foregoing, Parent and the Company hereby acknowledge and agree that the final form and
content of any such required press release or other public announcement, statement or disclosure shall be at the reasonable discretion of the disclosing party.
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Section 7.6 Exclusivity. The terms of Section 14 of that certain letter
agreement, dated as of July 12, 2015, between Parent and Company, are hereby incorporated by reference and the terms of such Section shall continue in force and effect until the earlier of Closing and the date that this Agreement is terminated
pursuant to its terms.
Section 7.7 Indemnification of Directors and Officers.
(a) For six (6) years from and after the Effective Time, Parent shall cause the Surviving Corporation to indemnify and hold harmless all
past and present employees, agents, officers and directors of the Company and of its Subsidiaries to the same extent such Persons are currently indemnified by the Company and its Subsidiaries pursuant to the Company’s and its Subsidiaries’
Organizational Documents as in effect on the date hereof for acts or omissions occurring at or prior to the Effective Time, and for such period of time Parent shall not, and shall not permit the Company or its Subsidiaries to, amend, repeal or
modify any provision in the Company’s or any of its Subsidiaries’ Organizational Documents relating to exculpation or indemnification of present and former officers and directors as in effect in the Company’s or any of its
Subsidiaries’ Organizational Documents immediately prior to the Closing, except as required by Applicable Law. Parent shall, and shall cause the Surviving Corporation and its Subsidiaries to, honor the indemnification agreements of the Company
and its Subsidiaries set forth in Section 7.7(a) of the Company Disclosure Letter with the employees, officers and directors covered by such agreements. If the Company or any of its successors or assigns: (i) consolidate with or merge into
any other corporation or entity 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, then and in each such case, to the
extent necessary, proper provision shall be made so that the successors and assigns of the Company shall assume all of the obligations set forth in this Section 7.7.
(b) Parent shall cause the Company and its Subsidiaries to maintain in effect for six (6) years from the Closing Date directors’ and
officers’ liability insurance covering those Persons who are currently covered by the Company’s and its Subsidiaries’ directors’ and officers’ liability insurance for events occurring at or prior to the Effective Time
(“D&O Insurance”) on terms not less favorable than such existing insurance coverage; provided, that the Surviving Corporation and its Subsidiaries shall not be required, and Parent shall not be required to cause the
Surviving Corporation and its Subsidiaries, to pay for the D&O Insurance in an annual amount in excess of two hundred fifty percent (250%) of the annual premium currently paid as of the date hereof by the Company and its Subsidiaries for
such insurance; provided, further, that if the annual premiums of such insurance coverage exceed such amount, Parent or the Surviving Corporation shall be obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such maximum amount. Notwithstanding anything to the contrary in this Agreement, the Company and its Subsidiaries will, prior to the Closing at Parent’s sole cost and expense, purchase six (6) years run-off directors’ and
officers’ liability insurance that is dedicated to the Company and its Subsidiaries and not shared with any other entity that is unrelated to the Company and its Subsidiaries (“Runoff D&O Insurance”); provided that
payment for such insurance coverage provided by such Runoff D&O Insurance shall not exceed two hundred fifty percent (250%) of the annual premium currently paid as of the date hereof by the Company and its Subsidiaries for such insurance
without Parent’s prior written consent. If the cost of the Runoff D&O Insurance would require an expenditure that exceeds
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such amount and Parent does not so consent, the Company shall, and Parent shall cause the Company to, obtain policies with the greatest coverage available for a cost not exceeding such maximum
amount. Any such Runoff D&O Insurance policies will satisfy Parent’s obligation under this Section 7.7(b) to provide D&O Insurance. In the event that any claim is brought under such D&O Insurance, the policy shall be maintained
until final disposition thereof.
(c) Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any
rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries for any of their respective directors, officers or other employees, it being
understood and agreed that the indemnification provided for in this Section 7.7 is not prior to or in substitution for any such claims under such policies; provided, that subject to the foregoing, the Surviving Corporation shall be a
full indemnitor of first resort without regard to any rights any past and present officer or director of the Company and of its Subsidiaries and their respective heirs and legal representatives may have against any other Person, including any of its
Affiliates.
(d) This covenant is intended to be for the benefit of, and shall be enforceable by, each of the past and present officers and
directors of the Company and of its Subsidiaries and their respective heirs and legal representatives. The rights to indemnification and advancement and the other rights provided for herein shall not be deemed exclusive of any other rights to which
such a Person is entitled, whether pursuant to applicable Law, contract or otherwise.
Section 7.8 Employee Matters.
(a) As of the Closing Date, and for a one (1) year period following the Closing Date, Parent will provide to those employees of the
Company and its Subsidiaries who remain employed by them (the “Continuing Employees”) (A) salary and base wages that are at least equal to the salary and base wages provided to the Continuing Employees immediately prior to the
Closing Date and (B) bonus opportunity and benefits (other than equity compensation benefits) that, taken as a whole, are comparable in the aggregate to those provided to similarly situated employees of Parent. For one (1) year following
the Closing Date, Parent shall, or shall cause the Company or its Subsidiaries, as applicable, to, provide Continuing Employees with severance benefits provided to similarly situated employees in accordance with Parent’s standard practices in
effect from time to time; provided, that Parent shall, and shall cause the Company or its Subsidiaries, as applicable, to, honor any severance benefits with respect to which any such Continuing Employee is entitled pursuant to any employment,
severance or other similar agreement with the Company or any of its Subsidiaries as in effect at the Effective Time. Notwithstanding the foregoing, nothing herein is intended to limit the right of Parent or the Company or any of their respective
Subsidiaries to terminate the employment of any employee at any time.
(b) For purposes of determining eligibility and vesting (but not for
accrual of benefits, other than with respect to severance, vacation or paid time-off entitlement) under all employee benefit plans, programs, policies, contracts, fringe benefits or arrangements of Parent or its Affiliates providing benefits after
the Closing Date to any Continuing Employee (all such plans, “Parent Benefit Plans”), Parent shall, and shall cause its Affiliates to, give each Continuing Employee full credit for such Continuing Employee’s service with the
Company and
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its Affiliates (as well as service with any predecessor employer, to the extent service with the predecessor employer is recognized by the Benefit Plans immediately prior to the Closing Date) to
the same extent recognized by the Company or its Affiliates immediately prior to the Closing Date, except to the extent such recognition would result in duplication of benefits. Parent shall use reasonable efforts to waive, or cause to be waived,
any pre-existing condition limitations, exclusions, actively at work requirements and waiting periods under any Parent Benefit Plan that is a welfare benefit plan in which Continuing Employees (and their dependents) will be eligible to participate
from and after the Closing Date, except with respect to evidence of insurability requirements under any life insurance and disability plans. Parent shall use commercially reasonable efforts to recognize, or cause to be recognized, the dollar amount
of all co-payments, deductibles and similar expenses incurred by each Continuing Employee (and his or her eligible dependents) under the Benefit Plans during the year in which the Closing Date occurs for purposes of satisfying such year’s
deductible and co-payment limitations under the relevant welfare benefit plans in which they will be eligible to participate from and after the Closing Date.
(c) Immediately following the Closing, Parent shall pay Continuing Employees a pro-rata bonus under the annual incentive plans listed in
Section 7.8(c) of the Company Disclosure Letter for the fiscal year in which the Closing occurs based on achievement of pro-rata performance targets for the number of days that have elapsed in such fiscal year as of the Closing Date and with
the bonus amounts to be the pro-rata portion of a full annual bonus based on the number of days that have elapsed in such fiscal year as of the Closing Date.
(d) Nothing expressed or implied herein shall (i) confer upon any past or present employee of the Company and its Subsidiaries, or his or
her representatives, beneficiaries, successors and assigns, any rights or remedies of any nature, including, any rights to employment or continued employment with Parent, the Company or any of their respective Subsidiaries or any of their respective
successors or Affiliates, (ii) be construed to prohibit Parent from amending or terminating any employee benefit program or Parent Benefit Plan or (iii) constitute or be construed as an amendment of any employee benefit program or any Parent
Benefit Plan.
(e) This Section 7.8 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement,
and nothing in this Section 7.8, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 7.8.
Section 7.9 Affiliate Agreements. All Affiliate Agreements set forth on Section 7.9 of the Company Disclosure Letter shall be
terminated at and as of the Effective Time to the extent provided on Section 7.9 of the Company Disclosure Letter, and all obligations and liabilities thereunder shall have been satisfied or waived to the extent provided on Section 7.9 of
the Company Disclosure Letter, and evidence thereof with respect to any such Affiliate Agreements that do not terminate in accordance with their terms, in form reasonably acceptable to Parent, shall have been delivered to Parent.
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Section 7.10 Financing.
(a) Parent shall use its reasonable best efforts to arrange and consummate the Financing on the terms and conditions described in the
Commitment Letter at or prior to the Closing (or on terms more favorable in the aggregate to Parent) including by: (i) maintaining in effect and enforcing the Commitment Letter and complying with its obligations thereunder; (ii) negotiating,
entering into and delivering the definitive agreements with respect to the Debt Financing (the “Definitive Financing Agreements”) on the terms and conditions contained in the Commitment Letter and, to the extent such definitive
agreements are executed and delivered prior to the Effective Time, maintaining in effect and enforcing such definitive agreements; (iii) satisfying (or, if deemed advisable by Parent, seeking the waiver of) on a timely basis all terms, covenants and
conditions set forth in the Commitment Letter and the Definitive Financing Agreements applicable to Parent that are within its control; (iv) participating in and assisting with the preparation of rating agency presentations and meetings with
rating agencies; and (v) upon satisfaction of all of the conditions precedent under Section 8.1 and Section 8.2(other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions), consummating or causing the consummation of the Financing including by enforcing its rights under the Commitment Letter and the Definitive Financing Agreements to the extent necessary at such time to fund the Required
Amount.
(b) Parent shall apprise the Company of material developments relating to the Financing and shall give the Company prompt notice
of any material adverse change with respect to such Financing. Without limiting the foregoing, Parent agrees to notify the Company promptly, and in any event within three Business Days the same comes to the Knowledge of Parent, if at any time prior
to the Effective Time (i) the Commitment Letter or any of the commitments with respect to the Debt Financing thereunder or any Definitive Financing Agreement, as applicable, shall expire or be terminated for any reason, (ii) for any
reason, all or a portion of the Debt Financing becomes unavailable or (iii) any Financing Source or any other Person that is a party to any Commitment Letter breaches, defaults, terminates or repudiates any provisions thereunder or threatens in
writing to do any of the foregoing. Parent shall not amend, alter or replace, or agree to amend, alter or replace, the Commitment Letter in any manner that would (A) impose new or additional conditions or otherwise expand, amend or modify any
of the conditions to the receipt of the Financing, (B) reduce the amount of cash proceeds from the Financing available to fund the Required Amount, in each case, in a manner that would materially adversely affect the ability of Parent or its
Affiliates to enforce their respective rights against the other parties to the Commitment Letter or the Definitive Financing Agreements or reasonably be expected to prevent or materially impair or delay the ability of Parent to consummate the
transactions contemplated by this Agreement, in each case with respect to the foregoing sub-clauses (A) and (B) without the prior written consent of the Company (it being understood and agreed that the Commitment Letter may be amended
solely to add lenders, lead arrangers, bookrunners, syndication agents or similar entities who had not executed the Commitment Letter as of the date of this Agreement and to reflect assignments and replacements of lenders in accordance with the
terms of the syndication provisions of the Commitment Letter with respect to the Debt Financing, provided, that no such addition, assignment or replacement would reasonably be expected to prevent or materially impair or delay the ability of
Parent to consummate the transactions contemplated by this Agreement as determined by the Company in its reasonable discretion).
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(c) If any portion of the Debt Financing becomes unavailable on the terms and conditions
contemplated in the Commitment Letter for any reason, Parent and Merger Sub shall use their reasonable best efforts as promptly as practicable following the occurrence of such event but no later than the final day of the Marketing Period, to arrange
to obtain alternative financing from alternative sources in an amount sufficient, when taken together with the available cash of Parent, to fund the Required Amount and pay any related fees and expenses earned, due and payable as of the Closing Date
(the “Alternate Financing”) and to obtain, and, if obtained, will provide the Company with true, correct and complete copies of, any new financing commitment that provides for at least the same amount of financing as such Commitment
Letter as originally issued, to the extent needed to fund the Required Amount (the “Alternate Commitment Letter”). In the event any Alternate Financing is obtained and an Alternate Commitment Letter is entered into in accordance
with this Section 7.10(c), (i) any reference in this Agreement to “Debt Financing” shall mean the debt financing contemplated by the Commitment Letter as modified pursuant to clause (ii) below, and (ii) any
reference in this Agreement to the “Commitment Letter” (or defined terms that use such phrase) shall be deemed to include the Commitment Letter to the extent not superseded by an Alternate Commitment Letter, at the time in question
and any Alternate Commitment Letter to the extent then in effect.
(d) From and after the date of this Agreement, and through the earlier
of the Closing and the date on which this Agreement is terminated in accordance with ARTICLE IX, the Company shall, and the Company shall cause each of its Subsidiaries and each of its and their respective management, advisors and other
Representatives to, use its respective reasonable best efforts to provide all cooperation reasonably requested by Parent to assist Parent in the arrangement of any Debt Financing or any debt capital markets financing undertaken in lieu of or in
replacement of all or a portion of such Debt Financing (the “Bond Financing” and, together with the Debt Financing, the “Financing”) for the purposes of financing the Required Amount and all related fees and expenses of
Parent (it being acknowledged and agreed by Parent and Merger Sub that, notwithstanding anything in this Agreement to the contrary, the receipt of such Financing is not a condition to the consummation of the Merger or any of the other transactions
contemplated by this Agreement), including (A) participating in a reasonable number of meetings, presentations, road shows, sessions with rating agencies, Financing Arrangers and prospective Financing Arrangers and drafting sessions, and
participating in reasonable and customary due diligence, (B) furnishing Parent and the financial institutions providing or arranging the Debt Financing and/or the Bond Financing, including any underwriters, initial purchasers or placement
agents participating in the Financing (collectively, the “Financing Arrangers”) with such customary financial and other information regarding the Company and its Subsidiaries as may be reasonably requested to structure, arrange,
syndicate and consummate the Debt Financing and the Bond Financing, including financial statements of the Operating Company, information necessary to create pro forma financial statements, financial data of the Operating Company, audit reports and
other information of the type required by Regulation S-X and Regulation S-K under the Securities Act for a registered public offering of debt securities by Parent on Form S-1 (subject to exceptions customary for private placements pursuant to Rule
144A under the Securities Act for debt capital markets transactions similar to the Bond Financing), other information of the type customarily included in a bank information memorandum (including information necessary to create pro forma financial
statements) and including, in any event, all information and data necessary to satisfy the conditions set forth in Clauses (i)(B) and (ii)(B) of Section 2 of Annex IV of the Commitment Letter (such information
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described in this clause (B) which for the avoidance of doubt, shall not include financial statements of the Company, collectively, the “Required Information”),
(C) assisting Parent and the Financing Arrangers in the preparation of (1) offering documents, private placement memoranda, bank information memoranda (including a bank information memorandum that does not include material non-public
information), registration statements, prospectuses and similar documents required for the Debt Financing and/or the Bond Financing, (2) customary pro forma financial statements reflecting the Merger and the Financing and (3) materials for
rating agency presentations, business projections and similar documents in connection with the Debt Financing and the Bond Financing, (D) reasonably cooperating with the marketing efforts for the Debt Financing and the Bond Financing,
(E) furnishing Parent and the Financing Arrangers with customary payoff letters, consistent with the requirements of Section 4.7 hereof, relating to the repayment of outstanding obligations under any credit facilities of the Company or its
Subsidiaries that are to be refinanced at Closing, subject to receipt of the funds therefor from (or on behalf of) Parent, (F) using its commercially reasonable efforts to cause the independent accountants of the Operating Company to provide
assistance and cooperation in the Debt Financing and the Bond Financing, including (1) in connection with any Bond Financing, participating in a reasonable number of drafting sessions and accounting due diligence sessions, (2) in connection
with any filings made with the Commission or pursuant to the Securities Act or Exchange Act, providing any necessary customary consents to use their audit reports relating to the Operating Company and (3) in connection with any Bond Financing,
providing any necessary customary “comfort” (including “negative assurance comfort”) letters, (G) providing the Financing Sources and their respective legal, financial and accounting advisors, access to the properties,
assets and personnel of the Company and its Subsidiaries in accordance with 7.4, (H) furnishing Parent and any Financing Sources promptly, and in any event at least three (3) Business Days prior to the Closing Date, with all documentation
and other information required by any Governmental Authority with respect to the Debt Financing and the Bond Financing under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act of
2001, as amended, that has been reasonably requested by Parent or any of the Financing Sources at least ten (10) Business Days prior to the Closing Date, (I) ensuring that the syndication efforts of the Financing Arrangers benefit from the
Company’s lending and investment banking relationships and (J) taking all reasonable actions, subject to occurrence of the Closing, to permit consummation of the Financing, including executing and delivering any registration statements,
credit agreements, indentures, pledge and security documents, other definitive financing documents or other requested certificates or documents (provided that, (a) none of the letters, agreements, registration statements, documents and
certificates shall be executed and delivered except at or after the Closing and (b) the effectiveness thereof shall be conditioned upon, or only become operative after, the occurrence of the Closing). The Company will notify Parent of any
material error, mistake or omission in the Required Information or the other information provided pursuant to this 7.10 that it becomes aware of and if requested by Parent will use its reasonable efforts to promptly correct such error, mistake or
omission. Nothing herein shall require such cooperation to the extent it would (A) unreasonably disrupt the conduct of the business or operations of the Company or its Subsidiaries, (B) require the Company or any of its Subsidiaries to
agree to pay any fees, reimburse any expenses or otherwise incur any liability or give any indemnities prior to the Closing Date, (C) require the Company or any of its Subsidiaries to take any action that would reasonably be expected to
conflict with, or result in any violation or breach of, or default (with or
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without notice or lapse of time, or both) under, the Organizational Documents of the Company or any of its Subsidiaries, any Applicable Laws or any Contract, (D) require the Company or any
of its Subsidiaries to execute or deliver any certificate, document, instrument or agreement that is effective prior to the Closing or agree to any change or modification of any existing certificate, document instrument or agreement that is
effective prior to the Closing (other than any payoff letters) or (E) require current directors, officers or stockholders of the Company to act to adopt any resolutions or consents or execute any Definitive Financing Agreements unless such
individuals will remain in such capacities after the Closing. Parent shall promptly, upon request by the Company, reimburse the Company for all reasonable and documented costs and expenses (including reasonable attorneys’ fees) incurred by the
Company or any of its Subsidiaries or their respective Representatives in connection with the Financing (collectively, the “Financing Expenses”). Parent shall indemnify and hold harmless the Company, its Subsidiaries and their respective
representatives from and against any and all losses, damages, claims, costs or expenses suffered or incurred by any of them in connection with the arrangement of the Financing and any information used in connection therewith (other than arising from
any information provided by the Company or its Affiliates or its or their respective Representatives).
Section 7.11 Tax
Matters. All transfer, documentary, sales, use, real property transfer, stock transfer, recording, stamp, registration and other similar Taxes and fees (including penalties and interest) (“Transfer Taxes”) incurred in connection
with this Agreement shall be paid by Parent. Parent or the Company, as appropriate, will file all necessary tax returns and other documentation with respect to all such Transfer Taxes.
Section 7.12 FIRPTA Certificate. At or prior to Closing, the Company shall deliver to Parent a duly executed certification, signed
under penalties of perjury by the Company and dated not more than thirty (30) days prior to the Closing Date, that satisfies the requirements of Treasury Regulations section 1.1445-2(c)(3) and confirms that the Company is not, nor has it been
within five (5) years of the date of the certification, a “United States real property holding corporation” as defined in Section 897 of the Code, and shall authorize Parent, as agent for the Company, to deliver a copy of the
certification to the IRS on behalf of the Company.
Section 7.13 Section 280G. The Company will, prior to the Closing
Date, use reasonable best efforts to ensure that the stockholder approval requirements of Section 280G(b)(5)(B) of the Code and the regulations promulgated pursuant thereto are satisfied to the extent necessary such that payments or benefits to
be received or retained by any “disqualified individual” (as defined in Treasury Regulation Section 1.280G-1) arising in whole or in part as a result of or in connection with the transactions contemplated by this Agreement will not be
characterized as “excess parachute payments” under Section 280G of the Code. Prior to seeking such stockholder approval, the Company will request waivers (the “280G Waivers”) from the intended recipients of such
payments or benefits which waivers shall provide that unless such payments or benefits are approved by the stockholders of the Company to the extent and manner prescribed under Section 280G(b)(5)(B) of the Code, such payments or benefits shall
not be made; provided, that in no event will this Section 7.13 be construed to require the Company to compel any Person to waive any existing rights under any contract or agreement that such Person has with the Company or any Subsidiary
thereof and in no event will the Company be deemed in breach of this Section 7.13 if any such Person refuses to waive any such rights. The parties acknowledge that this Section 7.13 shall not apply to any arrangements entered into at the
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direction of Parent or its Affiliates or between Parent and/or its Affiliates, on the one hand, and a disqualified individual on the other hand unless such arrangements have been entered into in
advance of the vote and provided to the Company prior to its seeking stockholder approval (the “Parent Arrangements”) so that, for the avoidance of doubt, unless such arrangements have been entered into in advance of the vote and
provided to the Company, compliance with this Section 7.13 shall be determined as if such Parent Arrangements had not been entered into. At least five (5) Business Days prior to the date the Company submits all relevant arrangements for such
stockholder approval, the Company shall provide Parent, for its review and reasonable comment, a copy of the documentation proposed to be submitted (including any 280G Waivers) and the calculations prepared under Section 280G of the Code, upon
which the stockholder vote is being sought.
Section 7.14 Notice of Events. The Company shall give prompt notice to Parent,
and Parent shall give prompt notice to the Company, of any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement or from any Person alleging that the consent of such Person
is or may be required in connection with the transactions contemplated by this Agreement.
Section 7.15 Expenses. Except as
(i) as set forth in the immediately following sentence or (ii) as otherwise expressly provided herein, all expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring
such expenses; provided, that if the Closing occurs, Parent shall pay all Company Transaction Expenses and all HSR Act and other applicable Competition Act filing fees and expenses.
Section 7.16 Further Assurances. Each of the parties hereto shall execute such documents and other papers and perform such further
acts as may be reasonably required to carry out the provisions hereof and the transactions contemplated hereby.
Section 7.17
Company Stockholder Approval. Promptly following, and in no event later than one (1) Business Day after, the execution this Agreement, the Company shall deliver to Parent a true and complete copy of a written consent executed by the
stockholders set forth on Section 7.17 of the Company Disclosure Schedule evidencing the Company Stockholder Approval (the “Requisite Approval”) and in connection therewith take such other actions set forth on Section 7.17
of the Company Disclosure Letter.
Section 7.18 Merger Sub. Prior to the Effective Time, Merger Sub will have engaged in no
other business activities and will have incurred no liabilities or obligations other than as contemplated herein.
Section 7.19
Subsidiary Loans. Promptly following the execution of this Agreement, and in any event prior to Closing, the Company shall, in consultation with Parent and Parent’s tax advisors, formulate a plan to minimize any potential adverse tax
impact associated with the intercompany loans held by Star Guide Limited in the manner and with the intended effect set forth on Section 7.19 of the Company Disclosure Letter.
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Section 7.20 Mexican Maquiladora. Promptly following the execution of this Agreement,
the Company shall undertake, in consultation with Parent, the actions set forth in Section 7.20 of the Company Disclosure Letter.
ARTICLE VIII
CONDITIONS
TO CLOSING
Section 8.1 Mutual Conditions. The obligations of each of Parent, Merger Sub and the Company to effect the
Closing shall be subject to the following conditions, any one or more of which, to the extent permitted by Applicable Law, may be waived in writing, as to itself, by Parent, Merger Sub and the Company:
(a) no Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Applicable Law
(whether temporary, preliminary or permanent), which is then in effect and has the effect of enjoining, restraining, prohibiting or otherwise preventing the consummation of the transactions contemplated by this Agreement (collectively, a
“Restraint”);
(b) (i) any waiting period (and any extension thereof) applicable to the consummation of the transactions
contemplated by this Agreement under the HSR Act shall have expired or been terminated; and (ii) any approval or waiting period with respect to the Required Foreign Filings set forth in Section 8.1(b) of the Company Disclosure Letter shall
have been obtained or terminated or shall have expired;
(c) the shares of Parent Common Stock to be issued under this Agreement shall have
been approved for listing on the NYSE, subject to official notice of issuance (provided that the satisfaction of the condition set forth in this Section 8.1(c) shall not be a condition to the obligation of Parent or Merger Sub to effect
the Closing if the representation and warranty set forth in the fourth sentence of Section 6.2 is not true and correct in all respects); and
(d) the Requisite Approval shall have been obtained and shall remain in full force and effect.
Section 8.2 Conditions to Parent’s and Merger Sub’s Obligations. In addition to the conditions set forth in
Section 8.1, the obligations of Parent and Merger Sub to effect the Closing shall be subject to the following conditions, any one or more of which may be waived in writing by Parent in its sole discretion:
(a) (i) the representations and warranties made by the Company in (i) the first sentence of Section 5.1 (only as to the Company and
the Operating Company), Section 5.2, Section 5.4(a)(ii), the first, third and fifth sentences of Section 5.5(a) and Section 5.23 shall be true and correct in all respects as of the date of this Agreement and as of the Closing, as
though made on and as of the Closing (except that such representations and warranties that are made as of a specific date shall be true and correct as of such specific date) except, in the case of the representations and warranties contained in the
first, third and fifth sentences of Section 5.5(a), for any de minimis inaccuracy, (ii) the representations and warranties made by the Company in Section 5.1 (other than the first sentence thereof as to the Company and the Operating
Company) shall be true and correct in all material respects as of the date of this Agreement and as of the
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Closing, as though made on and as of the Closing (except that such representations and warranties that are made as of a specific date shall be true and correct as of such date) and (iii) the
representations and warranties made by the Company in each other section of ARTICLE V that (A) are not made as of a specific date shall be true and correct as of the date of this Agreement and as of the Closing, as though made on and as of the
Closing, and (B) are made as of a specific date shall be true and correct as of such date, in each case under this clause (iii), except where the failure of such representations and warranties to be true and correct (without giving effect to
any qualifications as to materiality or Company Material Adverse Effect (except that the word “material” in the defined term “Material Contract” shall not be disregarded for any of such purposes)) has not had and would not
reasonably be expected to have, either individually or in the aggregate, a Company Material Adverse Effect;
(b) the Company shall have
performed and complied in all material respects with all agreements, covenants and obligations required by this Agreement to be performed or complied with by the Company on or prior to the Closing;
(c) the Company shall have caused to be delivered to Parent a certificate executed by a duly authorized officer of the Company certifying that
each of the conditions set forth in Section 8.2(a) and (b) has been satisfied; and
(d) the Stockholders Agreement shall have
been executed and delivered by the parties thereto set forth on Section 8.2(d) of the Company Disclosure Letter.
Section 8.3
Conditions to the Company’s Obligations. In addition to the conditions set forth in Section 8.1, the obligations of the Company to effect the Closing shall be subject to the following conditions, any one or more of which may be
waived in writing by the Company in its sole discretion:
(a) the representations and warranties made by Parent in (i) the first
sentence of Section 6.1 (as to Parent and Greatbatch Ltd.), Section 6.3(a)(ii), the first, fourth and sixth sentences of Section 6.5(a) and Section 6.12 shall be true and correct in all respects as of the date of this Agreement
and as of the Closing, as though made on and as of the Closing (except that such representations and warranties that are made as of a specific date shall be true and correct as of such specific date), except, in the case of the representations and
warranties contained in the first, fourth and sixth sentences of Section 6.5(a), for any de minimis inaccuracy; (ii) Section 6.1 (other than the first sentence thereof as to Parent and Greatbatch Ltd.) and Section 6.2 shall be
true and correct in all material respects as of the date of this Agreement and as of the Closing, as though made on and as of the Closing (except that such representations and warranties that are made as of a specific date shall be true and correct
as of such specific date) and (iii) each other section of ARTICLE VI that (A) are not made as of a specific date shall be true and correct as of the date of this Agreement and as of the Closing, as though made on and as of the Closing, and
(B) are made as of a specific date shall be true and correct as of such date, in each case, except where the failure of such representations and warranties to be true and correct (without giving effect to any qualifications as to materiality or
Parent Material Adverse Effect) has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect;
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(b) Parent and Merger Sub shall have performed and complied in all material respects with all
agreements, covenants and obligations required by this Agreement to be performed or complied with by Parent and Merger Sub on or prior to the Closing;
(c) Parent shall have caused to be delivered to the Company a certificate executed by a duly authorized officer of Parent certifying that each
of the conditions set forth in Section 8.3(a) and (b) has been satisfied; and
(d) the Stockholders Agreement shall have been
executed and delivered by Parent.
ARTICLE IX
TERMINATION
Section 9.1 Termination.
(a) This Agreement may be terminated prior to the Closing only as follows:
(i) by mutual written consent of Parent and the Company;
(ii) by Parent or the Company if the Closing shall not have occurred on or before the date that is ninety (90) calendar days from the
date of this Agreement (as such date may be extended in accordance with the first proviso to this Section 9.1(a)(ii), the “Outside Date”); provided, however, that: (A) if on the Outside Date the conditions
set forth in Section 8.1(a) or Section 8.1(b) have not been satisfied or waived, then Parent or the Company may extend the Outside Date for an additional ninety (90) calendar days by delivery of written notice of such extension to the
other party not less than five (5) Business Days prior to the original Outside Date; and (B) if all of the conditions set forth in Section 8.1, Section 8.2 and Section 8.3 have been satisfied or waived (or, with respect to
the conditions that by their terms must be satisfied at the Closing, would have been so satisfied if the Closing had occurred) and the Marketing Period has commenced but has not yet ended, the Outside Date shall be extended to the first
(1st) Business Day after the end of the Marketing Period; provided, further, that the right to terminate this Agreement under this Section 9.1(a)(ii) shall not be available to any party whose failure to fulfill in all
material respects any obligation, covenant or agreement of such party under this Agreement or other breach of this Agreement has been a material cause of, or resulted in, the failure of the Closing to occur on or before the original Outside Date;
provided, further, that in no event shall the Outside Date be later than 180 days after the date hereof;
(iii) by Parent or
the Company, if any Restraint shall have become final and non-appealable; provided, however, that the party seeking to terminate this Agreement shall have complied with its obligations under Section 7.3 in all material respects;
(iv) by the Company, if there shall have been a breach or inaccuracy of any representation or warranty of Parent contained in this
Agreement, or Parent or Merger Sub has failed to perform or comply with any of its covenants, obligations or agreements contained in this Agreement, which breach, inaccuracy or failure to perform or comply (i) would give rise to the failure of
a condition set forth in Section 8.3(a) or (b) and (ii) is incapable of being cured by Parent or is not cured by Parent prior to the earlier of (x) thirty (30) days following written notice
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to Parent of such breach, inaccuracy or failure to perform or comply and (y) the Business Day immediately prior to the Outside Date; provided, that the Company is not then in breach
of any of its representations, warranties, covenants, obligations or agreements contained in this Agreement;
(v) by Parent, if there
shall have been a breach or inaccuracy of any representation or warranty of the Company contained in this Agreement or the Company has failed to perform or comply with any of its covenants, obligations or agreements contained in this Agreement,
which breach, inaccuracy or failure to perform or comply (i) would give rise to the failure of a condition set forth in Section 8.2(a) or (b) and (ii) is incapable of being cured by the Company or is not cured by the Company
prior to the earlier of (x) thirty (30) days following written notice to the Company of such breach, inaccuracy or failure to perform or comply and (y) the Business Day immediately prior to the Outside Date; provided, that
Parent and Merger Sub are not then in breach of any of their representations, warranties, covenants, obligations or agreements contained in this Agreement; and
(vi) by Parent, if the Requisite Approval is not delivered to Parent by the end of the first (1st) Business Day following the execution
and delivery of this Agreement.
(b) The termination of this Agreement shall be effectuated by the delivery of a written notice of such
termination from the party terminating this Agreement to the other party specifying the provision or provisions hereof pursuant to which such termination is affected.
Section 9.2 Obligations upon Termination. In the event that this Agreement is terminated pursuant to Section 9.1, this
Agreement shall become null and void and have no further force and effect and all obligations of the parties hereto under this Agreement shall terminate and there shall be no liability of any party hereto to any other party except (a) as set
forth in Section 7.5, the first sentence of Section 7.15, ARTICLE X and this Section 9.2, and (b) that nothing herein will relieve or release any party from liability arising from any fraud or willful or intentional material
breach by such party of this Agreement prior to such termination.
ARTICLE X
GENERAL
Section 10.1
Amendment. This Agreement may not be amended, altered or modified except by written instrument executed by Parent, Merger Sub and the Company. Notwithstanding the foregoing, Section 10.6, Section 10.11, Section 10.13 and this
Section 10.1 to the extent such Sections are applicable to the Financing Sources may not be modified, waived or terminated in a manner that is adverse to such Financing Source without the prior written consent of such Financing Source.
Section 10.2 Entire Agreement. This Agreement, including the Disclosure Letters, Annexes which form a part hereof and the
Confidentiality Agreement constitute the entire understanding of the parties hereto with respect to the transactions contemplated hereby and the subject matter contained herein, and supersede all prior and contemporaneous agreements and
understandings, written and oral, among the parties with respect to the subject matter hereof.
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Section 10.3 Interpretation. The headings preceding the text of Articles and Sections
included in this Agreement and the headings to Sections of the Company Disclosure Letter are for convenience only and shall not be deemed part of this Agreement, the Company Disclosure Letter or the Parent Disclosure Letter or be given any effect in
interpreting this Agreement, the Company Disclosure Letter or the Parent Disclosure Letter. The use of the masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The use of the terms “including” or
“include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively. Capitalized references to Articles, Sections, Exhibits or Annexes shall refer to those portions of
this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term in this Agreement the singular. “Writing”, “written” and comparable terms refer to printing, typing and other means of
reproducing words (including electronic format) in a visible form. If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on
the first succeeding Business Day thereafter. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Any capitalized term used in any Annex, the Company Disclosure Letter or the Parent Disclosure Letter but not otherwise defined therein shall have the meaning given to such term in this Agreement. References from or through any date
shall mean, unless otherwise specified, from and including or through and including, respectively. All references to dollars or to “$” shall be references to United States dollars.
Section 10.4 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms
or provisions of this Agreement in any other jurisdiction. Upon such determination that any term or other provision is invalid or unenforceable, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are fulfilled to the extent possible.
Section 10.5 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if they are:
(a) delivered in person, (b) transmitted by facsimile (deemed given upon confirmation of receipt), (c) delivered by an express courier (deemed given upon receipt of proof of delivery) or (d) delivered by e-mail to a party at its
e- mail address listed below (deemed given upon confirmation of receipt by non-automated reply e- mail from the recipient) (or to such other person or at such other facsimile or address as such party shall deliver to the other party by like notice):
If to the Company:
Lake Region Medical Holdings, Inc.
100 Fordham Road, Building C
Wilmington, MA 01887
Attention:
Ron Honig, SVP, General Counsel & Company Secretary
Email: ron.honig@lakeregionmedical.com
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With a copy (that does not constitute notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York,
NY 10017
Attention: Marni J. Lerner
Email: mlerner@stblaw.com
If
to Parent:
Greatbatch, Inc.
10000 Wehrle Drive
Clarence, NY
14031
Attention: General Counsel
Email: tmcevoy@greatbatch.com
With a copy (that does not constitute notice) to:
Hodgson Russ LLP
The Guaranty
Building
140 Pearl Street
Buffalo, NY 14202
Attention:
John J. Zak
Email: jzak@hodgsonruss.com
Section 10.6 Binding Effect; Persons Benefiting; No Assignment. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns. Except (a) that the D&O Indemnified Persons and their respective heirs, executors, administrators and personal representatives shall be express third-party
beneficiaries of Section 7.7 and entitled to enforce such section directly, (b) that the Lender Related Parties shall be express third-party beneficiaries of Section 10.1, Section 10.9(c), Section 10.11 and
Section 10.13 and entitled to enforce such section directly, (c) that the Parent Released Parties shall be express third-party beneficiaries of Section 10.14 and entitled to enforce such section directly and (d) the Non-Recourse
Parties shall be express third-party beneficiaries of Section 10.15 and entitled to enforce such section directly, nothing in this Agreement, express or implied, is intended to confer upon any Person not a party to this Agreement any rights or
remedies of any nature whatsoever under or by reason of this Agreement. This Agreement may not be assigned by any party hereto without the prior written consent of each of the other parties.
Section 10.7 Counterparts. This Agreement may be executed in one or more counterparts (delivery of which may occur via facsimile
or e-mail), each of which shall be binding as of the date first written above, and, when delivered, all of which shall constitute one and the same instrument. A facsimile signature or electronically scanned copy of a signature shall constitute and
shall be deemed to be sufficient evidence of a party’s execution of this Agreement, without necessity of further proof. Each such copy shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
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Section 10.8 No Prejudice; Survival. The parties hereto acknowledge that the terms
and language of this Agreement were the result of negotiations among the parties and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any particular party. Any controversy over construction
of this Agreement shall be decided without regard to events of authorship. None of the representations, warranties, covenants, obligations or other agreements in this Agreement shall survive the Closing; provided, however, that the
portion of this sentence preceding this proviso shall not limit any covenant, obligation or agreement of any party which by its express terms contemplates performance after the Closing.
Section 10.9 Governing Law; Consent to Jurisdiction.
(a) This Agreement and all matters arising out of or relating hereto, including its validity, construction and interpretation, shall be
governed by the laws of the State of Delaware, without regard to the laws as to choice or conflict of laws.
(b) Each party to this
Agreement, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction and venue of the applicable state and Federal courts of competent jurisdiction located in the State of Delaware, and any appellate court therefrom,
for the purpose of any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or related to this Agreement or the agreements delivered in connection herewith or the transactions
contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, (ii) to the extent not prohibited by Applicable Law, hereby waives and agrees not to assert by way of motion, as a defense or otherwise, in any
such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation that it is not subject to the personal jurisdiction of the above-named courts, that its property is exempt or immune from attachment
or execution by reason of a lack of personal jurisdiction, that any such proceeding brought in one of the above-named courts is improper by reason of a lack of personal jurisdiction or venue, or that this Agreement or the subject matter hereof may
not be enforced in or by such court by reason of a lack of personal jurisdiction or improper venue, and (iii) hereby agrees not to commence any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or
investigation arising out of or related to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby other than before one of the above-named courts, nor to make any motion or take any other
action seeking or intending to cause the transfer or removal of any such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of the above-named courts. Each party
hereby consents to and accepts service of process in any such proceeding in any manner permitted by Delaware law or if served by registered mail addressed to it at its address provided in Section 10.5. Each party agrees that a final judgment in
any such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by
Applicable Law.
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(c) Notwithstanding the foregoing and without limiting Section 10.13, each party to this
Agreement agrees that it will not bring or support any proceeding of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against the Financing Sources in any way relating to this Agreement, including
any dispute arising out of the Commitment Letter or the performance thereof, in any forum other than the Supreme Court of the State of New York, County of New York, or, if under Applicable Law exclusive jurisdiction is vested in the Federal courts,
the United States District Court for the Southern District of New York, County of New York (and of the appropriate appellate courts therefrom).
Section 10.10 Waiver. At any time prior to the Closing, Parent, on the one hand, and the Company, on the other, may
(a) extend the time for the performance of any of the obligations or other acts of the Company in the case of Parent, or of Parent or Merger Sub, in the case of the Company, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto of the Company in the case of Parent, or of Parent, in the case of the Company, and (c) waive compliance with any of the agreements or conditions contained herein of the Company, in
the case of Parent, or of Parent, in the case of the Company. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. No failure or
delay by any party in exercising any right, power or privilege hereunder shall act as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
Section 10.11 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, CAUSE OF ACTION, SUIT OR PROCEEDING (IN CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR BASED UPON THIS AGREEMENT, ANY DEBT FINANCING (OR AGAINST ANY FINANCING SOURCE) OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY. THE PARTIES
ACKNOWLEDGE THAT THIS SECTION 10.11 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT, AND ANY OTHER AGREEMENTS RELATING HERETO OR CONTEMPLATED HEREBY. ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 10.11 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, CLAIM, CAUSE OF ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE ANY OF THE WAIVERS CONTAINED IN THIS SECTION 10.11, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, AND (C) IT MAKES SUCH WAIVERS VOLUNTARILY.
Section 10.12
Enforcement of Agreement. The parties’ rights in this 10.12 are an integral part of the transactions contemplated by this Agreement and each party hereby waives
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any objections to any remedy referred to in this Section 10.12. For the avoidance of doubt, the parties agree that irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with its specific terms or was otherwise breached or the Closing was not consummated, and that money damages would not be an adequate remedy, even if available. It is accordingly agreed that, notwithstanding
anything in this Agreement to the contrary (but subject to and without limitation of the last sentence of this Section 10.12), the parties shall be entitled to an injunction or injunctions to prevent or remedy breaches or threatened breaches of
this Agreement and to enforce specifically the terms and provisions hereof and to any further equitable relief, this being in addition to any other remedy to which they are entitled at law or in equity. In the event any party seeks any remedy
referred to in this Section 10.12, such party shall not be required to prove damages or obtain, furnish, post or provide any bond or other security in connection with or as a condition to obtaining any such remedy.
Section 10.13 Recourse Against Financing Sources. Notwithstanding anything to the contrary in this Agreement or any document
delivered under this Agreement, the Company agrees that none of the Financing Sources, nor their respective Affiliates, successors or assigns (collectively, the “Lender Related Parties”) shall have any liability or obligation to the
Company and their Affiliates relating to this Agreement, any document delivered under this Agreement, the Commitment Letter or any of the transactions contemplated herein or therein including in connection with any funding or failure to fund. This
10.13 is intended to benefit and may be enforced by the Lender Related Parties, who are third party beneficiaries, and shall be binding on all successors and assigns of the Company. Nothing in this Section 10.13 shall limit, impair or otherwise
modify (i) the rights of any of the parties to the Commitment Letter (including Parent, Merger Sub or their respective Affiliates party to the Commitment Letter) enumerated in the Commitment Letter in accordance with the express terms and
conditions thereof or (ii) any liability or obligation of any of the Financing Sources, and/or of the rights of Parent, Merger Sub, the Company or their respective Affiliates, under any of the Definitive Financing Agreements.
Section 10.14 Releases.
(a) Effective upon the Closing, Parent, on its own behalf and on behalf of each of its former, present and future Affiliates (each of the
foregoing, a “Parent Releasing Party”), hereby releases and forever discharges each of the holders of shares of Company Common Stock and their respective Affiliates and Representatives, their respective successors and assigns and
each other Non-Recourse Party (each of the foregoing, a “Parent Released Party”) from any and all claims, rights, obligations, debts, liabilities, actions or causes of action of every kind and nature, whether foreseen or unforeseen,
contingent or actual, and whether now known or hereafter discovered, which any of the Parent Releasing Parties had, now has or may in the future have, at law or in equity, against any Parent Released Party in any way arising out of, in connection
with, pertaining to or by reason of events, circumstances or actions occurring, existing or taken prior to the or as of the Closing (each, a “Parent Released Claim”); provided, however, that the Parent Releasing
Parties expressly do not release their rights and interests (i) under (y) this Agreement or the Stockholders Agreement, or (z) the Confidentiality Agreement and the joint defense agreement between the Company and Parent, or
(ii) with respect to claims, actions, causes of action or any liabilities that arise as a result of actual fraud, intentional misrepresentation or other criminal act by the Parent Released Party.
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(b) This Section 10.14 shall survive the Closing, is intended for the benefit of and may be
enforced directly by each of the Parent Released Parties, and shall be binding on all successors and permitted assigns of the Parent Released Parties.
Section 10.15 Non-Recourse. Notwithstanding anything to the contrary contained herein or otherwise, this Agreement may only be
enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement or the transactions contemplated hereby, may only be made against
the entities and Persons that are expressly identified as parties to this Agreement in their capacities as such and no former, current or future stockholders, equity holders, controlling persons, directors, officers, employees, general or limited
partners, members, managers, agents or Affiliates of any party hereto, or any former, current or future direct or indirect stockholder, equity holder, controlling person, director, officer, employee, general or limited partner, member, manager,
agent or Affiliate of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise) based
on, in respect of, or by reason of, the transactions contemplated hereby or in respect of any oral representations made or alleged to be made in connection herewith. Without limiting the rights of any party against the other parties hereto, in no
event shall any party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party.
Section 10.16 Disclosure Letters. Disclosure in any section or subsection of the Company Disclosure Letter or the Parent
Disclosure Letter shall apply only to the indicated Section of this Agreement, except to the extent that it is reasonably apparent on the face of such disclosure that such disclosure is applicable to or relevant to another Section of this Agreement.
The inclusion of information in the Company Disclosure Letter or the Parent Disclosure Letter shall not be construed as an admission that such information is material to any of the Company or its Subsidiaries or to any of Parent or its Subsidiaries,
as applicable. In addition, matters reflected in the Company Disclosure Letter or the Parent Disclosure Letter are not necessarily limited to matters required by this Agreement to be reflected in the Company Disclosure Letter or the Parent
Disclosure Letter. Such additional matters are set forth for informational purposes only and do not necessarily include other matters of a similar nature. Neither the specifications of any dollar amount in any representation, warranty or covenant
contained in this Agreement nor the inclusion of any specific item in the Company Disclosure Letter or the Parent Disclosure Letter is intended to imply that such amount, or higher or lower amounts, or the item so included or other items, are or are
not material, and shall not be construed as an admission of liability or responsibility under any Law or in any dispute or controversy. Further, neither the specification of any item or matter in any representation, warranty or covenant contained in
this Agreement nor the inclusion of any specific item in the Company Disclosure Letter or the Parent Disclosure Letter is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business
(except where expressly stated in the relevant representation, warranty or covenant), and shall not be construed as an admission of liability or responsibility under any Law or in any dispute or controversy.
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Section 10.17 Waiver of Conflicts. Recognizing that Simpson Thacher &
Bartlett LLP has acted as legal counsel to the Company, its Subsidiaries, certain of the direct and indirect holders of shares of Company Common Stock and their Affiliates prior to date hereof, and that Simpson Thacher & Bartlett LLP
intends to act as legal counsel to certain of the direct and indirect holders of shares of Company Common Stock and their Affiliates (which will no longer include the Company and its Subsidiaries) after the Closing, each of Parent, Merger Sub and
the Company hereby waives, on its own behalf and agrees to cause its Affiliates, the Surviving Corporation and its Subsidiaries to waive, any conflicts that may arise in connection with Simpson Thacher & Bartlett LLP representing any direct
or indirect holders of the Company Common Stock or their Affiliates after the Closing as such representation may relate to Parent, Merger Sub, the Company, the Surviving Corporation and its Subsidiaries or the transactions contemplated hereby.
[NEXT PAGE IS SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be
executed as of the date first set forth above.
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GREATBATCH, INC. |
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/s/ Thomas J. Hook |
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Name: |
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Thomas J. Hook |
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Title: |
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President and Chief Executive Officer |
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PROVENANCE MERGER SUB INC. |
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By: |
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/s/ Thomas J. Hook |
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Name: |
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Thomas J. Hook |
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Title: |
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President and Chief Executive Officer |
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LAKE REGION MEDICAL HOLDINGS, INC. |
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/s/ Donald J. Spence |
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Donald J. Spence |
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Chairman and CEO |
[Signature Page to Merger Agreement]
Exhibit 10.1
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| MANUFACTURERS AND
TRADERS TRUST COMPANY 25
South Charles Street Baltimore, Maryland 21201 |
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CREDIT SUISSE
SECURITIES (USA) LLC
CREDIT SUISSE AG Eleven
Madison Avenue New York, New York 10010 |
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KEYBANK NATIONAL ASSOCIATION
KEYBANC CAPITAL MARKETS
INC. 127 Public Square
Cleveland, Ohio 44114 |
August 27, 2015
Greatbatch Ltd.
2595 North Dallas Parkway Suite 310
Frisco, Texas 75034
Project Redwing
Commitment Letter
Ladies and Gentlemen:
You have advised Manufacturers and Traders Trust Company (“M&T”), Credit Suisse AG (acting through such of its affiliates or
branches as it deems appropriate, “CS”), Credit Suisse Securities (USA) LLC (“CS Securities” and, together with CS and their respective affiliates, “Credit Suisse”), KeyBank
National Association (“KeyBank”), and KeyBanc Capital Markets Inc. (“KBCM”; and together with KeyBank, M&T, CS and CS Securities, each a “Commitment Party,” and together the
“Commitment Parties”, “we” or “us”) that Greatbatch Ltd., a New York corporation (the “Borrower” or “you”), desires to acquire
the Target (as defined in Annex I) and to engage in the other transactions described in Annex I (the “Transaction Description”). Capitalized terms used in this letter agreement but not defined herein shall have
the meanings given to them in the Annexes (as defined below).
You have further advised us that, in connection therewith, (a) the Borrower wishes to
obtain the senior secured credit facilities (the “Credit Facilities”) described in Annex II hereto (the “Credit Facilities Term Sheet”), in an aggregate principal amount of $1,500,000,000, and
(b) the Borrower (i) will seek to issue $400,000,000 in aggregate principal amount of its senior unsecured notes (the “Notes”) in a Rule 144A or other private placement, and (ii) to the extent the Borrower is
unable to issue the Notes on or prior to the Closing Date or in the full amount of Notes referred to above, wishes to borrow up to $400,000,000 in aggregate principal amount (minus the aggregate gross proceeds of any Notes or other Securities (as
defined in the Bridge Facility Fee Letter (as defined below)) issued on or prior to the Closing Date) of senior unsecured loans under the senior unsecured credit facility (the “Bridge Facility”) described in Annex III
(the “Bridge Facility Term Sheet”). The Credit Facilities and the Bridge Facility are collectively referred to herein as the “Facilities”. The attached Annexes I, II, III and IV are collectively
referred to as the “Annexes” and, together with this letter agreement, this “Commitment Letter.”
Subject
only to the conditions expressly set forth in Section 1 below, and on the terms contemplated by this Commitment Letter and the Fee Letters, (a) each of M&T, CS and KeyBank is pleased to inform you of its several and not joint
commitment to provide 37%, 34.5% and 28.5%, respectively, of the principal amount of each of the Facilities (in such capacity, each an “Initial Lender” and together, the “Initial
Lenders”), (b) M&T is pleased to advise you of its willingness to act as the sole and exclusive administrative agent (in such capacity, the “Administrative
Agent”) and collateral agent for the Credit Facilities, (c) M&T is pleased to advise you of its willingness to act as the sole and exclusive administrative agent (in such capacity, the “Bridge Agent”)
for the Bridge Facility and (d) each of M&T, CS Securities and KBCM is pleased to advise you of its willingness to act as a co-lead arranger and co- bookrunner (in such capacity, each a “Lead Arranger” and together,
the “Lead Arrangers”) for the Facilities. It is understood and agreed that (i) M&T will have “left” placement (and will be entitled to exercise the rights and discretion in respect of syndication of the
Revolving Credit Facility and the Term A Facility customarily associated with such placement), and that CS Securities will appear to the immediate right of M&T, on all marketing materials relating to the Revolving Credit Facility and the Term A
Facility and (ii) CS Securities will have “left” placement (and will be entitled to exercise the rights and discretion in respect of syndication of the Term B Facility and the Bridge Facility customarily associated with such
placement), and that M&T will appear to the immediate right of CS Securities, on all marketing materials relating to the Term B Facility and the Bridge Facility (including the confidential information memorandum referred to below). You further
agree that no other titles will be awarded (other than as expressly contemplated by this Commitment Letter or the Fee Letters referred to below) in connection with the Facilities unless you and we shall so agree.
Credit Suisse shall have the right (but not the obligation), subject to the consent of the other Lead Arrangers (each such consent not to be unreasonably
withheld, conditioned or delayed), to appoint up to four additional banks, financial institutions or other entities satisfactory to Credit Suisse (each, an “Additional Initial Lender”) as managers or co-managers (or similar
titles satisfactory to Credit Suisse) with respect to the Bridge Facility at any time after the date hereof and on or prior to the Closing Date, which Additional Initial Lenders shall assume the rights and obligations of the Initial Lenders
hereunder in respect of commitments in respect of the Bridge Facility not to exceed 20% in the aggregate of the total commitments in respect of the Bridge Facility with the amount allocated to Additional Initial Lenders and the allocation among any
Additional Initial Lenders to be determined by Credit Suisse; provided that no Additional Initial Lender shall receive greater compensatory economics than any Initial Lender party hereto is entitled to with respect to the Bridge Facility on
the date hereof; provided, further, that the assignment and assumption or joinder documentation (which may take the form of an amendment and restatement of this Commitment Letter and the Bridge Facility Fee Letter) effecting such appointment
and assumption shall be reasonably acceptable to Borrower and Credit Suisse and consented to by the other Lead Arrangers (such consent not to be unreasonably withheld, conditioned or delayed) and shall reflect that the “Initial Lenders”
under this Commitment Letter and the Bridge Facility Fee Letter in respect of the Bridge Facility shall include the Additional Initial Lenders or their respective designated affiliates (if applicable) for all purposes hereof and thereof. The
original Initial Lenders’ commitments in respect of the Bridge Facility shall be reduced by the aggregate amount of commitments held by the Additional Initial Lenders upon the execution by such Additional Initial Lenders of such documentation,
with such reduction applied ratably. For the avoidance of doubt, the commitments of the Initial Lenders and any Additional Initial Lenders shall be several and not joint.
The Commitment Parties may, from time to time, determine to provide certain of the services contemplated herein through one or more of their respective
affiliates.
1. Conditions Precedent
The commitments
and other obligations of each Commitment Party and each Initial Lender hereunder are subject only to the satisfaction or waiver (by all of the Initial Lenders) of the following conditions:
(a) The negotiation, execution and delivery by the parties thereto of the Facilities Documentation (as defined in Annex III), which
shall be consistent with this Commitment Letter, the Fee Letters and, in the case of the Credit Documentation, the Documentation Principles (as defined in Annex II).
(b) Since April 4, 2015, there has not been a Target Material Adverse Effect (as defined
below). For purposes hereof, “Target Material Adverse Effect” means any change, effect, event, occurrence, state of facts or development that, individually or in the aggregate with all other changes, effects, events,
occurrences, state of facts and developments, (a) is or would reasonably be expected to be materially adverse to the business, results of operations or financial condition of the Target and its Subsidiaries, taken as a whole, except to the
extent that such change, effect, event, occurrence, state of facts or development results from, arises out of or is attributable to (i) changes in general economic conditions, (ii) general financial or security market fluctuations or
changes in conditions thereof, (iii) changes in or events affecting any of the industries in which the Target or any of its Subsidiaries operate, (iv) any effect arising out of a change or proposed change in GAAP (or any authoritative
interpretation thereof) or Applicable Law (or any authoritative interpretation thereof), (v) the negotiation, execution, delivery, announcement or pendency of the Merger Agreement and the transactions contemplated hereby, including any
(x) litigation resulting therefrom and (y) change in customer, distributor, sales representative, employee, labor union, works council, supplier, financing source, licensor, licensee, sub- licensee, stockholder, Governmental Authority or
similar relationships, including as a result of the identity of the Parent or its plans or intentions for the Target or any of its Subsidiaries or their respective businesses or operations (or any portion thereof), (vi) any failure by the
Target and its Subsidiaries to meet any estimates of revenues, earnings, projections, budgets, plans or forecasts (provided, that unless otherwise excluded from the definition of Target Material Adverse Effect, the underlying cause or causes
of such failure may be taken into consideration when determining whether a Target Material Adverse Effect has occurred), (vii) natural disasters or other force majeure events, (viii) changes in local, national, international or other
political, social or regulatory conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack of any kind, or the worsening
thereof, (ix) compliance by the Target and its Subsidiaries with any of the terms and conditions of the Merger Agreement, (x) any change in the credit rating of the Target or any of its Subsidiaries (provided, that unless otherwise
excluded from the definition of Target Material Adverse Effect, the underlying cause or causes of such change in credit rating may be taken into consideration when determining whether a Target Material Adverse Effect has occurred), (xi) any
action taken by the Target or any of its Subsidiaries at the request or with the consent of Parent, so long as the Lead Arrangers shall have consented thereto in writing or (xii) any relationship or activity subject to the National Labor
Relations Act or similar Applicable Law; provided, that in the cases of the foregoing clauses (i) through (iv), (vii) and (viii), to the extent such changes do not have a materially disproportionate effect on the Target and its
Subsidiaries, taken as a whole, as compared to other participants in the same industry or (b) would prevent consummation of the transactions contemplated by the Merger Agreement by the Target.
For purposes of the foregoing definition, the terms “Applicable Law”, “Subsidiaries”, “GAAP’ and “Governmental
Authority” shall be used as defined in the Merger Agreement as in effect on the date hereof.
(c) The satisfaction or waiver by the
Initial Lenders of the conditions precedent to the initial funding of the applicable Credit Facility expressly contained in Annex II.
(d) The satisfaction or waiver by the Initial Lenders of the conditions precedent to the initial funding of the Bridge Facility expressly
contained in Annex III.
(e) The satisfaction or waiver by the Initial Lenders of the additional conditions precedent to the initial
funding of the Facilities contained in Annex IV.
It being understood and agreed, notwithstanding anything herein to the contrary, that there are no conditions
(implied or otherwise (including compliance with the terms of this Commitment Letter and Fee Letters)) to the commitments and other agreements hereunder other than the conditions expressly stated or expressly referred to in clauses (a) through
(e) above.
Notwithstanding anything in this Commitment Letter, the Fee Letters or any other letter agreement, definitive documentation or other
agreement or undertaking concerning the Facilities to the contrary, (i) the only representations or warranties, the accuracy of which shall be a condition to availability of the Facilities on the Closing Date shall be (A) such of the
representations made by or in respect of the Target and its subsidiaries in the Merger Agreement that are material to the interests of the Lenders, but only to the extent that you (or your affiliates) have the right to terminate your (or their)
obligations under the Merger Agreement or otherwise have the right to decline to consummate the Acquisition as a result of a breach of such representations or warranties in the Merger Agreement (the “Merger Agreement
Representations”) and (B) the Specified Representations (as defined below) made by the Borrower or any Guarantor in the Facilities Documentation and (ii) the terms of the Facilities Documentation shall be in a form such that
they do not impair availability of the Facilities on the Closing Date if the conditions precedent set forth in this Section 1 of this Commitment Letter are satisfied (it being understood that to the extent any security interest in the intended
Collateral for the Credit Facilities or any deliverable related to the perfection of security interests in the intended Collateral for the Credit Facilities (other than (x) any Collateral a security interest in which may be perfected solely by
the filing of a UCC financing statement and (y) the certificated equity securities, if any, of the Borrower and any material wholly- owned U.S. domestic subsidiaries of the Borrower (to the extent required by the Credit Documentation
(provided that such certificated equity securities, other than certificated equity securities of the Borrower and its applicable subsidiaries (other than the Target and its subsidiaries), will be required to be delivered on the Closing Date
only to the extent received from the Target or its equityholders after your use of commercially reasonable efforts to do so)) is not provided on the Closing Date after your use of commercially reasonable efforts to do so, the perfection or creation
of such security interest(s) and, or provision of such deliverable shall not constitute a condition precedent to the availability of the Credit Facilities on the Closing Date but shall be required to be created, perfected and/or delivered, as
applicable, within 90 days after the Closing Date (or such longer period as the Administrative Agent and the Lead Arrangers may agree to in writing) pursuant to arrangements to be mutually agreed between the Administrative Agent and Borrower. For
purposes hereof, the “Specified Representations” means the representations and warranties of the Borrower and the Guarantors set forth in the Facilities Documentation relating to corporate status, due organization, corporate
existence, corporate power and authority (in each case, as to execution, delivery and performance of the applicable Facilities Documentation), the due authorization, execution, delivery and enforceability of the Facilities Documentation, the
Facilities Documentation not conflicting with charter documents, solvency of Borrower and its consolidated subsidiaries on a consolidated basis (determined in accordance with Exhibit A to Annex IV), Federal Reserve margin regulations, status of debt
under the Facilities as senior debt (if applicable), the PATRIOT Act, OFAC, FCPA and the Investment Company Act, and, in the case of the Credit Facilities, subject to the last parenthetical appearing in the preceding sentence, relating to the
validity, priority and perfection of the security interests required to be pledged hereunder. This paragraph, and the provisions herein, shall be referred to as the “Limited Conditionality Provisions.”
2. Commitment Termination
Each Commitment Party’s
and each Initial Lender’s commitment and the other obligations set forth in this Commitment Letter will terminate on the earliest of (A) 5:00 p.m. (New York City time) on the date that is 90 days after the date of this Letter,
provided, however, if the Parent or Target have the right to extend the termination date of the Merger Agreement pursuant to Section 9.1 thereof and do so extend the date, then termination of the Initial Lenders’ commitment and
other obligations set forth in this
Commitment Letter pursuant to this clause (A) shall instead be the date of the termination of the Merger Agreement in accordance with Section 9.1 thereof, provided that in any event the
commitments and the other obligations of the Commitment Parties and the Initial Lenders shall terminate 180 days after the date hereof, (B) the date the Merger Agreement is validly terminated in accordance with its terms prior to the closing of
the Acquisition and (C) the date the Acquisition is consummated without any borrowing under the Facilities, unless each Commitment Party and each Initial Lender shall, in its sole discretion, agree to an extension in writing. In addition, the
commitments of the Initial Lenders hereunder to provide the Bridge Facility will terminate to the extent of the issuance of any Notes or other Securities (as defined in the Bridge Facility Fee Letter).
3. Syndication
The Lead Arrangers reserve the right,
before or after the date of the consummation of the Acquisition and the initial funding under the Facilities (such date, the “Closing Date”), to syndicate all or a portion of the Initial Lenders’ commitments under each
Facility to one or more other financial institutions and institutional lenders selected by the Lead Arrangers in consultation with you and reasonably acceptable to you (such acceptance not to be unreasonably withheld, conditioned or delayed), and in
each case, that will become parties to the Facilities Documentation (the financial institutions becoming parties to the Facilities Documentation being collectively referred to herein as the “Lenders”); provided, that
it is understood that the Lead Arrangers will not syndicate the Facilities to (i) those persons, identified by you in writing from time to time (provided that no such written notice shall apply retroactively to disqualify any person or
any affiliates of any person) as competitors of the Borrower, the Target or their respective subsidiaries, or affiliates of such persons (other than any bona fide debt fund) to the extent such affiliates are clearly identifiable as affiliates of
such person on the basis of their name or (ii) any person (together with its affiliates to the extent clearly identifiable as affiliates of such person on the basis of their name) identified in writing to the Lead Arrangers by the Borrower
prior to the date of this Commitment Letter by the Lead Arrangers (collectively, the “Disqualified Institutions”); provided further, that notwithstanding the Lead Arrangers’ right to syndicate the Facilities and
receive commitments with respect thereto, (i) except to the extent that such assignees shall become parties to this Commitment Letter, the Initial Lenders shall not be relieved, released or novated from their obligations hereunder (including
their obligations to fund the Facilities on the Closing Date) in connection with any syndication, assignment or participation of the Facilities, including their commitments in respect thereof, until after the Closing Date has occurred, (ii) no
assignment or novation shall become effective with respect to all or any portion of the Initial Lenders’ commitments in respect of the Facilities until the initial funding of the Facilities, and (iii) unless you otherwise agree in writing,
the Initial Lenders shall retain exclusive control over all rights and obligations with respect to their commitments in respect of the Facilities, including all rights with respect to consents, modifications, supplements, waivers and amendments,
until the Closing Date has occurred.
The Lead Arrangers, in their capacity as such, will manage all aspects of the syndication of the Facilities in
consultation with you, including the timing of all offers to potential Lenders, the determination of all amounts offered to potential Lenders, the selection of Lenders (subject to the preceding paragraph), the allocation of commitments among the
Lenders and the compensation to be provided to the Lenders in connection with the syndication.
Without limiting your obligations to assist with
syndication efforts as set forth herein, it is understood that the Initial Lenders’ commitments hereunder are not conditioned upon the syndication of, or receipt of commitments in respect of, the Facilities and in no event shall the
commencement or successful completion of syndication of the Facilities constitute a condition to the availability of the Facilities on the Closing Date. Until the earlier of 60 days after the Closing Date and the date of completion of a Successful
Syndication (as defined in the Credit Facilities Fee Letter (as defined below)) (the
“Syndication Date”), you agree to actively assist the Lead Arrangers in completing a timely syndication of each of the Facilities that is reasonably satisfactory to the
Lead Arrangers. Borrower’s assistance in forming such syndicate shall include but not be limited to: (i) as the Lead Arrangers may reasonably request, making senior management, representatives and advisors of Borrower available (and, to
the extent provided in the Merger Agreement, using your commercially reasonable efforts to make senior management, representatives and advisors of the Target available) to participate in informational meetings with potential Lenders at such times
and, to the extent applicable, places, to be mutually agreed; (ii) using commercially reasonable efforts to ensure that the syndication effort benefits from Borrower’s and the Parent’s existing lending and investment banking
relationships and, to the extent practical and appropriate, and, to the extent provided in the Merger Agreement, the Target’s existing lending relationships; (iii) your cooperation (including, to the extent provided in the Merger
Agreement, using commercially reasonable efforts to cause the Target to cooperate) in the preparation of a customary confidential information memorandum and other marketing materials to be used in connection with the syndication of each of the
Facilities; (iv) using your commercially reasonable efforts to obtain, prior to the launch of syndication, (A) a public corporate family rating (but not any specific rating level) from Moody’s Investors Service, Inc.
(“Moody’s”) for the Borrower after giving effect to the Acquisition and the other transactions contemplated hereunder and any other material recent or pending transaction or financing, (B) a public corporate credit
rating (but not any specific rating level) from Standard & Poor’s Ratings Group, a division of McGraw Hill Corporation (“S&P”), for the Borrower after giving effect to the Acquisition and the other
transactions contemplated hereunder and any other material recent or pending transaction or financing and (C) a public credit rating (but not any specific rating level) for the Notes and the Facilities from each of Moody’s and S&P
(collectively, the “Ratings”); and (v) the hosting, with the Lead Arrangers and appropriate members of senior management of the Borrower, of meetings of prospective Lenders at times and locations to be mutually agreed
(and, to the extent provided in the Merger Agreement, using your commercially reasonable efforts to cause senior management of the Target to be available for such meetings). For the avoidance of doubt, you will not be required to provide any
information to the extent that the provision thereof would violate any law, rule or regulation, or any obligation of confidentiality binding upon you, the Target or any of your or its affiliates (provided that in the case of any such
confidentiality obligation, (x) you shall have used commercially reasonable efforts to obtain consent to provide such information (in the case of Target, to the extent permitted by the Merger Agreement) and (y) such obligation was not
entered into in contemplation of this provision; provided further that you shall notify us if any such information is being withheld as a result of any such obligation of confidentiality). Notwithstanding anything to the contrary contained in
this Commitment Letter or the Fee Letters or any other letter agreement or undertaking concerning the financing of the Transactions to the contrary, neither the obtaining of the Ratings referenced above nor the compliance with any of the other
provisions set forth in this paragraph shall constitute a condition to the commitments hereunder or the funding of the Facilities on the Closing Date after satisfaction of the conditions thereto.
You acknowledge that (i) the Lead Arrangers may make available any Information and Projections (each as defined in Section 8) (collectively, the
“Company Materials”) on a confidential basis to potential Lenders by posting the Company Materials on SyndTrak, Intralinks, the Internet or another similar electronic system (the “Platform”) and
(ii) certain of the potential Lenders may be public side Lenders (i.e., Lenders that do not wish to receive MNPI (as defined below)) (each, a “Public Lender” and each Lender that is not a Public Lender, a
“Private Lender”). You agree (A) at the request of the Lead Arrangers, to assist (and, to the extent provided in the Merger Agreement, to use commercially reasonable efforts to cause the Target to assist) the Lead
Arrangers in preparing a version of the information package and presentation to be provided to potential Lenders that consists exclusively of information and documentation that is either (a) (x) publicly available, in the case of the
Parent and its subsidiaries or any of their respective securities, or (y) of a type that would be publicly available if any of the Target or its subsidiaries were public reporting companies, or (b) not material with respect to the Parent,
the Target or any of their respective subsidiaries or any securities of any of the foregoing for purposes of foreign,
United States federal and state securities laws (all such information, “Public Lender Information”; and all information and documentation that is not Public Lender
Information, “MNPI”); (B) to identify all Company Materials that are to be made available to Public Lenders which, at a minimum, will mean that the word “PUBLIC” will appear prominently on the first page
thereof; (C) that by marking Company Materials “PUBLIC,” you will be deemed to have (i) represented that such Company Materials marked “PUBLIC” do not contain any MNPI, and (ii) authorized the Lead Arrangers and
the proposed Lenders to treat such Company Materials as not containing any MNPI (although they may be confidential or proprietary) (it being understood that you shall not be under any obligation to mark Company Materials “PUBLIC”);
(D) all Company Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Lender”; and (E) the Lead Arrangers will be entitled (but not obligated) to treat any
Company Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Lender.”
Before the distribution of any Company Materials to (a) prospective Private Lenders, you shall provide us with a customary letter authorizing the
dissemination of the Company Materials to such Private Lenders, and (b) prospective Public Lenders, you shall provide us with a customary letter authorizing the public dissemination of the Company Materials and confirming the absence of any
MNPI therefrom, each of which letters shall include a customary “10b-5” representation. Notwithstanding the foregoing, you acknowledge and agree that the following documents may (except to the extent you notify us to the contrary promptly
prior to their intended distribution) be distributed to all prospective Lenders, including prospective Public Lenders: (w) the summary of terms set forth in Annex II, (x) drafts and final credit documentation,
(y) administrative materials prepared by the Lead Arrangers (such as Lender meeting invitations, allocations and funding and closing memoranda), (z) notifications of changes to the terms of the Facilities; and (z) other materials
(excluding the Projections) intended for prospective public Lenders after the initial distribution of Company Materials.
To ensure an orderly and
effective syndication of each of the Facilities you agree that, until the Syndication Date, you will not and will not permit any of your affiliates to (and, to the extent provided in the Merger Agreement, you will use commercially reasonable efforts
to ensure that each of the Target and its affiliates does not), syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of any debt security or commercial bank or other debt facility
(including any renewals thereof) other than the Notes, other Securities (as defined in the Bridge Facility Fee Letter) the Facilities, capital leases, ordinary course business financings or any indebtedness of the Target permitted to be incurred
pursuant to the Merger Agreement, in each case, that could reasonably be expected to (as determined by the Lead Arrangers with commitments, or whose affiliates have commitments, representing a majority of the commitments with respect to the
Facilities under this Commitment Letter, in consultation with the Borrower) adversely affect the syndication of any of the Facilities in any material respect without the prior written consent of the Lead Arrangers.
You agree that, in connection with the syndication, no Lender will receive any compensation of any kind for its participation in the Facilities, except as
expressly provided in the Fee Letters or in the Annexes or as otherwise agreed in writing by the Lead Arrangers.
4. Fees
In addition to the fees described in the Annexes, you will pay (or cause to be paid) the fees set forth in each of (x) the Credit Facilities Fee Letter
dated the date hereof (the “Credit Facilities Fee Letter”), between you and the Commitment Parties and (y) the Bridge Facility Fee Letter dated the date hereof (the “Bridge Facility Fee Letter”;
and together with the Credit Facilities Fee Letter, the “Fee Letters”), between you and the Commitment Parties. The terms of the Fee Letters, in the case of the Commitment Parties, and the Bridge Facility Fee Letter, in the
case of the Commitment Parties and the Additional
Initial Lenders, in each case are an integral part of such Commitment Party’s or Additional Initial Lender’s, as applicable, commitment and other obligations hereunder and constitute
part of this Commitment Letter for all purposes hereof. Once paid, such fees shall not be refundable under any circumstances except as otherwise agreed in writing by the parties hereto.
5. Indemnification
You agree to indemnify and hold
harmless each Commitment Party, each Initial Lender and each of their respective affiliates and their respective officers, directors, members, employees, agents, advisors, other representatives and controlling persons (collectively, the
“indemnified persons”), from and against any and all losses, claims, damages, liabilities and expenses, joint or several, to which any such indemnified person may become subject arising out of or in connection with this
Commitment Letter, the Fee Letters, the Facilities Documentation and the other transactions contemplated hereby or thereby, each of the Facilities and the use of the proceeds thereof or any claim, litigation, investigation or proceeding (any of the
foregoing, a “Proceeding”) relating to any of the foregoing, regardless of whether any such indemnified person is a party thereto and whether or not such Proceedings are brought by you, by the Target, or by your or its
respective creditors, equity holders or affiliates or any other third person, and to reimburse each such indemnified person for any reasonable and documented out-of-pocket legal expenses of one firm of counsel for all such indemnified persons, taken
as a whole and, if necessary, of one local counsel in each appropriate jurisdiction (and, to the extent required by the subject matter, one specialist counsel for each such specialized area of law in each appropriate jurisdiction), and for all such
indemnified persons, taken as a whole (and, in the case of a conflict of interest (as determined in the sole discretion of each affected indemnified person) where the indemnified person affected by such conflict informs you of such conflict and
thereafter retains its own counsel, of another firm of counsel for each such affected indemnified person) or other reasonable and documented out-of-pocket fees and expenses incurred in connection with investigating or defending any of the
foregoing; provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses (i) to the extent they resulted from the gross negligence, bad faith or willful
misconduct of such indemnified person or any of its related indemnified persons (as defined below), (ii) to the extent arising from a material breach of the obligations of such indemnified person or any of its related indemnified persons under
this Commitment Letter, the Fee Letters or the Facilities Documentation (in the case of each of preceding clauses (i) and (ii), as determined by a court of competent jurisdiction in a final and non-appealable judgment) or (iii) arising out
of any Proceeding that does not involve an act or omission of you or any of your affiliates and that is brought by an indemnified person against any other indemnified person (except when one of the parties to such action was acting in its capacity
as an agent, an arranger, a bookrunner or other agency capacity). Notwithstanding any other provision of this Commitment Letter, no indemnified person shall be liable for any damages arising from the use by others of information or other materials
obtained through electronic, telecommunications or other information transmission systems, except to the extent such damages are found by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross
negligence, bad faith or willful misconduct of such indemnified person or any related indemnified person; provided, that nothing contained in this sentence shall limit your indemnification obligations to the extent such damages arising from
the use of information or other materials obtained through electronic, telecommunications or other information transmission systems are included in any third party claim in connection with which such indemnified parson is entitled to indemnification
hereunder. Notwithstanding any other provisions of this Commitment Letter to the contrary, none of we, you, the Target or any indemnified person shall be liable for any indirect, special, punitive or consequential damages incurred in connection with
the Transactions or the other transactions contemplated by this Commitment Letter (provided, that this provision shall not limit your indemnification obligations set forth above, including, without limitation, as to any claims by persons not
party to this Commitment Letter, or brought in violation of this sentence). For purposes hereof, a “related indemnified person” of an indemnified person means (1) any person controlled by,
controlling or under common control with such indemnified person (an “affiliate”) and (2) the respective directors, officers, employees or agents of such indemnified
person or any affiliate of such indemnified person, in each case, acting on behalf of or at the instructions of such indemnified person or any such affiliate.
6. Costs and Expenses
You shall pay or reimburse each
Commitment Party from time to time, upon presentation of a summary statement, together with any supporting documentation reasonably requested by you, for all reasonable and documented or invoiced costs and expenses (including, without limitation,
reasonable expenses of such Commitment Party’s due diligence investigation, consultants’ fees, and syndication expenses, travel expenses and fees and disbursements and other charges of counsel) incurred by each Commitment Party (whether
incurred before or after the date hereof and whether or not the Transactions close) in connection with the Facilities and the preparation, negotiation, execution and delivery of the Facilities Documentation and the preparation, negotiation,
execution, delivery and enforcement of this Commitment Letter and the Fee Letters. You shall pay or reimburse the Administrative Agent, the Bridge Agent and each Commitment Party from time to time, upon presentation of a summary statement, together
with any supporting documentation reasonably requested by you, for all reasonable and documented or invoiced costs and expenses (including, without limitation, fees and disbursements and other charges of counsel) incurred by the Administrative
Agent, the Bridge Agent or such Commitment Party (whether incurred before or after the date hereof and whether or not the Transactions close) in connection with the Facilities and the preparation, negotiation, execution, delivery and enforcement of
the Facilities Documentation. The foregoing provisions in this paragraph shall be superseded in each case, to the extent covered thereby, by the applicable provisions contained in the Facilities Documentation upon execution thereof and thereafter
shall have no further force and effect.
7. Confidentiality
You agree that this Commitment Letter and the Fee Letters, and the contents hereof and thereof, are for your confidential use only and that neither its
existence nor the terms hereof will be disclosed by you to any person without the prior written approval of the Lead Arrangers (such approval not to be unreasonably withheld or delayed) other than to your affiliates and your and their officers,
directors, employees, attorneys, accountants, agents and other advisors, and then only on a confidential and “need to know” basis in connection with the transactions contemplated hereby. Notwithstanding the foregoing, (i) you may
disclose this Commitment Letter (and, only if and to the extent portions thereof have been redacted in a manner reasonably agreed by us (including the portions thereof addressing fees, other economic terms and “market flex” terms), the Fee
Letters) to the Target, its affiliates, their respective subsidiaries and their respective equityholders, officers, directors, employees, affiliates, independent auditors, legal counsel and other legal advisors on a confidential and “need to
know” basis in connection with the Acquisition, (ii) following your acceptance hereof and its return of an executed counterpart of this Commitment Letter to the Lead Arrangers as provided below, you may disclose the Commitment Letter (but
not the Fee Letters) in any syndication or other marketing materials in connection with the Facilities or in connection with any public filing relating to the Transactions, (iii) following your acceptance of the provisions hereof and its return
of an executed counterpart of this Commitment Letter to the Lead Arrangers as provided below, you may file a copy of any portion of this Commitment Letter (other than the Fee Letters) in any public record in which it is required by law to be filed,
(iv) you may disclose the existence and contents of this Commitment Letter (but not the Fee Letters), including the Annexes I and II to any rating agency or other person in connection with the Transactions to the extent necessary
to satisfy your obligations or the conditions hereunder, (v) you may make such other public disclosures of any of the terms and conditions hereof pursuant to the order of any court or administrative agency in any pending legal, judicial or
administrative proceeding, or as otherwise required by law or
compulsory legal process or to the extent requested or required by governmental and/or regulatory authorities, in each case based on the reasonable advice of your legal counsel (in which case you
agree, to the extent practicable and not prohibited by applicable law, regulation or other compulsory legal process or order to inform us promptly thereof prior to disclosure), and (vi) you may disclose the aggregate fee amount contained in the
Fee Letters as part of the fee component in the Projections and pro forma information or other generic disclosure of aggregate sources and uses related to fee amounts related to the Transactions to the extent customary or required in offering and
marketing materials for the Facilities or in any public filing relating to the Transactions, and to the Target, its affiliates, their respective subsidiaries and their respective officers, directors, employees, affiliates, independent auditors,
legal counsel and other legal advisors on a confidential and “need to know” basis solely in connection with the Acquisition. Your obligations under this paragraph (except with respect to the Fee Letters) shall terminate on the second
anniversary of the date hereof.
Each Commitment Party and each Initial Lender and the respective affiliates of each of the foregoing will use all
confidential information provided to them or such affiliates by or on behalf of you hereunder or in connection with the Acquisition and the related Transactions solely for the purpose of providing the services which are the subject of this
Commitment Letter and shall treat confidentially all such information and shall not publish, disclose or otherwise divulge, such information; provided that nothing herein shall prevent any Commitment Party, any Initial Lender or any of their
respective affiliates from disclosing any such information (a) pursuant to the order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, or otherwise as required by applicable law or compulsory
legal process, (b) upon the request or demand of any regulatory authority having jurisdiction over such Commitment Party, such Initial Lender or any of their respective affiliates, (c) to the extent that such information becomes publicly
available other than by reason of improper disclosure by such Commitment Party, such Initial Lender or any of their respective affiliates, (d) to the extent that such information is received by such Commitment Party or such Initial Lender from
a third party that is not, to such Commitment Party’s or such Initial Lender’s, as applicable, knowledge, subject to confidentiality obligations owing to you, the Borrower or any respective affiliates or related parties, (e) to the
extent that such information is independently developed by such Commitment Party or such Initial Lender, (f) to such Commitment Party’s or such Initial Lender’s respective affiliates and to their and their affiliates’ respective
employees, legal counsel, independent auditors, professionals and other experts or agents who need to know such information in connection with the Transactions and who have agreed (including as a general condition of employment) to keep information
of this type confidential; (g) to potential or prospective lenders, participants or prospective participants and to any direct or indirect contractual counterparty to any swap or derivative transaction relating to Borrower or any of its
subsidiaries, in each case who agree to be bound by the terms of this paragraph (or confidentiality and undertakings substantially similar to this paragraph) or (h) for purposes of establishing a “due diligence” defense;
provided, that the disclosure of any such information to any potential or prospective Lenders, participants or prospective participants or assignees and to any direct or indirect contractual counterparty to any swap or derivative transaction
relating to Borrower or any of its subsidiaries referred to above shall be made subject to the acknowledgment and acceptance by such potential or prospective Lender, participant or prospective participant or assignees or any direct or indirect
contractual counterparty to any swap or derivative transaction relating to Borrower or any of its subsidiaries that such information is being disseminated on a confidential basis (on substantially the terms set forth in this paragraph or as is
otherwise reasonably acceptable to you, each Commitment Party and each Initial Lender, including, without limitation, as agreed in any Company Materials or other marketing materials) in accordance with the standard syndication processes of such
Commitment Party or customary market standards for dissemination of such type of information. Each Commitment Party’s, each Initial Lender’s, and each of their respective affiliate’s, if any, obligations under this paragraph shall
terminate automatically and be superseded by the confidentiality provisions in the Facilities Documentation upon the initial funding thereunder; provided, that if the Closing Date does not occur, this paragraph shall automatically terminate
on the second anniversary hereof.
8. Representations and Warranties
You represent and warrant (which representation and warranty shall be to your knowledge to the extent it relates to the Target or its subsidiaries or
businesses and is made prior to the Closing Date) that (i) all written information, other than Projections (as defined below), other forward looking information and information of a general economic or general or specific industry nature, that
has been or will hereafter be made available to any Commitment Party or any Initial Lender by you or by any of your representatives on your behalf in connection with the transactions contemplated hereby (the “Information”),
when taken as a whole, is or will be correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such statements were or are made (giving effect to all supplements and updates previously provided thereto) and (ii) all financial projections, if any, that have been
or will be prepared by or on behalf of you or by any of your representatives on your behalf in connection with the transactions contemplated hereby (which information shall be, prior to the Closing Date, to your knowledge to the extent it related to
the Target or its subsidiaries or businesses) and made available to any Commitment Party, any Lender or any potential Lender (the “Projections”) have been or will be prepared in good faith based upon assumptions that are
believed by you to be reasonable at the time furnished; it being understood that the Projections are as to future events and are not to be viewed as facts, the Projections are subject to significant uncertainties and contingencies, many of which are
beyond your control, that no assurance can be given that any particular Projections will be realized and that actual results during the period or periods covered by any such Projections may differ significantly from the projected results and such
differences may be material. If, at any time prior to the later of the Syndication Date and the Closing Date, you become aware that any of the representations and warranties in the preceding sentence would be incorrect in any material respect if the
Information or Projections were being furnished, and such representations and warranties were being made, at such time, then you will (or prior to the Closing Date, with respect to the Information and Projections relating to the Target, you will use
commercially reasonable efforts to) promptly supplement the Information and or Projections so that such representations and warranties (and with respect to the representations and warranties relating to the Target and its subsidiaries, prior to the
Closing Date, to your knowledge) contained in this paragraph remain accurate and complete in all material respects under those circumstances.
In
arranging each of the Facilities including the syndications of the Facilities, each Commitment Party will be entitled to use, and to rely on the accuracy of, the Information without responsibility for independent verification thereof.
9. No Third Party Reliance; Not a Fiduciary, Etc.
The agreements of each Commitment Party and each Initial Lender hereunder and of any Lender that issues a commitment to provide financing under the Facilities
are made solely for your benefit and the benefit of each Commitment Party and each Initial Lender, as applicable, and may not be relied upon or enforced by any other person.
You hereby acknowledge that each Commitment Party and each Initial Lender is acting pursuant to a contractual relationship, on an arm’s length basis, and
the parties hereto do not intend that any Commitment Party or any Initial Lender act or be responsible as a fiduciary to you, your management, stockholders, creditors or any other person. You and each Commitment Party and each Initial Lender hereby
expressly disclaim any fiduciary, advisory or agency relationship and agree they are each
responsible for making their own independent judgments with respect to any transactions entered into between them. You also hereby acknowledge that each Commitment Party and each Initial Lender
has not advised and is not advising you as to any legal, accounting, regulatory or tax matters, and that you are consulting your own advisors concerning such matters to the extent you deem it appropriate.
You understand that each Commitment Party and each Initial Lender and their respective affiliates (collectively, the “Group”) are
engaged in a wide range of financial services and businesses (including investment management, financing, securities trading, corporate and investment banking and research). Members of the Group and businesses within the Group generally act
independently of each other, both for their own account and for the account of clients. Accordingly, there may be situations where parts of the Group and/or their clients either now have or may in the future have interests, or take actions, that may
conflict with your interests. For example, the Group may, in the ordinary course of business, engage in trading in financial products or undertake other investment businesses for their own account or on behalf of other clients, including without
limitation, trading in or holding long, short or derivative positions in securities, loans or other financial products of you or your affiliates or other entities connected with the Facilities or the transactions contemplated hereby. Additionally,
you acknowledge that any of us or our respective affiliates may be arranging or providing (or contemplating arranging or providing) a form of acquisition financing to other potential purchasers of the Target.
In recognition of the foregoing, you agree that the Group is not required to restrict its activities as a result of this Commitment Letter and that the Group
may undertake any business activity without further consultation with or notification to you. Neither this Commitment Letter nor the receipt by any Commitment Party or any Initial Lender of confidential information nor any other matter will give
rise to any fiduciary, equitable or contractual duties (including without limitation, any duty of trust or confidence) that would prevent or restrict the Group from acting on behalf of other customers or for its own account. Furthermore, you agree
that neither the Group nor any member or business of the Group is under a duty to disclose to you or use on your behalf any information whatsoever about or derived from those activities or to account for any revenue or profits obtained in connection
with such activities. However, consistent with the Group’s long-standing policy to hold in confidence the affairs of its customers, the Group will not use confidential information obtained from you except in connection with its services to, and
its relationship with, you; provided, however, that the Group will be permitted to disclose information as provided in Section 7 above. You also acknowledge that no member of the Group has any obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you, confidential information obtained by any member of the Group from other companies, and no member of the Group shall be under any obligation to furnish to you any information
any member of the Group may possess about the Target, its equity holders or affiliates, the Acquisition and other potential purchasers and their respective strategies and bids.
10. Assignments
Other than pursuant to, and subject to,
the syndication provisions in paragraph 3 above and the fourth full paragraph of this Commitment Letter, and by Commitment Parties or Initial Lenders to their respective affiliates as expressly provided for herein, this Commitment Letter and the
commitments hereunder shall not be assignable by any party hereto, without the prior written consent of each other party hereto (and any attempted assignment without such consent shall be void ab initio).
11. Amendments
This Commitment Letter may not be amended
or any provision hereof waived or modified except by an instrument in writing signed by each party hereto; provided that CS Securities and any Additional Initial Lender may effect the provisions of the fourth full paragraph of this Commitment
Letter hereof with the consent of the other Lead Arrangers (such consent not to be unreasonably withheld, conditioned or delayed) but without any need for the consent or signature of any other party hereto.
12. Miscellaneous
THIS COMMITMENT LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT SOLELY
(I) THE INTERPRETATION OF THE DEFINITION OF “TARGET MATERIAL ADVERSE EFFECT” (AND WHETHER OR NOT A TARGET MATERIAL ADVERSE EFFECT HAS OCCURRED), (II) THE ACCURACY OF ANY MERGER AGREEMENT REPRESENTATIONS AND WHETHER OR NOT YOU OR YOUR
AFFILIATES HAS THE RIGHT TO TERMINATE YOUR OR ITS OBLIGATION UNDER THE ACQUISITION AGREEMENT OR OTHERWISE HAVE THE RIGHT TO DECLINE TO CONSUMMATE THE ACQUISITION, IN EACH CASE AS A RESULT OF A BREACH OF THE MERGER AGREEMENT REPRESENTATIONS, AND
(III) WHETHER OR NOT THE ACQUISITION HAS BEEN CONSUMMATED SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF TO THE EXTENT THE SAME WOULD PERMIT OR
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. This Commitment Letter and the Fee Letters set forth the entire agreement among the parties with respect to the matters addressed herein and supersede all prior communications, written or
oral, with respect hereto. This Commitment Letter may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original and all of which, taken together, shall constitute one and the same Commitment
Letter. Delivery of an executed counterpart of a signature page to this Commitment Letter by telecopier shall be as effective as delivery of a manually executed counterpart of this Commitment Letter. Sections 4 through 9 and 12 through 14 shall
survive the termination of the Commitment Party’s and the Initial Lender’s commitments and other obligations hereunder and shall remain in full force and effect regardless of whether definitive Facilities Documentation are executed and
delivered (with respect to Section 7, to the extent set forth therein); provided, that your obligations under this Commitment Letter (other than your obligations with respect to (a) assistance to be provided in connection with the
syndication thereof (including supplementing and/or correcting Information and Projections) prior to the Syndication Date and (b) confidentiality of the Fee Letters and the contents thereof) shall automatically terminate and be superseded by
the provisions of the Facilities Documentation upon the initial funding thereunder, and you shall automatically be released from all liability in connection therewith at such time. You may terminate this Commitment Letter and/or the Initial
Lenders’ commitments with respect to the Facilities (or portion thereof pro rata among the Initial Lenders) hereunder at any time subject to the provisions of the preceding sentence. You acknowledge that information and documents relating to
the Facilities may be transmitted through the Platform, subject to the limitations set forth in Section 3. Notwithstanding anything in the second paragraph of Section 7 to the contrary, each Commitment Party may place advertisements in
financial and other newspapers and periodicals or on a home page or similar place for dissemination of information on the Internet or World Wide Web as it may choose, and circulate similar promotional materials, after the closing of the Transactions
in the form of a “tombstone” or otherwise describing the names of you, the Parent, the Target and your and their respective affiliates (or any of them), and the amount, type and closing date of the Transactions, all at such Commitment
Party’s expense.
Each of the parties hereto agrees that this Commitment Letter is a binding and enforceable agreement with respect to the subject
matter contained herein, including an agreement to negotiate in good faith the Facilities Documentation by the parties hereto in a manner consistent with this Commitment Letter, it being acknowledged and agreed that the commitment provided hereunder
is subject to the conditions precedent as expressly set forth herein. Reasonably promptly after the execution of this Commitment Letter, the parties hereto shall proceed with the negotiation of the Facilities Documentation for the purpose of
executing and delivering the Facilities Documentation substantially simultaneously with the consummation of the Acquisition.
Section headings used herein are for convenience of reference only and are not to affect the construction of, or
to be taken into consideration in interpreting, this Commitment Letter.
13. Taxes; Payments.
All payments under this Commitment Letter (including without limitation, the Fee Letters) will, except as otherwise provided herein, be made in U.S. Dollars in
New York, New York and will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto. You will pay any and all such taxes
and will indemnify each Commitment Party and each Initial Lender for and hold it harmless against any such taxes and any liability arising therefrom or with respect thereto.
To the fullest extent permitted by law, you will make all payments hereunder regardless of any defense or counterclaim, including, without limitation, any
defense or counterclaim based on any law, rule or policy which is now or hereafter promulgated by any governmental authority or regulatory body and which may adversely affect your obligation to make, or the right of each Commitment Party and each
Initial Lender to receive, such payments.
14. Waiver of Jury Trial, Etc.
EACH PARTY HERETO 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 COMMITMENT LETTER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
With respect to all matters relating to this Commitment Letter, the Fee Letters or other undertaking concerning the financing of the Transactions and the
financing contemplated under those agreements or undertakings, each of the parties hereto hereby irrevocably and unconditionally (i) submits, for itself and its property, to the exclusive jurisdiction of the United States District Court for the
Southern District of New York or, if that federal court lacks subject matter jurisdiction, the Commercial Division of the Supreme Court of the State of New York, in each case sitting in New York County, and any appellate court from any thereof, in
any action or proceeding arising out of or in any way relating to this Commitment Letter, the Fee Letters or any other undertaking concerning the financing of the Transactions and the financing contemplated under those agreements or undertakings, or
(subject to clause (v) below) for recognition or enforcement of any judgment, (ii) agrees that it will not assert any claim, or in any way support any suit, action or proceeding, arising out of or relating to this Commitment Letter, the
Fee Letters or other undertaking concerning the financing of the Transactions and the financing contemplated under those agreements or undertakings, or for recognition or enforcement of any judgment, other than in such courts, (iii) agrees that
all suits, claims, actions or proceedings related to this Commitment Letter, the Fee Letters or other undertaking concerning the financing of the Transactions and the financing contemplated under those agreements or undertakings shall be heard and
determined only in such courts, (iv) waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum, (v) agrees that a final judgment of such courts shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law, and (vi) consents to the service of any process, summons, notice or document in any such suit, action or proceeding by registered mail addressed to you or us at the
addresses specified on the first page of this Commitment Letter. Nothing herein will affect the right of any party to serve legal process in any other manner permitted by law.
15. Patriot Act
The Commitment Parties and the Initial Lenders hereby notify you that pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed
into law October 26, 2001) (the “Patriot Act”), the Commitment Parties, the Initial Lenders and the other Lenders are required to obtain, verify and record information that identifies the Borrower and each Guarantor,
which information includes the name, address, tax identification number and other information regarding the Borrower and each Guarantor, that will allow the Commitment Parties, the Initial Lenders or such Lender to identify the Borrower and each
Guarantor in accordance with the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act and is effective as to the Commitment Parties, the Initial Lenders and the other Lenders.
Please indicate your acceptance of the provisions hereof by signing the enclosed copy of this Commitment Letter and each Fee Letter and returning them to the
Lead Arrangers, at or before 5:00 p.m. (New York City time) on August 27, 2015, the time at which each the Commitment Party’s commitment and other obligations hereunder (if not so accepted prior thereto) will terminate.
[SIGNATURE PAGES FOLLOW]
We are pleased to have been given the opportunity to assist you in connection with the financing for the
Transactions.
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| Very truly yours, |
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| MANUFACTURERS AND TRADERS TRUST COMPANY |
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| By: |
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/s/ Katharine Castro |
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Name: |
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Katharine Castro |
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Title: |
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Vice President |
Greatbatch —
Commitment Letter
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| CREDIT SUISSE SECURITIES (USA) LLC |
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| By |
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/s/ Colin A. Bathgate |
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Name: Colin A. Bathgate |
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Title: Managing Director |
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| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH |
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| By |
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/s/ Christopher Day |
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Name: Christopher Day |
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Title: Authorized Signatory |
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| By |
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/s/ Sean MacGregor |
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Name: Sean MacGregor |
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Title: Authorized Signatory |
Greatbatch —
Commitment Letter
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| KEYBANK NATIONAL ASSOCIATION |
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| By: |
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/s/ Stacy Moritz |
| Name: Stacy Moritz |
| Title: Managing Director |
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| KEYBANC CAPITAL MARKETS INC. |
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| By: |
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/s/ Stacy Moritz |
| Name: Stacy Moritz |
| Title: Managing Director |
Greatbatch —
Commitment Letter
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| Accepted and agreed: |
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| GREATBATCH LTD. |
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| By: |
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/s/ Thomas J. Hook |
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Name: Thomas J. Hook |
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Title: President and Chief Executive Officer |
Greatbatch —
Commitment Letter
Transaction Description
All capitalized terms used herein but not defined herein shall have the meanings provided in the Commitment Letter to which this Annex I is attached.
The following transactions, including the Acquisition, are referred to herein as the “Transactions.”
1.
Greatbatch, Inc., a Delaware corporation (the “Parent”), shall have caused, on or prior to the date hereof, the creation of Provenance Merger Sub Inc., a Delaware corporation (“Merger Sub”), as an
indirect wholly-owned subsidiary of Parent and a direct wholly-owned subsidiary of Greatbatch Ltd., a New York corporation (“Borrower”).
2. Merger Sub will merge with and into Lake Region Medical Holdings, Inc., a Delaware corporation (the “Target”), with
Target surviving the merger as an indirect wholly-owned subsidiary of the Parent and a direct or indirect wholly-owned subsidiary of Borrower; provided, however, that if an indirect subsidiary, all entities between Borrower and Target
shall be domestic subsidiaries of the Borrower and Guarantors (the “Acquisition”) pursuant to an Agreement and Plan of Merger, dated as of the date hereof, among the Parent, Target and Merger Sub (together with all schedules,
exhibits and annexes thereto, and all disclosure schedules or letters and other documentation entered into in connection therewith, the “Merger Agreement”).
3. The aggregate consideration payable to Target’s equity holders or on behalf of Target in connection with the Acquisition will be
5,100,000 newly issued shares or options to acquire shares of common stock of Parent (the “Equity Consideration”) plus the Aggregate Cash Consideration (as defined in the Merger Agreement on the date hereof) in cash (the
“Cash Consideration”), but which Aggregate Cash Consideration shall not exceed $480,000,000. Parent will also pay Target’s transaction expenses (other than Disallowed Expenses as defined in the Merger Agreement on the
date hereof) not to exceed $5,000,000 and will assume Target’s indebtedness to the extent contemplated by the Merger Agreement.
4.
The Borrower will obtain the Credit Facilities described in the Credit Facilities Term Sheet.
5. The Borrower will (i) seek to issue
$400,000,000 in aggregate principal amount of its senior unsecured notes in a Rule 144A or other private placement, and (ii) to the extent the Borrower is unable to issue the such notes on or prior to the Closing Date or in the full amount of
referred to above, borrow up to $400,000,000 in aggregate principal amount (minus the aggregate principal amount of any Notes or other Securities (as defined in the Bridge Facility Fee Letter) issued on or prior to the Closing Date) of senior
unsecured loans under the senior unsecured credit facility described in the Bridge Facility Term Sheet.
6. All material existing third
party indebtedness for borrowed money of Target and the Parent and their respective subsidiaries (which shall exclude (i) certain existing indebtedness up to an amount that the Lead Arrangers and the Borrower reasonably agree may remain
outstanding after the Closing Date and (ii) indebtedness for borrowed money of Target and its subsidiaries contemplated to remain outstanding pursuant to the Merger Agreement (which shall exclude in any event any indebtedness under
Target’s existing first lien and second lien credit agreements) (collectively, the “Permitted Existing Debt”)) will be refinanced, repaid or satisfied and discharged in accordance with the requirements of the applicable
indentures or credit facilities and all liens other than liens permitted to remain outstanding under the Facilities Documentation shall be discharged, and all letters of credit issued under the Target’s current credit facility agreement will be
cash collateralized or backstopped, or reissued under, or assumed by the Issuing Bank pursuant to, the Revolving Credit Facility, in each case in a manner reasonably satisfactory to the Lead Arrangers (collectively, the
“Refinancing”).
ANNEX II
Greatbatch Ltd. and Subsidiaries
$1,500,000,000 Senior Secured Credit Facilities
Summary of Terms and Conditions
Capitalized terms not otherwise defined herein have the meanings given to them in the Commitment Letter to which this Annex II is attached.
| Borrower: |
Greatbatch Ltd., a New York corporation (the “Borrower”). |
| Guarantors: |
Greatbatch, Inc. (“Parent”) and all of the present and future direct and indirect domestic subsidiaries of the Parent (other than non-wholly owned Ventures as defined in the Existing Credit Agreement), including, without
limitation, the Target (and its direct and indirect domestic subsidiaries), Precimed, Inc., Electrochem Solutions, Inc., Greatbatch- Globe Tool, Inc., Micro Power Electronics, Inc., GBV, LLC, NeuroNexus Technologies, Inc., and QIG Group, LLC (all of
the foregoing, collectively, the “Guarantors”). |
| Administrative Agent: |
Manufacturers and Traders Trust Company (“M&T”; and in such capacity, the “Administrative Agent”). |
| Joint Lead Arrangers and Joint Bookrunners: |
M&T, Credit Suisse Securities (USA) LLC (“CS Securities”) and KeyBanc Capital Markets Inc. (“KBCM”; and collectively with CS Securities and M&T, the “Arrangers”).
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| Existing Credit Agreement: |
Second Amended and Restated Credit Agreement, dated as of September 20, 2013, by and among the Borrower, the financial institutions party thereto as lenders, M&T, as administrative agent, and the other parties thereto (as in effect on
the date hereof, the “Existing Credit Agreement”). |
| Lenders: |
M&T, an affiliate of CS Securities, an affiliate of KBCM and other banks, financial institutions, funds and institutional lenders but excluding any Disqualified Institutions (the “Lenders”). |
| Credit Facilities: |
An aggregate principal amount of up to $1,500,000,000 will be available through the following facilities (such facilities together, the “Credit Facilities”): |
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Revolving Credit Facility: $200,000,000 revolving credit facility (the “Revolving Credit Facility”) with a $15,000,000 sub-limit for
Swingline Loans (as defined below) and $15,000,000 sub-limit for standby Letters of Credit (as defined below). The Revolving Credit Facility will be available after (and, except for (x) continuation (as Letters of Credit) of, or the replacement
with Letters of Credit in an equal stated amount of, letters of |
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credit outstanding under the Existing Credit Agreement and (y) borrowings to fund additional upfront fees or original issue discount resulting from the exercise of “Flex
Provisions” of the Credit Facilities Fee Letter, not on) the Closing Date until the Revolving Maturity Date (as defined below). Until the Revolving Maturity Date, subject to usual and customary conditions, the Borrower may borrow, repay and
re-borrow under the Revolving Credit Facility. Availability will be reduced by the amount of Letters of Credit outstanding and outstanding Swingline Loans. |
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Term A Facility: $300,000,000 term loan facility, all of which will be drawn on the Closing Date (the “Term A Facility”). |
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Term B Facility: $1,000,000,000 term loan facility, all of which will be drawn on the Closing Date (the “Term B Facility” and, together with the Term A Facility, the “Term Loan
Facilities”). |
| Accordion Feature: |
The Credit Documentation (as defined below) will permit the Borrower to add one or more incremental term loan facilities to the Credit Facilities (each, an “Incremental Term Facility”) and/or increase commitments under
the Revolving Credit Facility (any such increase, an “Incremental Revolving Facility”; the Incremental Term Facilities and the Incremental Revolving Facilities are collectively referred to as “Incremental
Facilities”) in an unlimited amount, so long as, on a pro forma basis after giving effect to the incurrence of all such Incremental Facilities, the First Lien Net Leverage Ratio (as defined below) does not exceed the lesser of
(x) 4.00:1.00 and (y) the First Lien Net Leverage Ratio on the Closing Date (after giving effect to the Transactions); provided, however, that: |
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i. |
no Lender will be required to participate in any such Incremental Facility; |
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ii. |
no event of default or default shall exist before or after giving effect thereto; |
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iii. |
the representations and warranties in the Credit Documentation shall be true and correct in all material respects; |
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iv. |
the maturity date of any such Incremental Term Facility shall be no earlier than the maturity date for the Term B Facility; |
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v. |
the weighted average life to maturity of any Incremental Term Facility shall be no shorter than the weighted average life to maturity of the Term B Facility; |
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vi. |
the interest margins for the Incremental Term Facility shall be determined by the Borrower and the Lenders of the Incremental Term Facility;
provided, that in the event that the interest margins for any Incremental Term Facility are greater than the interest margins for the Term B Facility by more than 50 basis points, then the interest margins for the Term B Facility shall be
increased to the extent necessary so that the interest margins for the Incremental Term Facility are not more than 50 basis points higher than the interest margins for the Term B Facility; provided, further, that in determining the
interest margins |
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applicable to the Term B Facility and the interest margins for the Incremental Term Facility, (x) original issue discount (“OID”) or upfront fees (which shall be
deemed to constitute like amounts of OID) payable by the Borrower for the account of the Lenders of the Term B Facility or the Incremental Term Facility, in each case, in the primary syndication thereof shall be included (with OID or upfront fees
being equated to interest margins in a manner consistent with generally accepted financial practice based on an assumed four- year life to maturity (or, if shorter, the remaining life to maturity)), it being understood that customary arrangement,
structuring or like fees payable solely to the arrangers (or affiliates thereof) shall be excluded, and (y) if the LIBOR or Base Rate floor for the Incremental Term Facility is greater than the LIBOR floor for the existing Term B Facility, the
difference between such floor for the Incremental Term Facility and the existing Term B Facility shall be equated to an increase in the interest margins for purposes of this clause (vi); |
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vii. |
access to the Incremental Facilities shall be subject to notice, timing and other documentation matters as shall be set forth in the Credit Documentation; and |
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viii. |
any Incremental Revolving Facility shall be on the terms and pursuant to the documentation applicable to the Revolving Credit Facility and any Incremental Term Facility shall be on terms and pursuant to documentation
consistent with the Term A Facility, Term B Facility or other terms satisfactory to the Administrative Agent. The Borrower shall seek commitments in respect of any Incremental Facility from existing Lenders or from additional banks, financial
institutions and other institutional lenders reasonably acceptable to the Administrative Agent who will become Lenders in connection therewith. |
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The Borrower shall have the option, subject to satisfaction of the conditions applicable to the incurrence of Incremental Facilities (other than as set forth in
clause (vi) above), to issue notes (including bridge financings in respect thereof with customary extension terms to be agreed) or borrow term loans (or obtain commitments in respect thereof) in lieu of Incremental Facilities that are (at the
option of the Borrower) unsecured or secured by the Collateral on an equal priority basis (solely in the case of notes) or on a junior basis (in the case of notes or loans) (collectively, “Incremental Equivalent Debt”);
provided that (w) if any such Incremental Equivalent Debt is secured, it shall not be secured by any assets other than the Collateral and shall be subject to customary intercreditor terms and documentation reasonably acceptable to the
Administrative Agent, (x) if any such Incremental Equivalent Debt is guaranteed, it shall not be guaranteed by any person other than the Guarantors, (y) such Incremental Equivalent Debt shall have (i) a final scheduled maturity date
no earlier than the scheduled maturity date of the Term B Facility and (ii) a weighted average life to maturity that is equal or greater than the weighted average life to maturity of the Term B Facility and (z) the other terms and
conditions of such Incremental |
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Equivalent Debt (excluding pricing and optional prepayment or redemption terms) shall be substantially identical to (with appropriate adjustments for the differing nature of notes and loans, if applicable), or not
materially more favorable to the lenders or other investors providing such Incremental Equivalent Debt, as applicable, than, those applicable to the Credit Facilities (except for covenants or other provisions applicable only to periods after the
latest final maturity date of the Term Loan Facilities existing at the time such Incremental Equivalent Debt is incurred). For the avoidance of doubt, Incremental Equivalent Debt can be incurred in connection with, and as part of a single series or
issuance of, other indebtedness permitted hereunder. |
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“First Lien Net Leverage Ratio” shall mean (i) Total Indebtedness (as defined in the Existing Credit Agreement) that is secured by a first priority lien on assets of the Parent or its
Subsidiaries (including indebtedness under the Credit Facilitates and capital lease obligations) (provided that for purposes of any ratio test in connection with the incurrence of any Incremental Facility or any Incremental Equivalent Debt,
any Incremental Equivalent Debt that is unsecured or secured by a junior-priority lien shall be deemed to be secured by a first-priority lien for purposes of this definition) less unrestricted cash (excluding cash proceeds of any indebtedness
incurred pursuant to any provision of the Credit Documentation that requires a First Lien Net Leverage to be satisfied in connection therewith) and cash equivalents not to exceed an amount to be agreed, divided by (ii) Adjusted EBITDA (as
defined on Exhibit B to this Annex II). |
| Refinancing Facilities: |
The Credit Documentation will permit the Borrower to refinance loans under the Term Loan Facilities or commitments under the Revolving Credit Facility from time to time, in whole or part, on a dollar-for-dollar basis, with, in the case of the
Term Loan Facilities, one or more new term loan facilities (each, a “Refinancing Term Facility”) or, in the case of the Revolving Credit Facility only, new revolving credit facilities (each, a “Refinancing
Revolving Facility”; the Refinancing Term Facilities and the Refinancing Revolving Facilities are collectively referred to as “Refinancing Facilities”), respectively, under the Credit Documentation with the
consent of the Borrower, the Administrative Agent (not to be unreasonably withheld or delayed), the institutions providing such Refinancing Term Facility or Refinancing Revolving Facility, as applicable, (it being understood that such Refinancing
Facility may be provided by existing Lenders (or, in the case of any Refinancing Revolving Facility, existing Lenders with commitments under the Revolving Credit Facility) each of which shall be entitled to agree or decline to participate in its
sole discretion), and, in the case of a Refinancing Revolving Facility, the consent of the Issuing Bank (as defined below) and the Swingline Lender (as defined below); provided, that |
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(i) |
such Refinancing Facilities shall rank pari passu in right of payment and security with the other indebtedness under the Credit Documentation; |
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(ii) |
any Refinancing Term Facility does not mature, or have a weighted average life to maturity, earlier than 91 days after the final maturity, or the weighted average life, of the loans under the Term Loan Facilities being
refinanced; |
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(iii) |
any Refinancing Revolving Facility does not mature prior to the maturity date of the revolving commitments being refinanced; |
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(iv) |
the other terms and conditions of such Refinancing Facility (excluding pricing and optional prepayment or redemption terms) are substantially identical to, or not materially more favorable to the lenders providing such
Refinancing Facility, as applicable, than, those applicable to the Term Loan Facilities or revolving commitments being refinanced (except for covenants or other provisions applicable only to periods after the latest final maturity date of the Term
Loan Facilities and revolving credit commitments existing at the time of such refinancing); and |
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(v) |
the proceeds of such Refinancing Facilities shall be applied, substantially concurrently with the incurrence thereof, to the pro rata prepayment of outstanding loans (and, in the case of the Revolving Facility, pro rata
commitment reductions) under the applicable Credit Facility being so refinanced. |
| Swingline and Letter of Credit Subfacilities: |
M&T, in its capacity as the swingline lender (in such capacity, the “Swingline Lender”), will make available to the Borrower a discretionary swingline facility under which the Borrower may make short-term borrowings
of up to $15,000,000 in the aggregate. |
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M&T will be the initial issuing bank for letters of credit (in such capacity, the “Issuing Bank”). There will be a $15,000,000 sub-limit for standby letters of credit (each, a
“Letter of Credit”) with expiration dates not later than the earlier of (a) one year after the date of issuance (with evergreen credits allowed in the sole discretion of the Issuing Bank) and (b) 30 days prior to
the Revolving Maturity Date. |
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Each Lender under the Revolving Credit Facility will purchase an irrevocable and unconditional participation in each Letter of Credit and each borrowing under the swingline facility (each, a “Swingline
Loan”). |
| Purpose: |
The proceeds of the borrowings under the Term Loan Facilities on the Closing Date, together with the proceeds of the Note issuance and/or the Bridge Loans, the Equity Consideration and cash on the balance sheet of the Borrower and the
Guarantors, shall be used to (i) fund the Cash Consideration and the Refinancing and (ii) pay fees and expenses incurred in connection with the Transactions. The proceeds of borrowings under the Revolving Credit Facility after the Closing
Date shall be used to finance permitted acquisitions, to finance permitted restricted payments, to support working capital and for general corporate purposes. |
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| Maturity: |
Revolving Credit Facility: five years from the Closing Date (subject to the last sentence of this section, the “Revolving Maturity Date”). |
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Term A Facility: six years from the Closing Date. |
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Term B Facility: seven years from the Closing Date. |
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Notwithstanding the foregoing, subject to the terms and conditions to be mutually agreed, the Credit Documentation shall provide that, upon the request of the Borrower and consent of the Administrative Agent, individual
Lenders may agree to extend the maturity of their respective commitments or loans without the consent of any other Lender; provided, that each Lender in the Revolving Credit Facility, the Term A Facility or the Term B Facility, as applicable,
shall have the opportunity to also so extend its commitment termination date or maturity date, as applicable. |
| Interest Rates: |
The interest rates applicable to the Credit Facilities will be, at the Borrower’s option, Adjusted LIBOR plus the interest margins or the Base Rate plus the interest margins. |
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Initially, the interest margins for (x) the Revolving Credit Facility and Term A Facility will be 3.25% per annum for loans based on Adjusted LIBOR and 2.25% per annum for loans based on the Base Rate and
(y) the Term B Facility will be 3.75% per annum for loans based on Adjusted LIBOR and 2.75% per annum for loans based on the Base Rate. |
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Such initial interest margins for the Revolving Credit Facility and the Term A Facility will remain in place until five business days after the delivery of the compliance certificate for the first full fiscal quarter
following the Closing Date, after which it will be based on the pricing grid attached hereto as Exhibit A. Such interest margins, as set forth on the pricing grid, shall be determined on the basis of the Total Leverage Ratio (to be defined in
the Credit Documentation), calculated quarterly on a trailing four-quarter basis. |
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Swingline Loans will bear interest at the Base Rate plus the interest margins for Base Rate loans under the Revolving Credit Facility. |
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The definitions of “Adjusted LIBOR” and “Base Rate” shall be consistent with the definitions provided therefor in the Existing Credit Agreement, subject to the
Documentation Principles; provided, that Adjusted LIBOR and Base Rate with respect to the Term B Facility shall not be less than 1.00% per annum and 2.00% per annum, respectively. |
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For LIBOR loans the Borrower may elect interest periods of one, two, three and six-months (or, if available to all Lenders, twelve months). Calculation of interest
shall be on the basis of the actual days elapsed in a year of 360 days (or 365 days in the case of a Base Rate loan, other than |
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Base Rate loans calculated by reference to the federal funds rate) and interest shall be payable at the end of each interest period and, in any event, at least every three months. Interest on Base Rate loans will be due
and payable monthly in arrears. |
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During the continuance of an event of default, loans and reimbursement obligations outstanding shall bear interest at the interest rate otherwise in effect plus 2% per annum. |
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The Credit Documentation shall include customary protective provisions for such matters as increased costs, funding losses, illegality, change of laws (including those related to capital adequacy of banks), defaulting
lenders, and withholding taxes. |
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Term B Facility will be issued with an original issue discount at 99.0%. |
| Letter of Credit Fees: |
A letter of credit fee in an amount equal to the interest margins for LIBOR loans under the Revolving Credit Facility will be paid on the aggregate face amount of Letters of Credit outstanding for the account of all Lenders in the Revolving
Credit Facility. In addition, the Company shall pay to the Issuing Bank a 0.125% letter of credit fronting fee. The letter of credit fee and the fronting fee shall be paid quarterly in arrears and shall be in addition to standard letter of credit
fees for issuance, negotiation, amendment, etc., payable to the Issuing Bank. |
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During the continuance of an event of default, letter of credit fees shall be increased by 2% per annum. |
| Unused Commitment Fee: |
For the period from the Closing Date through the fifth day after the delivery of the compliance certificate for the first full fiscal quarter following the Closing Date, a commitment fee (the “Unused Commitment Fee”)
equal to 0.25% per annum of the average daily amount by which the total credit commitment of the Revolving Credit Facility exceeds the outstanding revolving loans, letters of credit and unpaid reimbursement obligations under the Revolving
Credit Facility, will be payable quarterly in arrears to the Revolving Credit Lenders. Thereafter, the Unused Commitment Fee will be based on the pricing grid attached hereto as Exhibit A. Outstanding Swingline Loans will not affect the
calculation of the Unused Commitment Fee. |
| Expenses and Indemnification: |
Customary indemnification of Administrative Agent, the Arrangers, the Lenders and their respective affiliates and each such person’s employees, officers, directors, agents, advisors and controlling persons, in each case consistent with
Existing Credit Agreement. |
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In addition, the Borrower shall pay (a) all reasonable out-of-pocket expenses (including, without limitation, reasonable fees, disbursements and other charges
of counsel) of the Arrangers, the Administrative Agent, the Swingline Lender and the Issuing Bank in connection with the |
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syndication of the Credit Facilities, the preparation and administration of the Credit Documentation, and amendments, modifications and waivers thereto and (b) all out-of-pocket expenses
(including, without limitation, fees, disbursements and other charges of counsel) of the Arrangers, the Administrative Agent, the Swingline Lender, the Issuing Bank and the Lenders for enforcement costs and documentary taxes associated with the
Credit Facilities. |
| Collateral: |
Subject to Documentation Principles (as defined below), a valid and perfected first priority (subject to certain exceptions to be set forth in the Credit Documentation) security interest in all of the following of the Borrower and Guarantors
(collectively, the “Collateral”): |
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i. |
All present and future shares of capital stock of (or other ownership or profit interests in) the Borrower and each Guarantor (except Parent). |
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ii. |
Sixty-six percent of all present and future shares of capital stock of each first-tier foreign subsidiary or as otherwise provided next to the caption, “Non-Guarantor Ventures/Foreign Subsidiaries” below.
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iii. |
Substantially all of the Borrower’s and Guarantors’ other personal property assets. |
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iv. |
All proceeds and products of the property and assets described in clauses (i), (ii), (iii) and (iv) above. |
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The security shall secure the relevant party’s obligations in respect of the Credit Facilities and any interest rate swap or similar agreements with a Lender (or any affiliate thereof) and purchasing card and other
treasury management services provided by a Lender (or any affiliate thereof), in each case subject to the provisions of the Credit Documentation. |
| Scheduled Amortization: |
Revolving Credit Facility: None. All amounts outstanding under the Revolving Credit Facility shall be due and payable on the Revolving Credit Maturity Date. |
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Term A Facility: Subject to quarterly amortization of principal as follows: (i) 1.25% of the original aggregate principal amount of the Term A Facility in each quarter during the first two years following
the Closing Date, (ii) 1.875% of the original aggregate principal amount of the Term A Facility in each quarter during the third year following the Closing Date, and (iii) 2.50% of the original aggregate principal amount of the Term A
Facility in each quarter thereafter, with the balance payable at final maturity of the Term A Facility. |
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Term B Facility: Subject to quarterly amortization of principal equal to 0.25% per quarter of the original aggregate principal amount of the Term B Facility, with the balance payable at final maturity of the
Term B Facility. |
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| Voluntary Prepayments and Revolving Credit Facility Commitment Reductions: |
The Credit Facilities may be prepaid at any time in whole or in part without premium or penalty, upon written notice, at the option of the Borrower, except (x) that any prepayment of LIBOR advances other than at the end of the applicable
interest periods therefor shall be made with reimbursement for Lenders’ breakage costs and (y) as set forth in “Soft- Call/Prepayment Premium” below. Each optional prepayment of the Term Loan Facilities shall be applied to the
remaining scheduled installments thereof as directed by the Borrower (and absent such direction, ratably and in direct order of maturity). The unutilized portion of any commitment under the Revolving Credit Facilities may be reduced permanently or
terminated by the Borrower at any time without penalty. |
| Mandatory Prepayments: |
The Credit Facilities will include mandatory prepayments customary for facilities of this nature, including, without limitation, (i) 100% of the net cash proceeds with respect to the issuance of debt, other than net cash proceeds to the
extent used to prepay the Bridge Loans and certain debt to be agreed upon, (ii) 100% of the net cash proceeds from non-ordinary course asset sales, subject to customary exceptions and reinvestment rights to be agreed upon (iii) 100% of
insurance proceeds and condemnation recoveries not reinvested in similar assets within 180 days and (iv) commencing in respect of the fiscal year ending December 31, 2016, annual prepayments in an amount equal to the Recapture Rate (as
defined below) multiplied by Excess Cash Flow (as defined below) for each fiscal year of the Borrower; provided, that for any fiscal year, any (i) voluntary prepayments of the Term Loan Facilities and (ii) cash purchases by the Borrower
(including purchases at a discount to par, but only to the extent of the cash purchase price therefor) of the Term Loan Facilities pursuant to any loan buyback program, in each case, other than (x) prepayments or loan buy-backs funded with the
proceeds of long-term indebtedness and (y) non-cash prepayments deemed to occur upon the cancellation of the Term Loan Facilities pursuant to any loan buyback program, made during such fiscal year shall be credited against the Borrower’s
Excess Cash Flow prepayment obligation on a dollar-for- dollar basis for such fiscal year. Mandatory prepayments shall be applied pro rata to the Term Loan Facilities (and to the principal installments thereof on a pro rata basis) until paid in full
and then to the Revolving Credit Facility (without a permanent reduction of the commitments thereunder). |
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“Recapture Rate” means an amount equal to (i) 50% for any fiscal year where the Total Leverage Ratio is equal to or greater than 3.25:1.00, (ii) 25% for any fiscal year where the Total
Leverage Ratio is less than 3.25:1.00 and greater than or equal to 2.75:1.00, and (iii) 0% for any fiscal year when the Total Leverage Ratio is less than 2.75:1.00. |
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“Excess Cash Flow” shall be defined to mean consolidated net income, plus or minus adjustments, with such adjustments to include changes in
working capital items and deductions (except (as mutually agreed) to the extent funded by debt or equity) for (i) capital expenditures, (ii) |
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scheduled principal and voluntary repayments of funded debt (other than revolving loans unless accompanied by a corresponding reduction in revolving commitments and voluntary prepayments of the Term Loan Facilities),
(iii) interest expense, (iv) taxes and (v) permitted acquisitions and other permitted investments. |
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Prepayments from foreign subsidiaries’ Excess Cash Flow, insurance proceeds and asset sale proceeds will be limited under the definitive documentation to the extent (y) the repatriation of funds to fund such
prepayments is prohibited, restricted or delayed by applicable local laws or (y) the repatriation of funds to fund such prepayments would result in material adverse tax consequences; provided, that in any event, the Borrower shall use
commercially reasonable efforts to eliminate such prohibition, restriction, delay or material adverse tax consequences in order to make such prepayments; provided, further, that the Borrower shall promptly repatriate such amounts and
make the applicable prepayments as soon as such prohibition, restriction, delay or material adverse tax consequence is no longer applicable the relevant foreign subsidiary. |
| Soft-Call/Prepayment Premium |
In the event that all or any portion of the Term B Facility is (i) repaid, prepaid, refinanced or replaced or (ii) repriced or effectively refinanced through any waiver, consent or amendment (in each case, in connection with any
waiver, consent or amendment to the Term B Facility directed at, or the result of which would be, the lowering of the effective interest cost or the weighted average yield of the Term B Facility or the incurrence of any debt financing having an
effective interest cost or weighted average yield that is less than the effective interest cost or weighted average yield of the Term B Facility (or portion thereof) so repaid, prepaid, refinanced, replaced or repriced) (a “Repricing
Transaction”) occurring on or prior to the first anniversary of the Closing Date, such repayment, prepayment, refinancing, replacement or repricing will be made at 101.0% of the principal amount so repaid, prepaid, refinanced, replaced
or repriced. Without limiting the foregoing, if all or any portion of the Term B Facility held by any Lender is repaid, prepaid, refinanced or replaced on or prior to the first anniversary of the Closing Date pursuant to a “yank-a-bank” or
similar provision in the definitive Credit Documentation as a result of, or in connection with, such Lender not agreeing or otherwise consenting to any waiver, consent or amendment referred to in clause (ii) above (or otherwise in connection
with a Repricing Transaction), such repayment, prepayment, refinancing or replacement will be made at 101.0% of the principal amount so repaid, prepaid, refinanced or replaced. |
| Representations and Warranties: |
Subject to Documentation Principles, usual and customary for facilities of this size, type and purpose, including those relating to the Borrower, its subsidiaries and the Credit Facilities. |
II-10
| Conditions Precedent to Closing: |
The commitment of the Lenders with respect to the initial funding of the Credit Facilities are subject solely to (i) the satisfaction (or waiver by all of the Initial Lenders (as defined in the Commitment Letter)) of each of the conditions
set forth in or by reference in Section 1 of the Commitment Letter and (ii) the Limited Conditionality Provisions (as defined in the Commitment Letter). |
| Conditions Precedent to Each Borrowing Under the Credit Facilities Following the Closing Date: |
Subject to Documentation Principles, each borrowing or issuance or renewal of a Letter of Credit under the Credit Facilities following the Closing Date will be subject to satisfaction of the following conditions precedent: (i) delivery of
prior written notice, or telephonic notice followed by written notice, of borrowing, (ii) the representations and warranties in the Credit Documentation shall be true and correct in all material respects as of the date of such extension of
credit and (iii) no default or event of default under the Credit Documentation shall have occurred and be continuing or would result from such extension of credit. |
| Documentation Principles: |
The definitive credit documentation (i) shall be based upon the Existing Credit Agreement with appropriate modifications to baskets and materiality thresholds (subject to clause (ii) below) to reflect the Acquisition, the structure of
the Credit Facilities and the leverage ratio and ratings of the Borrower after giving effect to the Acquisition, (ii) shall contain the terms and conditions set forth in this Summary of Terms and Conditions, (iii) shall reflect the
operational and strategic requirements of the Borrower and its respective subsidiaries in light of their size, industries and practices, (iv) shall be consistent with the proposed business plan and financial model of the Borrower, in each case
as expressly approved by the Arrangers prior to the date of the Commitment Letter, (v) shall reflect the customary agency and operational requirements of the Administrative Agent and (vi) in each case, shall be subject to the “market
flex” provisions contained in the Credit Facilities Fee Letter, in each case, subject to the Limited Conditionality Provisions (collectively, the “Documentation Principles”). The “Credit
Documentation” means the definitive credit documentation with respect to the Credit Facilities consistent with the Commitment Letter, the Credit Facilities Fee Letter and the Documentation Principles. |
| Affirmative Covenants: |
Subject to the Documentation Principles, usual and customary for facilities of this size, type and purpose (including materiality and exceptions to be agreed upon) and consistent with the Existing Credit Agreement and related documents,
including, but not limited to: |
| |
A. |
Annual audited consolidated financial statements within 90 days after fiscal year end. Financial statements shall include any management letters or
reports and an attestation of the outside accountant as to the adequacy of the internal controls of Parent and its subsidiaries. Annual financial statements must also include a management
|
II-11
| |
prepared consolidating balance sheet, income statement, statement of change in retained earnings and cash flow statement, showing separately the results of operations and financial condition of
non-guarantor Ventures, if any, as a separate group. |
| |
B. |
Quarterly internally prepared consolidated financial statements within 45 days after the first three quarters. Quarterly financial statements must also include a management prepared consolidating balance sheet, income
statement, statement of change in retained earnings and cash flow statement, showing separately the results of operations and financial condition of non-guarantor Ventures, if any, and foreign subsidiaries, in each case, as a separate group.
|
| |
C. |
Compliance certificate from a financial officer to be delivered in conjunction with quarterly and annual financial statements. Compliance certificate shall calculate all applicable financial covenants.
|
| |
D. |
Annual operating budget for the Borrower’s consolidated operations no more than 90 days after the commencement of each fiscal year. The operating budget will include a balance sheet, income statement, statement of
cash flows and assumptions relating to the budget. |
| |
E. |
Maintain adequate insurance, licenses and other property. |
| |
F. |
Notification of defaults, disputes, litigation, investigations and material adverse changes, delivery of ERISA notices, delivery of notices related to intellectual property matters and such other information as the
Administrative Agent may reasonably request. |
| |
G. |
Maintenance of existence; compliance with laws (including environmental laws and ERISA); payment of taxes and claims. |
| |
H. |
Maintenance of records and accounts in accordance with GAAP; and inspection of property and books and records. |
| |
I. |
Maintenance of seniority of Credit Facilities over all subordinated notes of Parent and its subsidiaries. |
| |
J. |
Commercially reasonable efforts to maintain the Ratings (as defined in the Commitment Letter). |
II-12
| Negative Covenants: |
Subject to Documentation Principles, usual and customary for facilities of this size, type and purpose (with exceptions and baskets to be agreed upon, including an exception to allow for the spinoff of QiG Group, LLC and all related
transactions), including, but not limited to: |
| |
A. |
Limitation on additional indebtedness, liens and leases. |
| |
B. |
Limitation on restricted payments and investments; provided, however, that the restricted payments and investments set forth in clauses (1) through (4) below (collectively, the
“Specified Restricted Uses”) may be made subject to the following conditions: (i) no default or event of default shall then exist or be caused thereby, (ii) there shall be minimum liquidity (unrestricted cash on
hand plus availability under the Revolving Credit Facility) of at least $50,000,000 after giving pro forma effect to the proposed Specified Restricted Use, (iii) except as set forth below with respect to the Reset Provision, Specified
Restricted Uses shall not, in the aggregate, exceed $400,000,000, (iv) Total Leverage Ratio of the Borrower on a pro forma basis after giving effect to any such Specified Restricted Use shall be less than 5.20:1.00 and (v) the Borrower
shall be in compliance on a pro forma basis with all Financial Covenants, in each case after giving effect to any of the following: |
| |
1. |
Permitted Acquisitions in the aggregate not to exceed $400,000,000; |
| |
2. |
Other investments in the aggregate not to exceed $200,000,000 (excluding operating expenses that are written off in the ordinary course of business); and |
| |
3. |
Certain restricted payments relative to stock repurchases and dividends in the aggregate not to exceed $250,000,000; and |
| |
4. |
Investments foreign subsidiaries in an aggregate amount not to exceed $40,000,000. |
| |
Reset Provision: At any time that time the Total Leverage Ratio of the Borrower and its consolidated subsidiaries for each of the two most recently ended
fiscal quarters is less than 2.75:1.00, the Borrower may make an election (the date of such election being the “Reset Election Date”) by delivering a notice to the Administrative Agent (certifying that the conditions to the
election have been satisfied) to reset each of the amounts specified in clause (iii) and clauses (1) through (4) above. From and after such Reset Election Date, any utilizations of such baskets prior to the Reset Election Date shall
automatically be disregarded, enabling the Borrower to re-use such baskets in the amounts specified above after the Reset Election Date as if |
II-13
| |
no restricted payments or investments had been made in reliance on such provisions prior to the Reset Election Date. |
| |
C. |
Limitation on guaranties. |
| |
D. |
Limitation on loans, advances and investments. |
| |
E. |
Limitations on sales or other dispositions of assets (with exceptions for (i) sales of any assets of, or equity interests in, Ventures and (ii) for other asset sales in an aggregate amount not to exceed
$100,000,000 in the aggregate per fiscal year; provided, that at least 75% of the consideration for each such asset sale pursuant to this clause (ii) shall be cash), including by way of license or lease of such assets, and sale-leaseback
arrangements. |
| |
F. |
Limitation on mergers and acquisitions (with an exception for Permitted Acquisitions), or change in type of business. |
| |
G. |
Limitation on payment of distributions and dividends. |
| |
H. |
Limitation on transactions with affiliates. |
| |
I. |
Restriction on providing negative pledge to other third parties and other restrictive provisions. |
| |
J. |
Prohibition on activities by Parent other than those related to (i) the ownership of Borrower, (ii) its existence and (iii) other activities required of a public company. |
| |
K. |
A $20,000,000 limitation on guarantees of foreign lines of credits. |
| Financial Covenants: |
Revolving Credit Facility and Term A Facility: |
| |
A. |
Maximum Total Leverage Ratio - The Total Leverage Ratio shall not exceed, initially, 6.50:1.00 with step downs to be agreed. |
| |
B. |
Minimum Interest Coverage Ratio—The ratio of Adjusted EBITDA to Interest Expense shall not be less than 3.00:1.00. The term “Interest Expense” shall be consistent with the definition
thereof in the Existing Credit Agreement. |
| |
(the “Financial Covenants”) |
| |
Term B Facility: There will be no maintenance financial covenants. |
II-14
| Events of Default: |
Subject to Documentation Principles, usual and customary for facilities of this size, type and purpose (with thresholds and grace or cure periods to be agreed upon), including, but not limited to: |
| |
B. |
Breach of representation or warranties in any material respect; |
| |
C. |
Violation of covenant(s); |
| |
E. |
Bankruptcy, insolvency; |
| |
F. |
Loss of custody or control of all or substantially all property; or discontinuance of all or a substantial portion of the Borrower’s business; |
| |
H. |
Failure of subordination provisions to be in effect; and |
| |
I. |
Change in control (which will include, among other things, (i) any person or group of persons (within the meaning of the Securities Exchange Act) obtaining control of more than 30% of the capital stock of Parent;
(ii) Parent ceasing to be the legal and beneficial owner of 100% of the capital stock of Borrower free of liens except to the Administrative Agent; (iii) the Borrower ceasing to own all stock of its domestic subsidiaries free of liens except to
the Administrative Agent or otherwise permitted by the Credit Documentation; (iv) a merger in which the Borrower is not the surviving entity or a sale of substantially all of the assets of the Borrower (including a sale of substantially all of
the equity of subsidiaries of the Borrower); (v) a change in control or fundamental change under any preferred stock, indenture or other evidence of indebtedness that gives the holder of such preferred stock, indenture or other evidence of
indebtedness the right to cause its redemption or repayment (in whole or in part) by Borrower or its subsidiaries; and (vi) a majority of the board of directors of Parent consisting of directors that are not continuing directors (or approved by
members of the existing board). |
| |
Notwithstanding the foregoing, (x) only Lenders holding at least a majority of the commitments under the Revolving Credit Facility and Term A Facility shall
have the ability to (and be required in order to) amend the Financial Covenants and waive a breach of the Financial |
II-15
| |
Covenant and (y) a breach of the Financial Covenants shall not constitute an Event of Default with respect to the Term B Facility or shall not trigger a default under the Term B Facility
until the date on which the loans under the Revolving Credit Facility and Term A Facility have been accelerated or the obligations under the Revolving Credit Facility and Term A Facility have been paid in full and the commitments under the Revolving
Credit Facility shall have been terminated as a result of such breach. |
| Waivers and Amendments: |
Amendments and waivers of the credit agreement and other definite Credit Documentation will require the approval of Lenders whose commitments and loans under the Credit Facilities aggregate at least a majority of the Credit Facilities (the
“Required Lenders”). However, no amendment or waiver shall reduce the principal amount of the Loans of any Lender without such Lender’s consent, reduce the stated rate of interest or stated fees of any Lender without
such Lender’s consent, reduce any fees related to letters of credit owing to any Lender without such Lender’s consent, extend the final maturity of any Loans or expiration date of the commitment of any Lender without such Lender’s
consent, postpone the scheduled payment of any principal, interest or fees owing to any Lender without such Lender’s consent; or extend the date of payment for or reduce the reimbursement obligations in respect of Letters of Credit without the
consent of the issuer or extend the date of payment past the Revolver Maturity Date or reduce the reimbursement obligations with respect of Letters of Credit without the consent of each Lender that has a risk participation therein; or release all or
substantially all of the collateral (or the value thereof) or guaranties (or the value thereof) of the Credit Facilities or reduce any amount specified in the definition of Required Lenders without the consent of all Lenders. |
| |
Notwithstanding the foregoing (i) defaulting lenders shall be subject to the provisions set forth under the heading “Defaulting Lenders” below, (ii) waivers and amendments of Financial Covenants shall be
as set forth in the last paragraph under “Events of Default” above and (iii) the maturity date of Loans and the termination date of commitments may be extended in the manner set forth in “Maturity” above and
(iv) certain provisions may be amended with only the Administrative Agent and Borrower in connection with the accordion feature, for certain immaterial or ministerial matters and as otherwise to be set forth in the Credit Documentation.
|
| Defaulting Lenders |
Defaulting lenders will not be entitled to commitment fees, will be excluded for purposes of determining Required Lenders and will be subject to replacement (by assignment) at par. Amounts
owed to defaulting lenders will be subject to setoff for amounts not funded, and Swingline Lender and Issuing Bank will be relieved of any obligation to issue new Letters of Credit or fund Swingline Loans unless and until
|
II-16
| |
satisfactory arrangements have been made to eliminate risk to Swingline Lender or Issuing Bank, as appropriate, with respect to the participation in Swingline Loans or Letters of Credit, as appropriate, of the
defaulting lender, including by cash collateralizing such defaulting lender’s pro rata share of the Swingline Loan and Letter of Credit exposure. |
| Assignments and Participations: |
Lenders will be permitted to assign and participate the Credit Facilities. Assignments will be in minimum amounts of $1,000,000, in the case of the Term A Facility and the Term B Facility, and $2,000,000, in the case of the Revolving Credit
Facility, and assignees will be subject to the consent of the Administrative Agent, the Issuing Bank and (if no default or event of default then exists) the Borrower, such consents not to be unreasonably withheld, conditioned or delayed;
provided, however, that the consent of the Borrower shall (x) not be required in connection with assignments to other Lenders, to any affiliate of a Lender or any approved fund and (y) be deemed to have been given if the
Borrower has not responded within ten business days of a request for such consent with respect to any Term Loan Facilities. |
| |
Assignments will be subject to the payment by the assigning Lender of a service fee to the Administrative Agent. |
| |
Assignments of loans under the Term B Facility to the Borrower or any of its subsidiaries shall be permitted subject to satisfaction of conditions to be set forth in the Credit Documentation, including that (i) no
default or event of default shall exist or result therefrom, (ii) (A) there shall be minimum liquidity (unrestricted cash on hand plus availability under the Revolving Credit Facility) of at least $50,000,000 after giving pro forma effect
to the proposed assignment and (B) the Borrower shall be in compliance with all Financial Covenants on a pro forma basis, (iii) the Borrower must provide a customary representation and warranty as to disclosure of information,
(iv) immediately upon the effectiveness of any such assignment, such loans shall be cancelled and (v) no borrowings under the Revolving Credit Facility shall be used to fund any such assignment. |
| |
Notwithstanding anything to the contrary contained herein, no assignments or participations will be made to Disqualified Institutions, provided that the list of Disqualified Institutions shall have been made available
to all Lenders. |
| Patriot Act: |
To help fight the funding of terrorism and money laundering activities, Federal Law requires U.S. financial institutions to obtain, verify and record information that identifies each person or entity that opens an account and/or enters into a
business relationship with such financial institution. |
| Sanctions: |
The Administrative Agent and the Lenders may disclose confidential information, without notice to the Borrower, to governmental regulatory
|
II-17
| |
authorities in connection with any regulatory examination of the Administrative Agent or in accordance with its regulatory compliance policy. |
| Exclusive Forum: |
Federal and State courts in the County of New York, New York. |
| Counsel to Administrative Agent: |
Drinker Biddle & Reath LLP. |
II-18
Exhibit A to Annex II
Pricing Grid – Revolving Credit Facility and Term A Facility
Revolving Credit Facility
|
|
|
|
|
|
|
| Total Leverage Ratio |
|
Base Rate Margin |
|
LIBOR Margin |
|
Commitment Fee |
| > 4.50:1.00 |
|
2.250% |
|
3.250% |
|
0.250% |
| ³ 4.00:1.00 and <
4.50:1.00 |
|
1.750% |
|
2.750% |
|
0.250% |
| ³ 3.00:1.00 and
< 4.00:1.00 |
|
1.500% |
|
2.500% |
|
0.250% |
| ³ 2.50:1.00 and
< 3.00:1.00 |
|
1.250% |
|
2.250% |
|
0.250% |
| ³ 2.00:1.00 and
< 2.50:1.00 |
|
1.000% |
|
2.000% |
|
0.175% |
| < 2.00:1.00 |
|
0.750% |
|
1.750% |
|
0.175% |
Term A Facility
|
|
|
|
|
| Total Leverage Ratio |
|
Base Rate Margin |
|
LIBOR Margin |
| > 4.50:1.00 |
|
2.250% |
|
3.250% |
| ³ 4.00:1.00 and <
4.50:1.00 |
|
1.750% |
|
2.750% |
| ³ 3.00:1.00 and <
4.00:1.00 |
|
1.500% |
|
2.500% |
| ³ 2.50:1.00 and <
3.00:1.00 |
|
1.250% |
|
2.250% |
| ³ 2.00:1.00 and <
2.50:1.00 |
|
1.000% |
|
2.000% |
| < 2.00:1.00 |
|
0.750% |
|
1.750% |
II-19
Exhibit B to Annex II
Definitions of Adjusted EBITDA
Adjusted EBITDA: for each period the following items for the four fiscal quarters ended on, or most recently prior to, the last day of such
period: Net Income plus without duplication to the extent deducted in computing Net Income, the sum of (without duplication):
(a) Interest
Expense;
(b) income tax expense;
(c) depreciation and amortization expense;
(d) write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness
(including the Loans and any convertible securities);
(e) any extraordinary, unusual or non-recurring expenses or losses (including
expenses or losses on sales or abandonment of assets outside of the ordinary course of business) determined in accordance with GAAP;
(f)
share-based compensation plus any other non-cash charges, including, for the sake of clarity, non-cash impairments of intangible assets;
(g) net losses attributable to discontinued operations;
(h) non-recurring actual expenses in connection with Permitted Acquisitions;
(i) restructuring charges previously incurred and reported prior to the date such Person becomes a Subsidiary of the Borrower in connection
with a Permitted Acquisition to the extent the charges can be agreed upon by Majority Lenders and the Borrower;
(j) adjustments to
Operating Income (GAAP), including “Consolidation and Optimization,” “IP Litigation,” “Acquisition and Integration,” and/or “Asset Dispositions and Other” used in the determination of Total Adjusted Operating
Income;
(k) for the 2015 and 2016 fiscal years, $25 million for estimated run rate
synergies1;
(l) pro forma losses of Nuvectra (Spinco); and
(m) severance costs not included in other categories;
II-20
minus to the extent included in computing Net Income, but without duplication, the sum of:
(i) any extraordinary, unusual or non-recurring income or gains (including gains on sales or abandonment of assets outside of the ordinary
course of business) determined in accordance with GAAP; and
(ii) any other non-cash income;
(iii) net income attributable to discontinued operations;
(iv) any net gain from the collection of proceeds of life insurance policies; and
(v) pro forma gains of Nuvectra (Spinco); .
The aggregate amount of add backs made pursuant to clauses (h), (i) (j) and (m) above in any four fiscal quarter period shall not exceed 25% of
Adjusted EBITDA (prior to giving effect to such add backs) as measured at the end of any fiscal quarter ending prior to the first anniversary of the Closing Date and 20% of Adjusted EBITDA (prior to giving effect to such add backs) as measured at
the end of any fiscal quarter ending after the first anniversary of the Closing Date.
II-21
ANNEX III
Project Redwing
Up to $400,000,000 Senior Unsecured Bridge Facility
Summary of Terms and Conditions
Capitalized terms not otherwise defined herein have the meanings given to them in the Commitment Letter (including the other Annexes thereto) to which this
Annex III is attached.
| Borrower: |
The Borrower under the Credit Facilities (the “Borrower”). |
| Bridge Administrative Agent: |
Manufacturers and Traders Trust Company (the “Bridge Agent”). |
| Joint Lead Arrangers and Joint Bookrunners: |
Credit Suisse Securities (USA) LLC, Manufacturers and Traders Trust Company, and KeyBanc Capital Markets Inc. (the “Arrangers”). |
| Bridge Facility: |
Senior bridge loans (the “Bridge Loans”) in an aggregate principal amount of up to $400,000,000 (the “Bridge Facility”) minus the aggregate gross proceeds of any Notes or other Securities (as
defined in the Bridge Facility Fee Letter) issued on or prior to the Closing Date. |
| Ranking: |
The Bridge Loans will rank pari passu in right of payment with the Credit Facilities and will be unsecured. |
| Guarantors: |
Parent and each existing and subsequently acquired or organized subsidiary of the Borrower that is a guarantor of the Credit Facilities will guarantee (the “Bridge Guarantees”) the Bridge Loans on a senior unsecured
basis. |
| Purpose: |
The proceeds of the Bridge Loans on the Closing Date, together with the proceeds of the Term Loan Facilities, Equity Consideration and cash on the balance sheet of the Borrower and the Guarantors, shall be used to (i) fund the Cash
Consideration and the Refinancing and (ii) pay fees and expenses incurred in connection with the Transactions. |
| Conversion and Maturity: |
On the first anniversary of the Closing Date (the “Conversion Date”), any Bridge Loan that has not been previously repaid in full will be automatically converted into a senior term loan (each an “Extended Term
Loan”) due on the date that is eight years after the Closing Date (the “Maturity Date”); provided that such conversion shall be subject to the following conditions being satisfied (i) there shall be
no payment or bankruptcy event of default and (ii) the Conversion Fee (as defined in the Bridge Facility Fee Letter) shall have been paid in full (and to the extent any of such conditions are not satisfied as of first anniversary of the Closing
Date, such automatic extension shall not occur and the Bridge Loans shall mature and become due and payable on such date). |
| |
At any time on or after the Conversion Date, at the option of the applicable Lender, the Extended Term Loans may be exchanged in whole or in part for senior exchange notes (the “Exchange Notes”)
having an equal principal amount; provided that the Borrower may defer the first issuance of Exchange Notes until such time as the Borrower shall have received requests to issue an aggregate of at least $50 million in principal amount of
Exchange Notes, and may defer each subsequent issuance of Exchange Notes until such time as the Borrower shall have received additional requests to issue at least $50 million in principal amount of additional Exchange Notes (or, if the aggregate
principal amount of the outstanding Extended Term Loans is less than $50 million, additional requests to issue additional Exchange Notes in an amount equal to all of such outstanding Extended Term Loans). |
| |
The Extended Term Loans will be governed by the provisions of the Bridge Documentation (as defined below) and will have the same terms as the Bridge Loans except as expressly set forth on Exhibit A hereto. The Exchange
Notes will be issued pursuant to an indenture that will have the terms set forth on Exhibit B hereto. |
| Interest Rates: |
The interest rate applicable to the Bridge Loans for the first three-month period commencing on the Closing Date will be a rate per annum equal to Adjusted LIBOR (as defined below) plus 6.00% (the “Initial Margin”). Three
months after the Closing Date and at the end of each three month period thereafter, the spread over Adjusted LIBOR shall be increased by 50 basis points (the Initial Margin plus each 50 basis point increase described above, the
“Applicable Margin”). |
| |
“Adjusted LIBOR” shall be defined in a manner consistent with the Credit Facilities; provided that Adjusted LIBOR shall in no event be less than 1.00% per annum. |
| |
The Borrower may elect interest periods of one, two or three months. Calculation of interest shall be on the basis of the actual days elapsed in a year of 360 days and interest shall be payable at the end of each
interest period and, in any event, at least every three months. |
| |
During the continuance of an event of default, loans (including the Bridge Loans and Extended Term Loans) and reimbursement obligations outstanding shall bear interest at the interest rate otherwise in effect plus
2% per annum. |
| |
Notwithstanding anything to the contrary set forth herein, at no time shall the per annum interest rate on the Bridge Loans exceed the Total Cap (plus any default interest, if applicable). Notwithstanding anything the
contrary and for the avoidance of doubt, in no event shall the Total Cap limit the payment in cash of any default rate of interest in respect of the Bridge Loans, Extended Term Loans or Exchange Notes. |
| |
The Bridge Documentation shall include customary protective provisions for such matters as increased costs, funding losses, illegality, change of laws (including those related to capital adequacy of banks), defaulting
lenders, and withholding taxes. |
2
| Documentation Principles: |
The definitive documentation for the Bridge Facility (the “Bridge Documentation” and, together with the Credit Documentation, the “Facilities Documentation”) will be negotiated in good faith and
will be based on credit facility documentation (including guarantees) for recently committed, similarly sized unsecured credit facilities in connection with leveraged acquisitions and contain such other terms as the Borrower and the Commitment
Parties shall reasonably agree and customary for bridge financings of this type. |
| Voluntary Prepayments: |
Subject to the provisions of the Credit Facilities, the Bridge Loans may be prepaid, in whole or in part, without premium or penalty (other than breakage), at par plus accrued and unpaid interest upon not less than three business days’
prior written notice (or such shorter period as the Bridge Agent may agree to), at the option of the Borrower at any time. |
| Mandatory Prepayments: |
The Bridge Loans shall be prepaid with, subject to certain exceptions to be agreed upon, (i) the net proceeds from the issuance, offering or placement of any debt obligations or equity securities by Parent or any of its subsidiaries (with
such proceeds being applied to repay the Bridge Loans prior to the repayment of loans outstanding under the Credit Facilities); provided that in the event that any lender that committed to provide a portion of the Bridge Loans pursuant to the
Commitment Letter (each, an “Initial Bridge Lender”) or any of its affiliates purchases debt securities from Parent or its subsidiaries pursuant to a “Securities Offering” under the Bridge Facility Fee Letter at an
issue price above the level at which such Initial Bridge Lender or affiliate has determined such debt securities can be resold at the time of such purchase by such Initial Bridge Lender or affiliate to a bona fide third party that is not a Lender
under the Bridge Facility or an affiliate thereof or a participant in the Bridge Facility at such time (and notifies the Borrower thereof), the net cash proceeds received by Parent and its subsidiaries in respect of such debt securities may, at the
option of such Initial Bridge Lender or affiliate, be applied first to prepay the Bridge Loans of such Initial Bridge Lender or affiliate (provided that if there is more than one such Initial Bridge Lender or affiliate then such net cash
proceeds will be applied pro rata to prepay the Bridge Loans of all such Initial Bridge Lenders or affiliates in proportion to such Initial Bridge Lenders’ or affiliates’ principal amount of debt securities purchased from Parent or
its subsidiaries) prior to being applied to prepay the Bridge Loans held by other Lenders; and (ii) the net proceeds from any non-ordinary course asset sales by Parent or any of its subsidiaries (including proceeds from the sale of equity
securities of any subsidiary of the Borrower), but only to the extent required to be prepaid under, and subject to the reinvestment rights set forth in, the Credit Facilities and only in excess of the amount required to be paid to the lenders under
the Credit Facilities. The Borrower will also be required to prepay the Bridge Loans following the occurrence of a Change of Control (to be defined) at 100% of the outstanding principal amount thereof (plus all accrued and unpaid interest thereon).
|
3
| Representations and Warranties: |
The Bridge Documentation will contain representations and warranties provisions that are based on those for the Credit Facilities but with such changes that are appropriate for bridge loan financings of this type. |
| Conditions Precedent to Closing: |
Limited to the conditions precedent set forth in or by reference in Section 1 of the Commitment Letter. For the avoidance of doubt, it is agreed that conditions set forth herein are subject, in all respects, to the Limited Conditionality
Provision. |
| Covenants: |
The Bridge Documentation will contain affirmative and negative covenants relating to the Parent and its subsidiaries that are based on those for the Credit Facilities but with such changes that are appropriate for bridge loan financings of this
type, it being understood that prior to the Conversion Date, the debt, lien, and restricted payments covenants applicable to the Bridge Loans shall be more restrictive than those applicable to the Credit Facilities; provided, that in no event
will the Bridge Documentation contain financial maintenance covenants. |
| |
Notwithstanding the foregoing, the Bridge Documentation will include (i) a covenant for the Borrower to use commercially reasonable efforts to refinance the Bridge Loans as promptly as practicable following the Closing
Date and (ii) customary securities demand and cooperation covenants consistent with those set forth in the Bridge Facility Fee Letter. |
| Events of Default: |
The Bridge Documentation will contain events of default provisions that are based on those for the Credit Facilities but with such changes that are appropriate for bridge loan financings of this type. |
| Waivers and Amendments: |
Amendments and waivers of the Bridge Documentation will require the approval of Lenders holding more than 50% of the aggregate amount of the Bridge Loans, except that the consent of (a) each affected Lender shall be required with respect to
(i) increases in the commitment of such Lender, (ii) reductions or forgiveness of principal, interest or fees payable to such Lender (provided that a waiver of the obligation to pay default interest or to make a mandatory prepayment
will not constitute such a reduction or forgiveness for purposes of this clause (ii)), (iii) extensions of the Conversion Date or final maturity of such Lender’s Bridge Loans or of the date for payment to such Lender of any interest or
fees (provided that a waiver of the obligation to pay default interest will not constitute an extension of the date for payment of interest for purposes of this clause (iii)), (iv) changes that impose any additional restriction on such
Lender’s ability to assign any of its rights or obligations and (b) each Lender shall be required with respect to (i) modifications to certain provisions requiring the pro rata treatment of Lenders, (ii) modification to voting
requirements or percentages and (iii) releases of all or substantially all of the value of the guaranties. |
4
| Assignments and Participations: |
The Lenders will be permitted to assign loans under the Bridge Facility without the consent of (but with notice to) the Borrower and without the consent of (but with notice to) the Bridge Agent. Each assignment will be in an amount of an
integral multiple of $1,000,000. Assignments will be by novation and will be subject to customary restrictions on eligible assignees to be agreed. |
| |
Notwithstanding the above, prior to the Conversion Date and so long as no bankruptcy or payment event of default shall have occurred and be continuing, and so long as no Demand Failure Event (as defined in the Bridge
Facility Fee Letter) has occurred, the consent of the Borrower shall be required with respect to any assignment (such consent not to be unreasonably withheld, conditioned or delayed) if, subsequent thereto, the Commitment Parties in respect of the
Bridge Facility (together with their affiliates) would hold, in the aggregate, less than 50.1% of the outstanding Bridge Loans. Consent shall be deemed to have been given if the Borrower has not responded within ten business days of a request for
such consent. |
| |
The Lenders will be permitted to sell participations in loans without restriction. Voting rights of participants shall be limited to matters in respect of (a) reductions or forgiveness of principal, interest or
fees payable to such participant, (b) extensions of final maturity or scheduled amortization of, or date for payment of interest or fees on, the loans in which such participant participates and (c) releases of all or substantially all of
the value of the Bridge Guarantees. |
| |
Notwithstanding anything to the contrary contained herein, prior to the Conversion Date and so long as no Demand Failure Event (as defined in the Bridge Facility Fee Letter) has occurred, no assignments or
participations will be made to Disqualified Institutions, provided that the list of Disqualified Institutions shall have been made available to all Lenders. |
| Patriot Act: |
To help fight the funding of terrorism and money laundering activities, Federal Law requires U.S. financial institutions to obtain, verify and record information that identifies each person or entity that opens an account and/or enters into a
business relationship with such financial institution. |
| Sanctions: |
The Bridge Agent and the Lenders may disclose confidential information, without notice to the Borrower, to governmental regulatory authorities in connection with any regulatory examination of the Bridge Agent or in accordance with its regulatory
compliance policy. |
| Expenses and Indemnification: |
Consistent with the Credit Facilities. |
5
| Exclusive Forum: |
Federal and State courts in the County of New York, New York. |
| Counsel to Bridge Agent: |
Drinker Biddle & Reath LLP. |
6
Exhibit A to Annex III
Extended Term Loans
| Maturity: |
The Extended Term Loans will mature on the date that is eight years after the Closing Date. |
| Interest Rate: |
The Extended Term Loans will bear interest at a fixed rate per annum equal to the Total Cap. Interest shall be payable on the last day of each fiscal quarter of the Borrower and on the Maturity Date, in each case payable in arrears and computed
on the basis of a 360-day year. |
| Covenants, Events of Default and Offers to Purchase: |
Upon and after the Conversion Date, the covenants, events of default and mandatory offers to purchase applicable to the Exchange Notes will also be applicable to the Extended Term Loans. |
Exhibit B to Annex III
Exchange Notes
| Issue: |
The Exchange Notes will be issued under an indenture capable of being qualified under the Trust Indenture Act of 1939, as amended. |
| Maturity: |
The Exchange Notes will mature on the date that is eight years after the Closing Date. |
| Interest Rate: |
The Exchange Notes will bear interest at a fixed rate per annum equal to the Total Cap; provided that any Lender that surrenders Extended Term Loans in exchange for Exchange Notes may elect to receive such Exchange Notes in the form of
multiple tranches of Exchange Notes (with such tranches bearing different interest rates and having different maturities, ranking and other terms, all as determined by the required lenders), so long as the weighted average interest rate of such
tranches does not exceed the Total Cap. Interest will be payable semiannually in arrears. |
| Optional Redemption: |
The Exchange Notes will be non-callable until the third anniversary of the Closing Date (subject to a customary “equity clawback” provision described below and a customary make-whole optional redemption provision described below).
Thereafter, each Exchange Note will be callable at par plus accrued interest plus a premium equal to 75% of the coupon on such Exchange Note, which premium shall decline ratably on each anniversary of the Closing Date to zero on the date that is two
years prior to the maturity of the Exchange Notes. |
| |
Up to 40% of the aggregate principal amount of Exchange Notes will be redeemable at the option of the Issuer prior to the third anniversary of the Closing Date with the net cash proceeds of qualified equity offerings of
the Borrower at a price equal to par plus the coupon on the Exchange Notes plus accrued interest; provided that after giving effect to such redemption at least 60% of the aggregate principal amount of Exchange Notes originally issued shall remain
outstanding. |
| |
Prior to the third anniversary of the Closing Date, the Issuer may redeem such Exchange Notes at a make-whole price based on U.S. Treasury notes with a maturity closest to the third anniversary of the Closing Date plus
50 basis points. |
| |
Any Exchange Notes held by the Commitment Parties or their affiliates (other than asset management affiliates that purchase securities in the ordinary course of their business), and excluding Exchange Notes acquired
pursuant to bona fide open market purchases from third parties or market making activities, shall be redeemable at any time and from time to time at the option of the Issuer at a redemption price equal to par plus accrued and unpaid interest to the
redemption date. |
| Offer to Repurchase upon a Change of Control: |
The Borrower will be required to offer to repurchase the Exchange Notes following the occurrence of a Change of Control (to be defined) at 101% of the outstanding principal amount thereof (plus all accrued and unpaid interest thereon), unless
the Issuer shall redeem all Exchange Notes pursuant to the “Optional Redemption” section above. |
| Defeasance Provisions: |
Customary for high-yield debt securities of issuers of similar size, operational requirements, industry, businesses, business practices, proposed business plan and credit quality. |
| Modification: |
Customary for high-yield debt securities of issuers of similar size, operational requirements, industry, businesses, business practices, proposed business plan and credit quality. |
| Registration Rights: |
None. |
| Covenants: |
Incurrence-based covenants customary for high-yield debt securities of issuers of similar size, operational requirements, industry, businesses, business practices, proposed business plan and credit quality. |
| Events of Default: |
Customary for high-yield debt securities of issuers of similar size, operational requirements, industry, businesses, business practices, proposed business plan and credit quality. |
Summary of Additional Conditions Precedent
All capitalized terms used herein but not defined herein shall have the meanings provided in the Commitment Letter (including the other
annexes thereto) to which this Summary of Additional Conditions Precedent is attached.
The initial borrowing under the Facilities shall
be subject to the following conditions precedent:
1. Consummation of the Acquisition. The Acquisition shall be consummated
substantially concurrently with the initial funding of the Facilities in accordance in all material respects with the fully executed Agreement and Plan of Merger, dated as of the date of this Commitment Letter, and notwithstanding anything to the
contrary in the Commitment Letter, the Merger Agreement shall not have been amended or modified or any condition therein waived, in each case in any respect that is materially adverse to the Lenders or the Lead Arrangers in their capacities as such,
without the prior written consent of the Commitment Parties (such consent not to be unreasonably withheld or delayed); provided, that without the consent of each Lead Arranger, the Borrower shall not increase the portion of the purchase price
of the Target payable in cash, except to the extent that such increase in the cash portion of the purchase price is funded entirely from cash proceeds of a contemporaneous common equity offering; provided, further, that any amendment
or modification that results in (a) any increase in consideration for the Acquisition of more than 10%, (b) any decrease in the consideration for the Acquisition of more than 10%, and (c) any decrease in the consideration for the
Acquisition of less than 10% that is not applied to reduce the Term B Facility, the Term A Facility and the Bridge Facility (allocated ratably across all such Facilities) on a dollar-for-dollar basis, in each case shall be deemed to be materially
adverse to the Lenders and the Lead Arrangers. Immediately following the consummation of the Transactions, the Refinancing shall have occurred and neither the Parent nor any of its subsidiaries shall have any indebtedness for borrowed money or
preferred equity other than as contemplated by the Commitment Letter.
2. Financial Statements. The Lead Arrangers shall have
received U.S. GAAP (i) (A) audited consolidated balance sheets of the Parent as at the end of each of the three fiscal years immediately preceding, and ended more than 90 days prior to, the Closing Date, and related statements of
operations, comprehensive income (loss), stockholders’ equity and cash flows of the Parent for each of the three fiscal years immediately preceding, and ended more than 60 days prior to, the Closing Date and (B) audited consolidated
balance sheets of Accellent Inc. as at the end of each of the three fiscal years immediately preceding, and ended more than 90 days prior to, the Closing Date, and related statements of income, stockholders’ equity and cash flows of Accellent
Inc. for each of the three fiscal years immediately preceding, and ended more than 90 days prior to, the Closing Date; and (ii) (A) an unaudited consolidated balance sheet of the Parent as at the end of, and related statements of
operations, comprehensive income (loss) and cash flows of the Parent for, each fiscal quarter (and the corresponding quarter in the prior fiscal year), other than the fourth quarter of the Parent’s fiscal year, subsequent to the date of the
most recent audited financial statements of the Parent and ended more than 40 days prior to the Closing Date and (B) (i) unaudited interim consolidated financial statements for Accellent Inc. and its subsidiaries for the six months ended
July 4, 2015 (consisting of a balance sheet and a statement of operations, loss and stockholders’ equity) and (ii) an unaudited consolidated balance sheet of Accellent Inc. as at the end of, and related statements of income and cash
flows of Accellent Inc. for, each fiscal quarter (and, in the case of the statement of income and cash flows, the corresponding quarter in the prior fiscal year), other than the fourth quarter of Accellent Inc. fiscal year, subsequent to the date of
the most recent audited financial statements of Accellent Inc. and ended more than 45 days prior to the Closing Date. It being understood and agreed that the financial statements set forth in clauses (i)(A) for the fiscal year ended
December 31, 2014 and (i)(B) for the fiscal year ended January 3, 2015 have been delivered as of the date hereof.
3. Pro Forma Financial Statements; Projections. The Lead Arrangers shall have received a
pro forma consolidated balance sheet and related pro forma consolidated statements of income of the Parent as of and for the twelve-month period ending on the last date of the most recently completed four- fiscal quarter period for which financial
statements have been delivered pursuant to paragraph 2 above, prepared after giving effect to the Transactions and the spin-off of QIG Group LLC as if the Transactions and spin-off had occurred as of such date (in the case of such balance sheet) or
at the beginning of such period (in the case of such other financial statements). The Borrower shall have delivered its most recent projections through the 2020 fiscal year, prepared on a quarterly basis through the end of 2017.
4. Solvency. The Lead Arrangers, the Bridge Agent (in the event that any Bridge Loans are to be borrowed on the Closing Date) and the
Administrative Agent shall have received a solvency certificate from the chief financial officer of Borrower in the form of Exhibit A to this Annex IV as to the solvency of the Borrower and its subsidiaries on a consolidated basis
after giving effect to the Acquisition and the Refinancing.
5. Confidential Information Memorandum and Marketing Period for
Facilities. The Lead Arrangers shall have been afforded a period of at least 15 consecutive business days following the date of delivery of the Information Memorandum and prior to the Closing Date (provided that (i) November 27,
2015 shall be excluded as a business day for such purposes, (ii) such period shall commence no earlier than September 8, 2015 and (iii) if such period has not ended on or prior to December 18, 2015, such period shall not be
deemed to have commenced prior to January 4, 2016) to syndicate the Facilities. If the Borrower reasonably believes, in good faith, that it has provided the information required to be provided by it under Sections 2, 3 and 5 of this Annex
IV (such information, the “Required Financial Information”), the Borrower may then deliver to the Lead Arrangers a written notice to that effect (stating how and when it believes it completed such delivery), in which case
the Borrower shall thereafter be deemed to have provided the Required Financial Information unless the Lead Arrangers reasonably believe, in good faith, the Borrower has not completed the delivery of the Required Financial Information and, within
five Business Days after its receipt of such notice, any Lead Arranger delivers a written notice to the Borrower to that effect (stating with reasonable specificity which Required Financial Information such Lead Arranger reasonably believes has not
delivered, or has been delivered incompletely, by the Borrower).
6. Offering Memorandum and Marketing Period for Notes. With
respect to the Bridge Facility, (a) one or more investment banks satisfactory to the Lead Arrangers (collectively, the “Investment Bank”) shall have been engaged to privately place the Notes and the Lead Arrangers and
the Investment Bank each shall have received (i) a customary preliminary offering document (an “Offering Document”) suitable for use in a customary “high-yield road show” relating to the Notes, which contains
all information set forth in Section 2 of this Annex IV and customary appropriate pro forma financial statements (which shall in any event include adjustments in respect of the Transactions as well as the spin-off of QIG Group LLC) in
each case prepared in accordance with generally accepted accounting principles in the United States and prepared in accordance with Regulation S-X under the Securities Act of 1933, as amended, and all other information and data that the Securities
and Exchange Commission would require in a registered offering of the Notes or that would be customarily included in Offering Documents of such type (it being understood that such Offering Document shall not be required to include (A) financial
statements or information required by Rules 3-10 or 3-16 of Regulation S-X, (B) information required by Item 402 of Regulation S-K and information regarding executive compensation and (C) financial statements of the Target (it being
understood that this Section 6(a)(i)(C) of this Annex IV shall not be construed to exclude financial statements or information of Accellent Inc. and its
subsidiaries) but such Offering Document shall be required to include disclosure of information in respect of guarantors and non-guarantors that is customary for Rule 144A offerings of high yield
debt securities) and (ii) (A) customary “comfort” letters (each of which shall also provide “negative assurance” comfort that is customary in the context of a transaction where the most recent financial statements are
not more than 135 days old and, in the case of the “comfort” letters delivered by the independent accountants of the Parent, shall also provide customary “negative assurance” comfort with respect to the pro forma financial
statements included in the Offering Document) from the independent accountants of each of the Parent and Accellent Inc. in connection with the offering of the Notes (and any other accountant to the extent financial statements audited or reviewed by
such accountants are or would be included in any Offering Document) which the independent accountants of each of the Parent and Accellent Inc. are prepared to issue upon completion of customary procedures and (B) a customary “10b-5”
disclosure letter from counsel to the Parent and (b) the Investment Bank shall have been afforded a period of at least 15 consecutive business days following receipt of an Offering Document including the information described in clause
(a) to seek to place the Notes with qualified purchasers thereof (provided that (i) November 27, 2015 shall be excluded as a business day for such purposes, (ii) such period shall commence no earlier than September 8,
2015 and (iii) if such period has not ended on or prior to December 18, 2015, such period shall not be deemed to have commenced prior to January 4, 2016).
7. Collateral. With respect to the Credit Facilities, all documents and instruments required to perfect the Administrative Agent’s
security interest in the Collateral shall have been executed and delivered and, if applicable, be in proper form for filing; provided, however, that this condition is subject in all respects to the Limited Conditionality Provisions.
8. PATRIOT Act. The Administrative Agent, the Bridge Agent and the Lead Arrangers shall have received, at least 3 business days
prior to the Closing Date all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act that has been requested
by the Administrative Agent, the Bridge Agent or the Lead Arrangers in writing at least 10 business days prior to the Closing Date.
9.
Miscellaneous Closing Conditions. Subject to the Limited Conditionality Provisions, the delivery of customary closing certificates, good standing certificates, borrowing notices, legal opinions of counsel to the Borrower and the Guarantors
and customary evidence of authorization. The Specified Representations and the Merger Agreement Representations shall be true in all material respects (without giving effect to any “double materiality”).
10. Fees. Payment of all fees required to be paid on the Closing Date pursuant to the Fee Letters and reasonable out-of-pocket expenses
required to be paid on the Closing Date pursuant to the Commitment Letter, to the extent invoiced at least 2 business days prior to the Closing Date, shall, upon the initial borrowing under the Facilities, have been paid (which amounts may be offset
against the proceeds of the Facilities pursuant to arrangements reasonably satisfactory to the Initial Lenders and the Borrower).
EXHIBIT A TO
ANNEX IV
Form of
Solvency Certificate
SOLVENCY CERTIFICATE
[Date]
This Solvency
Certificate (this “Certificate”) is delivered pursuant to Section [ ] of the Credit Agreement, dated as of [ ] (the
“Credit Agreement”), among Greatbatch Ltd., a New York corporation (the “Borrower”), Manufacturers and Traders Trust Company, as the Administrative Agent, the other Lenders parties thereto[, and the
other agents party thereto]. Unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement.
I, [ ], solely in my
capacity as the Chief Financial Officer of the Borrower, do hereby certify on behalf of the Borrower that as of the date hereof, after giving effect to the consummation of the Transactions:
1. The sum of all indebtedness (including contingent liabilities) of the Borrower and its Subsidiaries, on a consolidated basis, does not
exceed the present fair saleable value of the present assets of the Borrower and its Subsidiaries, on a consolidated basis.
2. The capital
of the Borrower and its Subsidiaries, on a consolidated basis, is not unreasonably small in relation to their business as conducted, or presently contemplated to be conducted, as of date hereof.
3. The Borrower and its Subsidiaries, on a consolidated basis, have not incurred and do not intend to incur, or believe that they will incur,
debts including current obligations, beyond their ability to pay such debts as they become due (whether at maturity or otherwise).
4. The
Borrower and its Subsidiaries, on a consolidated basis, are “solvent” within the meaning given to that term and similar terms under applicable laws relating to fraudulent transfers and conveyances.
6. I am familiar with the business and financial position of the Borrower and its Subsidiaries. In reaching the conclusions set forth in this
Certificate, I have made such other investigations and inquiries as I have deemed appropriate, having taken into account the nature of the particular business presently conducted and anticipated to be conducted by the Borrower and its Subsidiaries
after the consummation of the Transactions.
For purposes of this Certificate, the amount of any contingent liability has been computed as
the amount that, in light of all of the facts and circumstances existing as of the date hereof, represents the amount that can reasonably be expected to become an actual or matured liability.
IN WITNESS WHEREOF, the undersigned has executed this Certificate in such undersigned’s capacity as Chief Financial Officer of the
Borrower, on behalf of the Borrower, and not individually, as of the date first written above.
|
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| GREATBATCH LTD. |
|
|
| By: |
|
|
| Name: |
| Title: Chief Financial Officer |
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