UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): May 21, 2023
IRONWOOD PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34620 | 04-3404176 | ||
| (State or other jurisdiction | (Commission | (I.R.S. Employer | ||
| of incorporation) | File No.) | Identification No.) |
100 Summer Street, Suite 2300
Boston, Massachusetts 02110
(Address of principal executive offices)
(617) 621-7722
Registrant’s telephone number, including area code:
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:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| x | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Class A Common Stock, $0.001 par value per share | IRWD | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
| Item 1.01 | Entry into a Material Definitive Agreement. |
Transaction Agreement
On May 21, 2023, Ironwood Pharmaceuticals, Inc., a Delaware corporation (“Ironwood”), entered into a Transaction Agreement (the “Transaction Agreement”) with VectivBio Holding AG, a corporation limited by shares organized under the laws of Switzerland (“VectivBio”).
Pursuant to the Transaction Agreement, and upon the terms and subject to the conditions set forth therein, Ironwood has agreed to commence as promptly as reasonably practicable (and in any event within 10 days of the date of the Transaction Agreement), a cash tender offer (the “Offer”) to acquire all of the outstanding registered ordinary shares, nominal value of CHF 0.05 per share, of VectivBio (the “Shares”), at a price per share equal to $17.00, net to the seller in cash, without interest, and subject to deduction for any applicable withholding taxes (the “Offer Price”).
The Offer will remain open for 20 business days (as calculated in accordance with Rule 14d-1(g)(3) under the Securities Exchange Act of 1934, as amended, the “Exchange Act”) from (and including) the date of commencement of the Offer, unless extended in accordance with the terms of the Transaction Agreement, including as required by the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
Pursuant to the Transaction Agreement, Ironwood’s obligation to accept for payment (such time of acceptance, the “Acceptance Time”) and pay for any Shares tendered pursuant to the Offer is subject to customary conditions, including that: (i) prior to the expiration of the Offer, there be validly tendered and not withdrawn a number of Shares that represents at least one Share more than 80% of the then-outstanding Shares (excluding any Shares held by VectivBio or any of its subsidiaries) (the “Minimum Condition”); (ii) prior to the expiration of the Offer, the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), in respect of the transactions contemplated by the Transaction Agreement, shall have expired or been terminated; (iii) prior to the expiration of the Offer, the VectivBio shareholders shall have (x) effected an amendment to the articles of association of VectivBio removing certain limitations on the shareholders of VectivBio from registering or exercising, directly or indirectly, voting rights with respect to, Shares owned or represented thereby in excess of 18% of the share capital registered in the commercial register of the Canton of Basel-Stadt, Switzerland (the “Articles Amendment”) and (y) elected to the board of directors of VectivBio (the “VectivBio Board”) and its compensation committee certain individuals designated by Ironwood (the “Board Modification”), each as set forth in the Transaction Agreement; and (iv) certain other customary conditions set forth in the Transaction Agreement, including on Exhibit A of the Transaction Agreement.
Following the completion of the Offer and provided that at such time Ironwood directly or indirectly has acquired or controls at least 90% of the then outstanding Shares (excluding Shares held by VectivBio or any of its subsidiaries), Ironwood intends that, in accordance with the laws of Switzerland and a merger agreement expected to be entered into between Ironwood Pharmaceuticals GmbH, a limited liability company organized under the laws of Switzerland and a subsidiary of Ironwood (“Merger Sub”) and VectivBio, Merger Sub and VectivBio will consummate a statutory squeeze-out merger pursuant to which VectivBio will be merged with Merger Sub, and Merger Sub will continue as the surviving entity (the “Merger”). At the effective time of the Merger, each Share (other than Shares held by VectivBio or any of its subsidiaries immediately prior to the Acceptance Time) that is not validly tendered and accepted pursuant to the Offer or acquired by Ironwood after the Acceptance Time will thereupon be cancelled and converted into the right to receive the Offer Price.
At the Acceptance Time, each option to purchase Shares (each, a “VectivBio Stock Option”), whether vested or unvested, that is outstanding and unexercised immediately prior to the Acceptance Time shall be cancelled and, in exchange therefore, Ironwood shall pay to each former holder of any such cancelled VectivBio Stock Option promptly following the Acceptance Time an amount in cash (without interest, and subject to deduction for any applicable withholding taxes) equal to the product, rounded down to the nearest cent, of (i) the excess, if any, of the Offer Price over the exercise price per Share of such VectivBio Stock Option and (ii) the number of Shares subject to such VectivBio Stock Option. If the exercise price per Share of any VectivBio Stock Option is equal to or greater than the Offer Price, such VectivBio Stock Option shall be automatically cancelled for no consideration and shall have no further force or effect.
Additionally, at the Acceptance Time, (i) each Share subject to a repurchase option of VectivBio (each, a “VectivBio Restricted Share”) that is outstanding immediately prior to the Acceptance Time shall (w) automatically become fully vested upon the Offer having been declared unconditional in accordance with the terms of the applicable restricted share purchase agreements between VectivBio and holders of such VectivBio Restricted Shares, (x) shall be treated as fully vested five (5) Business Days prior to the Acceptance time by lifting any applicable transfer restrictions and removing any restrictive legends only for purposes of enabling each holder of VectivBio Restricted Shares to tender such VectivBio Restricted Shares in the Offer, (y) shall be subject to an obligation of such holder to tender (and not withdraw) in the Offer, and (z) shall be treated the same as all other Shares in accordance with the terms and conditions of the Offer (including by prompt payment without any escrow mechanics, and further including subject to deduction for any applicable withholding taxes), and (ii) each restricted share unit award covering Shares that vests based solely on the passage of time (each, a “VectivBio RSU Award”) that is outstanding immediately prior to the Acceptance Time shall automatically become fully vested and shall be cancelled and, in exchange therefore, Ironwood shall pay to each former holder of any such cancelled VectivBio RSU Award an amount in cash (without interest, and subject to deduction for any applicable withholding taxes) equal to the product, rounded down to the nearest cent, of (i) the Offer Price and (ii) the number of Shares subject to such VectivBio RSU Award as of immediately prior to the Acceptance Time promptly after the Acceptance Time.
The Transaction Agreement contains representations, warranties and covenants of Ironwood and VectivBio that are customary for a transaction of this nature, including, among others, using reasonable best efforts to take all such actions necessary, proper or advisable to consummate and make effective, in the most expeditions manner practical, the transactions contemplated thereby. Additionally, during the period from the date of the Transaction Agreement to the Acceptance Time, VectivBio has agreed to, subject to certain exceptions, (x) carry on its business in the ordinary course of business and in compliance with all applicable laws and (y) use commercially reasonable best efforts to preserve intact its business organization, preserve in good repair and condition its assets, permits, rights and properties, keep available the services of its current officers, employees and consultants and preserve its goodwill and its relationships with customers, suppliers, licensors, licensees, distributors, and others having business dealings with VectivBio and its subsidiaries.
Subject to certain exceptions, during the period from the date of the Transaction Agreement through the Acceptance Time, VectivBio has also agreed not to directly or indirectly, publicly or otherwise, solicit, initiate, endorse, encourage or facilitate any inquiry, proposal or offer with respect to, or the making or completion of, any Acquisition Proposal (as defined in the Transaction Agreement), or any inquiry, proposal or offer that is reasonably likely to lead to, facilitate the making of or assist in the submission of any Acquisition Proposal, or take certain other restricted actions in connection therewith. Notwithstanding this limitation, prior to the Acceptance Time, subject to customary limitations and conditions, VectivBio may provide information to, and participate in discussions or negotiations with, a third party that has made a bona fide, written and unsolicited Acquisition Proposal that the VectivBio Board has determined in good faith (after consultation with outside legal counsel and financial advisors), either constitutes or is reasonable likely to lead to a Superior Proposal (as defined in the Transaction Agreement) and failure to take such action would reasonably be likely to result in a breach of its fiduciary duties to VectivBio and its shareholders.
The Transaction Agreement contains certain termination rights for each of Ironwood and VectivBio, including, among others, for the failure to consummate the Offer on or before October 31, 2023 (subject to extension through December 31, 2023 by Ironwood (in its sole discretion) in the event that certain conditions remain unsatisfied as of October 31, 2023, and through February 15, 2024 by Ironwood (in its sole discretion) in the event that certain conditions remain unsatisfied as of December 31, 2023, such date the “Outside Date”). If the Transaction Agreement is terminated under certain circumstances specified in the Transaction Agreement, including under specified circumstances in connection with VectivBio’s entry into a definitive written agreement with respect to a Superior Proposal or in connection with a change in recommendation by the VectivBio Board, VectivBio will be required to pay Ironwood a termination fee of $23,680,000. If the Transaction Agreement is terminated under certain circumstances specified in the Transaction Agreement, including under specified circumstances in connection with failure to satisfy the Minimum Condition, VectivBio will be required to pay Ironwood an amount equal to Ironwood’s fees and expenses incurred by Ironwood or on its behalf in connection with the Transaction Agreement and all other matters contemplated thereby, with such amount not to exceed $18,000,000 in the aggregate. In addition, if the Transaction Agreement is terminated under certain circumstances specified in the Transaction Agreement, including if the Acceptance Time has not occurred on or before the Outside Date and all conditions to the Offer have been satisfied other than (i) the Antitrust Condition (as defined in the Transaction Agreement) or (ii) solely to the extent such restraint arises under, is in respect of or is pursuant to any Antitrust Laws (as defined in the Transaction Agreement), any order, injunction, decision, directive or decree has been issued (and still be in effect) by any governmental entity preventing the consummation of the Offer, or any law shall have been enacted or deemed applicable to the Offer (and still be in effect) by any governmental entity that prohibits or makes illegal the consummation of the Offer, or there be instated and pending any litigation by any governmental entity seeking any Non-Required Remedy (as defined in the Transaction Agreement), Ironwood will be required to pay VectivBio a reverse termination fee of $59,200,000.
The Transaction Agreement has been approved by each of the VectivBio Board and the board of directors of Ironwood. The VectivBio Board unanimously recommends that shareholders of VectivBio accept the Offer and tender their Shares pursuant thereto.
The foregoing description of the Offer, the Merger and the Transaction Agreement does not purport to be complete and is qualified in its entirety by reference to the Transaction Agreement, which is attached hereto as Exhibit 2.1. The Transaction Agreement has been incorporated herein by reference to provide information regarding the terms of the Transaction Agreement and is not intended to modify or supplement any factual disclosures about VectivBio or Ironwood in any public reports filed with the SEC by VectivBio or Ironwood. In particular, the assertions embodied in the representations, warranties and covenants contained in the Transaction Agreement were made only for the purposes of the Transaction Agreement, were solely for the benefit of the parties to the Transaction Agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by information in confidential disclosure schedules provided by VectivBio to Ironwood in connection with the signing of the Transaction Agreement. These disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Transaction Agreement. Moreover, the representations and warranties in the Transaction Agreement were used for the purpose of allocating risk between VectivBio and Ironwood, rather than establishing matters of fact. Accordingly, the representations and warranties in the Transaction Agreement may not constitute the actual state of facts about VectivBio or Ironwood. The representations and warranties set forth in the Transaction Agreement may also be subject to a contractual standard of materiality different from that generally applicable to investors under federal securities laws. Therefore, the Transaction Agreement is included with this filing only to provide investors with information regarding the terms of the Transaction Agreement, and not to provide investors with any other factual information regarding the parties or their respective businesses.
Tender and Support Agreement
On May 21, 2023, in connection with the Transaction Agreement, Ironwood entered into a Tender and Support Agreement (the “Support Agreement”) with certain of VectivBio’s shareholders, executive officers and each of the members of the VectivBio Board (together, the “Supporting Shareholders”), pursuant to which each Supporting Shareholder agreed, among other things, to tender their Shares (including the Restricted Shares) in the Offer and vote their Shares (including the Restricted Shares) at any meeting of the shareholders of VectivBio (i) for, among other things, the approval and adoption of the Articles Amendment and the Board Modification, (ii) against any proposal or motion not recommended by the VectivBio Board that would be inconsistent with condition (c) set forth in Exhibit A of the Transaction Agreement, and (iii) against any change in the VectivBio Board (other than the re-elections proposed to the 2023 annual general meeting of shareholders of VectivBio and the Board Modification). As of May 21, 2023, the Supporting Shareholders owned an aggregate of approximately 28.6% of the Shares. The Supporting Shareholders’ obligations under the Support Agreement terminate in the event that the Transaction Agreement is terminated in accordance with its terms.
The foregoing description of the Support Agreement does not purport to be complete and is qualified in its entirety by reference to the form of the Support Agreement, which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Revolving Credit Agreement
On May 21, 2023, in connection with the Transaction Agreement, Ironwood entered into a credit agreement (the “Revolving Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, a letter of credit issuer and a lender, and the other agents, lenders and letter of credit issuers parties thereto (the “Lenders”).
Pursuant to the Revolving Credit Agreement, the Lenders have provided to Ironwood a $500 million secured revolving credit facility (the “Revolving Credit Facility”), which includes a $10 million letter of credit subfacility. The Revolving Credit Facility is available upon consummation of the Offer until, and loans made thereunder will mature on, the earliest to occur of (i) May 21, 2027, (ii) the date that is 91 days prior to the stated maturity date of Ironwood’s existing convertible notes then outstanding, unless, in the case of clause (ii), Ironwood’s minimum liquidity equals or exceeds certain agreed levels or (iii) if the Offer is not consummated on or before the Outside Date, the fifth business day following the Outside Date. Ironwood may borrow under the Revolving Credit Facility for working capital and general corporate purposes, including the financing of transactions that are permitted under the Revolving Credit Agreement, including to finance a portion of the consideration payable under the Offer and the Merger.
Borrowings under the Revolving Credit Agreement will bear interest, at Ironwood’s option, at a rate equal to (i) Adjusted Term SOFR (as defined in Revolving Credit Agreement) in effect from time to time plus the applicable rate (ranging from 1.75% to 3.00%) or (ii) the highest of (x) the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus one half of 1.0%, (y) the prime lending rate or (z) the one-month Adjusted Term SOFR plus 1.0% in effect from time to time plus the applicable rate (ranging from 0.75% to 2.00%). The applicable rates are based on Ironwood’s consolidated secured net leverage ratio at the time of the applicable borrowing. Ironwood’s consolidated secured net leverage ratio is the ratio of its total secured debt (which is calculated net of up to $100 million of Ironwood’s consolidated unrestricted cash) compared to its consolidated adjusted EBITDA. Interest on base rate loans is payable at the end of each calendar quarter. Interest on SOFR loans is payable at the end of each interest rate period or at the end of each three-month interval within an interest rate period if the period is longer than three months. Ironwood may prepay loans under the Revolving Credit Agreement at any time, without penalty, subject to certain notice requirements.
Commencing on the earlier of the consummation of the Offer or 120 days after the closing date of the Revolving Credit Agreement, Ironwood will also pay a quarterly commitment fee of 0.30% to 0.425% on the daily amount by which the commitments under the Revolving Credit Facility exceed the outstanding loans and letters of credit under the Revolving Credit Facility.
The loans and other obligations under the Revolving Credit Facility are secured by substantially all of Ironwood’s personal property, including a pledge of all the capital stock of subsidiaries held directly by Ironwood or any subsidiary that guarantees the Revolving Credit Facility following the closing date (which pledge, in the case of any foreign subsidiary, is limited to 65% of the voting stock), subject to certain customary exceptions and limitations. The Revolving Credit Agreement generally prohibits any other liens on the assets of Ironwood and its restricted subsidiaries, subject to certain exceptions as described in the Revolving Credit Agreement.
Under the terms of the Revolving Credit Agreement, Ironwood will be able to request an increase in the commitments or the addition of a term loan secured by a pari passu lien on the collateral of up to an additional amount equal to the greater of $200 million and 100% of trailing twelve month consolidated EBITDA upon satisfaction of customary conditions, including receipt of commitments from either new lenders or increased commitments from existing lenders.
The Revolving Credit Agreement contains certain covenants applicable to Ironwood and its Restricted Subsidiaries, including, without limitation, limitations on additional indebtedness, liens, various fundamental changes, dividends and distributions, investments (including acquisitions), transactions with affiliates, asset sales, prepayment of junior financing, changes in business and other limitations customary in senior secured credit facilities. In addition, Ironwood is required to maintain a maximum consolidated secured net leverage ratio of 3.00 to 1.00 and a minimum interest coverage ratio of 3.00 to 1.00, in each case at the end of each fiscal quarter. The Revolving Credit Agreement allows Ironwood to elect to increase the permitted maximum consolidated secured net leverage ratio to 3.50 to 1.00 for four fiscal quarters in the event it consummates an acquisition for consideration in excess of $50 million, subject to certain limitations on how often this election can be made. These covenants and limitations are more fully described in the Revolving Credit Agreement.
The Revolving Credit Agreement provides that events of default will exist in certain circumstances, including failure to make payment of principal or interest on the loans when required, failure to perform certain obligations under the Revolving Credit Agreement and related documents, defaults under certain other indebtedness, certain insolvency events, certain events arising under ERISA, a change of control and certain other events. Upon an event of default, the Agent with the consent of, or at the request of, the holders of more than 50% in principal amount of the loans and commitments, may terminate the commitments and accelerate the maturity of the loans and enforce certain other remedies under the Revolving Credit Agreement and the other loan documents.
The above description of the Revolving Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Revolving Credit Agreement, which is attached hereto as Exhibit 10.1.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information included under Item 1.01 above under the heading “Revolving Credit Agreement” is incorporated herein by reference.
| Item 8.01 | Other Events. |
On May 22, 2023, Ironwood and VectivBio issued a joint press release announcing the execution of the Transaction Agreement and certain other information. Also on May 22, 2023, Ironwood held a conference call to discuss, among other things, the announcement and execution of the Transaction Agreement and certain other information. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
* Schedules and exhibits to the Transaction Agreement and the Credit Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Ironwood will furnish copies of any such schedules and exhibits to the SEC upon request.
Additional Information and Where to Find It
The description contained herein is for informational purposes only and is not a recommendation, an offer to buy or the solicitation of an offer to sell any of VectivBio’s ordinary shares. The tender offer for VectivBio’s outstanding ordinary shares described in this communication has not commenced. At the time the tender offer is commenced, Ironwood will file or cause to be filed a Tender Offer Statement on Schedule TO with the SEC and VectivBio will file a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC related to the tender offer. The Tender Offer Statement (including an Offer to Purchase, a related Letter of Transmittal and other tender offer documents) and the Solicitation/Recommendation Statement will contain important information that should be read carefully before any decision is made with respect to the tender offer. Those materials will be made available to VectivBio’s stockholders at no expense to them. In addition, all of those materials (and any other documents filed with the SEC) will be available at no charge on the SEC’s website at www.sec.gov.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this communication may constitute “forward-looking statements,” including those regarding the expected nature, timing and benefits of the transaction. Forward-looking statements may be typically identified by such words as “may,” “will,” “could,” “should,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and other similar expressions. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause Ironwood’s or VectivBio’s actual results to differ materially from the expectations expressed in the forward-looking statements. Although Ironwood and VectivBio believe that the expectations reflected in the forward-looking statements are reasonable, any or all of such forward-looking statements may prove to be incorrect. Consequently, no forward-looking statements may be guaranteed and there can be no assurance that the actual results or developments anticipated by such forward looking statements will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Ironwood, VectivBio or their respective businesses or operations.
Factors which could cause actual results to differ from those projected or contemplated in any such forward-looking statements include, but are not limited to, the following factors: (1) the risk that the conditions to the closing of the transaction are not satisfied, including the risk that Ironwood may not receive sufficient number of shares tendered from VectivBio stockholders to complete the tender offer prior to the outside date set forth in the Transaction Agreement and the receipt of required regulatory approvals; (2) litigation relating to the transaction; (3) uncertainties as to the timing of the consummation of the transaction and the ability of each of Ironwood and VectivBio to consummate the transaction; (4) risks that the proposed transaction disrupts the current plans and operations of Ironwood or VectivBio; (5) the ability of Ironwood and/or VectivBio to retain and hire key personnel; (6) competitive responses to the proposed transaction; (7) unexpected costs, charges or expenses resulting from the transaction; (8) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; (9) the prospects, including clinical development, regulatory approvals, and commercial potential of apraglutide; (10) Ironwood’s ability to achieve the growth prospects and synergies expected from the transaction, as well as delays, challenges and expenses associated with integrating VectivBio with its existing businesses; and (11) legislative, regulatory and economic developments. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in VectivBio’s Annual Report on Form 20-F for the year ended December 31, 2022, Ironwood’s Annual Report on Form 10-K for the year ended December 31, 2022 and Ironwood’s other filings with the SEC (which may be obtained for free at the SEC’s website at http://www.sec.gov). Ironwood and VectivBio can give no assurance that the conditions to the transaction will be satisfied. Neither Ironwood nor VectivBio undertakes any intent or obligation to publicly update or revise any of these forward looking statements, whether as a result of new information, future events or otherwise, except as required by law.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 22, 2023 | Ironwood Pharmaceuticals, Inc. | |
| By: | /s/ Thomas McCourt | |
| Name: Thomas McCourt | ||
| Title: Chief Executive Officer | ||
Exhibit 2.1
TRANSACTION AGREEMENT
among
IRONWOOD PHARMACEUTICALS, INC.
and
VECTIVBIO HOLDING AG
Dated as of May 21, 2023
TABLE OF CONTENTS
Page
| Article I. THE OFFER | 2 | ||
| Section 1.1 | The Offer | 2 | |
| Section 1.2 | Offer Documents | 4 | |
| Section 1.3 | Company Actions | 5 | |
| Section 1.4 | Director Designations | 6 | |
| Section 1.5 | Treatment of Company Equity Awards; Warrants | 6 | |
| Section 1.6 | Exchange and Payment | 8 | |
| Section 1.7 | Withholding Rights | 9 | |
| Article II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 9 | ||
| Section 2.1 | Organization, Standing and Power | 9 | |
| Section 2.2 | Share Capital | 10 | |
| Section 2.3 | Subsidiaries | 11 | |
| Section 2.4 | Authority; Vote Required | 11 | |
| Section 2.5 | No Conflict; Consents and Approvals | 12 | |
| Section 2.6 | SEC Reports; Financial Statements | 13 | |
| Section 2.7 | No Undisclosed Liabilities | 15 | |
| Section 2.8 | Certain Information | 15 | |
| Section 2.9 | Absence of Certain Changes or Events | 16 | |
| Section 2.10 | Litigation | 16 | |
| Section 2.11 | Compliance with Laws | 16 | |
| Section 2.12 | Benefit Plans | 17 | |
| Section 2.13 | Labor Matters | 19 | |
| Section 2.14 | Environmental Matters | 21 | |
| Section 2.15 | Taxes | 22 | |
| Section 2.16 | Contracts | 24 | |
| Section 2.17 | Insurance | 26 | |
| Section 2.18 | Properties | 27 | |
| Section 2.19 | Intellectual Property | 27 | |
| Section 2.20 | Takeover Laws | 31 | |
| Section 2.21 | No Rights Plan | 31 | |
| Section 2.22 | FDA and Regulatory Matters | 31 | |
| Section 2.23 | Privacy and Security | 35 | |
| Section 2.24 | Brokers | 36 | |
| Section 2.25 | Opinion of Financial Advisor | 37 | |
| Section 2.26 | Related Party Transactions | 37 | |
| Section 2.27 | Suppliers and Manufacturers | 37 | |
| Section 2.28 | No Other Representations or Warranties | 37 | |
i
TABLE OF CONTENTS
(Continued)
Page
| Article III. REPRESENTATIONS AND WARRANTIES OF PARENT | 38 | ||
| Section 3.1 | Organization, Standing and Power | 38 | |
| Section 3.2 | Authority | 38 | |
| Section 3.3 | No Conflict; Consents and Approvals | 38 | |
| Section 3.4 | Certain Information | 39 | |
| Section 3.5 | Absence of Litigation | 39 | |
| Section 3.6 | Brokers | 39 | |
| Section 3.7 | Ownership of Shares | 40 | |
| Section 3.8 | Adequacy of Funds | 40 | |
| Section 3.9 | No Other Representations or Warranties | 40 | |
| Article IV. COVENANTS | 40 | ||
| Section 4.1 | Preparation of Shareholder Approval Invitation; Shareholder Meeting | 40 | |
| Section 4.2 | Conduct of Business | 42 | |
| Section 4.3 | No Solicitation | 46 | |
| Section 4.4 | Access to Information; Confidentiality | 50 | |
| Section 4.5 | Standard of Efforts; Governmental Approvals | 51 | |
| Section 4.6 | Takeover Laws | 53 | |
| Section 4.7 | Shareholder Litigation | 53 | |
| Section 4.8 | Notification of Certain Matters | 54 | |
| Section 4.9 | Indemnification, Exculpation and Insurance | 55 | |
| Section 4.10 | Public Announcements | 56 | |
| Section 4.11 | Stock Exchange Delisting; Deregistration | 56 | |
| Section 4.12 | Support of the Merger | 56 | |
| Section 4.13 | Employee Matters | 57 | |
| Section 4.14 | Payoff | 58 | |
| Section 4.15 | Company Warrants | 58 | |
| Section 4.16 | Resignation of Directors | 58 | |
| Section 4.17 | Tax Matters | 58 | |
| Section 4.18 | Swiss Tax Rulings | 59 | |
| Section 4.19 | Old Reserves Tax Ruling | 59 | |
| Section 4.20 | Annual Company Shareholder Meeting | 59 | |
| Article V. TERMINATION, AMENDMENT AND WAIVER | 59 | ||
| Section 5.1 | Termination | 59 | |
| Section 5.2 | Effect of Termination | 61 | |
| Section 5.3 | Fees and Expenses | 61 | |
| Section 5.4 | Amendment or Supplement | 63 | |
| Section 5.5 | Extension of Time; Waiver | 63 | |
ii
TABLE OF CONTENTS
(Continued)
Page
| Article VI. GENERAL PROVISIONS | 63 | ||
| Section 6.1 | Non-Survival of Representations and Warranties | 63 | |
| Section 6.2 | Notices | 64 | |
| Section 6.3 | Certain Definitions | 65 | |
| Section 6.4 | Interpretation | 74 | |
| Section 6.5 | Entire Agreement | 75 | |
| Section 6.6 | No Third-Party Beneficiaries | 75 | |
| Section 6.7 | Governing Law | 76 | |
| Section 6.8 | Submission to Jurisdiction | 76 | |
| Section 6.9 | Assignment; Successors | 76 | |
| Section 6.10 | Specific Performance | 77 | |
| Section 6.11 | Currency | 77 | |
| Section 6.12 | Severability | 77 | |
| Section 6.13 | Waiver of Jury Trial | 77 | |
| Section 6.14 | Counterparts | 78 | |
| Section 6.15 | .pdf Signature | 78 | |
| Section 6.16 | No Presumption Against Drafting Party | 78 | |
| Exhibit A | Offer Conditions |
| Exhibit B | Form of Support Agreement |
iii
INDEX OF DEFINED TERMS
| Definition | Location |
| Acceptable Confidentiality Agreement | Section 4.3(b) |
| Acceptance Time | Section 1.1(c) |
| Acquisition Proposal | Section 4.3(i)(i) |
| Action | Section 2.10 |
| Adverse Recommendation Change | Section 4.3(c) |
| Affiliate Transaction | Section 2.26 |
| Agreement | Preamble |
| Alternative Acquisition Agreement | Section 4.3(c) |
| Annual Company Shareholder Approval | Section 6.3(c) |
| Annual Company Shareholder Meeting | Section 6.3(d) |
| Anti-Corruption Laws | Section 2.22(i) |
| Code | Section 1.5(h), Section 1.7 |
| Company | Preamble |
| Company Board | Recitals |
| Company Board Recommendation | Section 2.4(b) |
| Company Disclosure Letter | Article II |
| Company Permits | Section 2.22(a) |
| Company Restricted Share | Section 1.5(b) |
| Company RSU Award | Section 1.5(c) |
| Company SEC Documents | Section 2.6(a) |
| Company Stock Option | Section 1.5(a) |
| Company Systems | Section 2.19(j) |
| Confidentiality Agreement | Section 4.4 |
| Continuing Employee | Section 4.14(a) |
| Contract | Section 2.5(a) |
| Data Partners | Section 2.23(a) |
| DOJ | Section 4.5(b) |
| EMA | Section 4.8(b) |
| Environment | Section 2.14(b)(i) |
| Environmental Law | Section 2.14(b)(ii) |
| Exchange Act | Section 1.1(a) |
| Excluded Shares | Section 1.1(a) |
| Expiration Date | Section 1.1(b) |
| FLSA | Section 2.13(a) |
| Foreign Antitrust Laws | Section 2.5(b) |
| Forward-Looking Statements | Article II |
| Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities | Section 2.22(d) |
| FTC | Section 4.5(b) |
| Governmental Entity | Section 2.5(b) |
| Hazardous Materials | Section 2.14(b)(iii) |
| HSR Act | Section 2.5(b) |
| HSR Condition | Exhibit A |
| IFRS | Section 2.6(b) |
iv
INDEX OF DEFINED TERMS
(Continued)
| Definition | Location |
| IRS | Section 1.7 |
| Law | Section 2.5(a) |
| Leased Real Property | Section 2.18(c) |
| Liens | Section 2.2(a) |
| Material Contract | Section 2.16(a)(xviii) |
| Measurement Date | Section 2.2(a) |
| Merger | Recitals |
| Merger Sub | Recitals |
| Minimum Condition | Exhibit A |
| Nasdaq | Section 1.1(b) |
| Nasdaq Rules | Recitals |
| Non-Required Remedy | Section 4.5(e) |
| Non-U.S. Benefit Plan | Section 2.12(c)(xi) |
| Offer | Recitals |
| Offer Conditions | Section 1.1(a) |
| Offer Documents | Section 1.2 |
| Offer Price | Recitals |
| Offer to Purchase | Section 1.2 |
| Option Consideration | Section 1.5(a) |
| Outside Date | Section 1.1(b) |
| Parent | Preamble |
| Parent Disclosure Letter | Article III |
| Parent Material Adverse Effect | Section 3.1 |
| Paying Agent | Section 1.6(a) |
| Payment Fund | Section 1.6(a) |
| Permits | Section 2.11 |
| Permitted Liens | Section 2.18(a) |
| Privacy Policies | Section 2.23(a) |
| Privacy Requirements | Section 2.23(a) |
| Related Party | Section 2.26 |
| Release | Section 2.14(b)(iv) |
| Representatives | Section 4.3(a) |
| Restraint | Section 5.1(b)(ii) |
| Reverse Termination Fee | Section 5.3(e)(ii) |
| Risk Factors | Article II |
| RSU Consideration | Section 1.5(c) |
| Sarbanes-Oxley Act | Section 2.6(a) |
| Schedule 14D-9 | Section 1.3(b) |
| Schedule TO | Section 1.2 |
| SEC | Section 1.1(b) |
| Securities Act | Section 2.5(b) |
| Security Incident | Section 2.23(e) |
v
INDEX OF DEFINED TERMS
(Continued)
| Definition | Location |
| Shareholder Approval Invitation | Section 4.1(a) |
| Shareholder List Date | Section 1.3(c) |
| Shares | Recitals |
| Superior Proposal | Section 4.3(i)(ii) |
| Support Agreement | Recitals |
| Takeover Laws | Section 2.20 |
| Termination Fee | Section 5.3(b)(iii) |
| Top Suppliers | Section 2.27 |
| Warrant Consideration | Section 1.5(d) |
| Withholding Agent | Section 1.7 |
vi
TRANSACTION AGREEMENT
TRANSACTION AGREEMENT (this “Agreement”), dated as of May 21, 2023, by and among Ironwood Pharmaceuticals, Inc., a Delaware corporation (“Parent”), and VectivBio Holding AG, a corporation limited by shares organized under the laws of Switzerland (the “Company”).
RECITALS
WHEREAS, upon the terms and subject to the conditions of this Agreement, Parent has agreed to commence a cash tender offer (the “Offer”) to purchase all of the outstanding registered ordinary shares, nominal value of CHF 0.05 per share, of the Company (the “Shares”) at a price per Share of $17.00 net (but subject to deduction for any applicable withholding Taxes in accordance with Section 1.7) to the shareholders of the Company in cash (such amount or any greater amount per Share as may be paid pursuant to the Offer, the “Offer Price”), on the terms and subject to the conditions set forth herein;
WHEREAS, the Company acknowledges that, following the completion of the Offer and provided that at such time Parent directly or indirectly has acquired or controls at least 90% of the then outstanding Shares (excluding Shares held by the Company or any of its Subsidiaries), Parent intends that, in accordance with the laws of Switzerland and a merger agreement between Ironwood Pharmaceuticals GmbH, a limited liability company organized under the laws of Switzerland and a Subsidiary of Parent (“Merger Sub”), and the Company, Merger Sub and the Company will consummate a statutory squeeze-out merger pursuant to which the Company will be merged with Merger Sub, and Merger Sub will continue as the surviving entity of the Merger, and each Share (other than any Excluded Shares) that is not validly tendered and accepted pursuant to the Offer or acquired by Parent after the Acceptance Time will thereupon be cancelled and converted into the right to receive the Offer Price (the “Merger”);
WHEREAS, the Board of Directors of Parent has approved this Agreement and declared it advisable for Parent to enter into this Agreement;
WHEREAS, the Board of Directors of the Company (the “Company Board”) has unanimously (i) determined that the terms of this Agreement, the Offer and the other transactions contemplated hereby are fair to and in the best interests of the Company and its shareholders, and declared it advisable, to enter into this Agreement and any future agreements implementing the provisions of this Agreement and to effect the Articles Amendment, the Board Modification, and, subject to the occurrence of the Acceptance Time and satisfaction of the applicable requirements under the listing rules of the Nasdaq Stock Market, LLC (the “Nasdaq Rules”), the Delisting (ii) approved the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby, including the Offer, and (iii) resolved and agreed to recommend that the Company’s shareholders approve and adopt the Articles Amendment, the Board Modification, and, subject to the occurrence of the Acceptance Time and satisfaction of the applicable requirements under the Nasdaq Rules, the Delisting, and accept the Offer and tender their Shares pursuant thereto;
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent’s willingness to enter into this Agreement, certain shareholders of the Company are each entering into an agreement (the “Support Agreement”), substantially in the form attached hereto as Exhibit B, pursuant to which each such Person has agreed, among other things, to tender the Shares held by such Person in the Offer; and
WHEREAS, Parent and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Offer and also to prescribe certain conditions to the Offer as specified herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Parent and the Company hereby agree as follows:
Article I.
THE OFFER
Section 1.1 The Offer.
(a) Provided that: (x) this Agreement shall not have been terminated in accordance with Article V and (y) the Company shall have complied with its obligations under Section 1.3, as promptly as reasonably practicable, and in any event within 10 days of the date of this Agreement, Parent shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder, the “Exchange Act”)) the Offer. The obligations of Parent to accept for payment and pay for any Shares tendered pursuant to the Offer shall be subject to the terms and conditions of this Agreement, including (i) the satisfaction of the Minimum Condition (as defined in Exhibit A hereto) and (ii) the satisfaction or waiver by Parent of each of the other conditions set forth in Exhibit A hereto (together with the Minimum Condition, the “Offer Conditions”). Parent expressly reserves the right to (A) increase the Offer Price, (B) waive any Offer Condition (other than the Minimum Condition, if the validly tendered and not withdrawn number of Shares, together with the Shares, if any, then owned by Parent or any of its Subsidiaries, would represent at least one Share less than 66.67% of the number of Shares issued and outstanding, or the Antitrust Condition) or (C) modify any of the other terms or conditions of the Offer not inconsistent with the terms of this Agreement, except that, without the consent of the Company, Parent shall not (1) reduce the Offer Price, (2) change the form of consideration payable in the Offer (other than by adding cash consideration), (3) reduce the number of Shares sought in the Offer or (4) add to the Offer Conditions, (5) amend or modify any of the Offer Conditions in a manner that would, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation of the Offer or prevent, materially delay or impair the ability of Parent to consummate the Offer, or (6) change or waive the Minimum Condition, if the validly tendered and not withdrawn number of Shares, together with the Shares, if any, then owned by Parent or any of its Subsidiaries, would represent at least one Share less than 66.67% of the number of Shares issued and outstanding, or the Antitrust Condition, (7) extend or otherwise change the Expiration Date in a manner other than as required or permitted by Section 1.1(b) of this Agreement or (8) provide any “subsequent offering period” within the meaning of Rule 14d-11 promulgated under the Exchange Act. For the avoidance of doubt, the Company will procure that no Share held in the treasury of the Company or any of its Subsidiaries immediately prior to the Acceptance Time (collectively, “Excluded Shares”) will be tendered pursuant to the Offer.
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(b) The Offer shall expire at one minute after 11:59 p.m. Eastern Time on the date that is 20 Business Days (for this purpose calculated in accordance with Rule 14d-1(g)(3) under the Exchange Act) after the commencement of the Offer, unless otherwise agreed to in writing by Parent and the Company (such date or such subsequent date to which the expiration of the Offer is extended in accordance with the terms of this Agreement, the “Expiration Date”). Notwithstanding anything to the contrary contained in this Agreement, but subject to the parties’ respective termination rights under Section 5.1: (i) if, as of the then-scheduled Expiration Date, any Offer Condition has not been satisfied or waived, Parent may, in its discretion (and without the consent of the Company or any other Person), extend the Offer on one or more occasions, for an additional period of up to 10 Business Days per extension, to permit such Offer Condition to be satisfied; (ii) Parent shall extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “SEC”) or the staff thereof or the rules of the Nasdaq Global Market (“Nasdaq”) applicable to the Offer; and (iii) if, at the then-scheduled expiration time of the Offer, the Company brings or shall have brought any action in accordance with Section 6.10 to enforce specifically the performance of the terms and provisions of this Agreement by Parent, the Expiration Date shall be extended (x) for the period during which such action is pending or (y) by such other time period established by the court presiding over such action, as the case may be; provided, however, that in no event shall Parent be required to extend the Offer beyond the earliest to occur of (x) the valid termination of this Agreement in compliance with Article V, and (y) the first day immediately following October 31, 2023 (the “Outside Date”).
(c) Subject to the terms and conditions of this Agreement, including the satisfaction or waiver of all of the Offer Conditions, Parent will irrevocably accept for payment (the time of such acceptance, the “Acceptance Time”) and thereafter pay for all Shares validly tendered and not validly withdrawn pursuant to the Offer as promptly as practicable after the Expiration Date in accordance with Section 1.6(a), provided, that with respect to Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee, Parent shall be under no obligation to make any payment for such Shares unless and until such Shares are delivered in settlement or satisfaction of such guarantee. Without limiting the generality of the foregoing, Parent shall provide on a timely basis the funds that are necessary to pay for any and all Shares that Parent becomes obligated to purchase pursuant to the Offer and this Agreement. For the avoidance of doubt, Parent shall not accept for payment or pay for any Shares if, as a result, Parent would acquire less than the number of Shares necessary to satisfy the Minimum Condition. The Offer Price payable in respect of each Share validly tendered and not withdrawn pursuant to the Offer shall be paid, without interest, net to the holder thereof in cash, subject to any withholding Taxes payable in respect thereof pursuant to applicable Law and Section 1.7. Subject to the Company Shareholder Approval, the Company shall register Parent, or if Shares are held by a nominee, such nominee in the share register of the Company as shareholder with voting rights with respect to any Shares irrevocably accepted for payment effective as soon as reasonably practicable after the Acceptance Time; provided that Parent shall have paid for such Shares concurrently with the transfer of such Shares.
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(d) Notwithstanding anything in this Agreement to the contrary, if, at any time occurring on or after the date hereof and prior to the Acceptance Time, any change in the outstanding equity interests of the Company shall occur as a result of any reorganization, reclassification, recapitalization, stock split (including a reverse stock split), subdivision or combination, exchange or readjustment of shares, or any stock dividend or stock distribution (including any dividend or other distribution of securities convertible into Shares) with a record date during such period, the Offer Price will be equitably adjusted to reflect such change and provide the holders of each Share the same economic effect as contemplated by this Agreement prior to such event; provided, that nothing in this Section 1.1(d) shall be construed to permit the Company to take any such action without the consent of Parent if required under Section 4.2.
Section 1.2 Offer Documents. As promptly as reasonably practicable on the date of commencement of the Offer, Parent shall (a) file a Schedule TO (together with all exhibits, amendments and supplements thereto, the “Schedule TO”) with respect to the Offer, which shall contain or shall incorporate by reference an offer to purchase (the “Offer to Purchase”) and forms of the related letter of transmittal and form of summary advertisement (the Schedule TO, the Offer to Purchase and such other documents, together with all exhibits, amendments and supplements thereto, the “Offer Documents”), (b) cause the Offer Documents to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities Laws, (c) deliver a copy of the Offer Documents to the Company at its principal executive offices in accordance with Rule 14d-3(a) promulgated under the Exchange Act and (d) give telephonic notice to Nasdaq of the information required by Rule 14d-3 promulgated under the Exchange Act, and mail by means of first class mail a copy of the Offer Documents to Nasdaq in accordance with Rule 14d-3(a) promulgated under the Exchange Act. The Company shall promptly supply Parent in writing, for inclusion in the Offer Documents, all information concerning the Company required under the Exchange Act to be included in the Offer Documents. Parent agrees that it shall cause the Offer Documents filed by Parent with the SEC to comply in all material respects with the Exchange Act and the rules and regulations thereunder and other applicable legal requirements. Each of Parent and the Company agrees to promptly correct (i) any information provided by it for use in the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect, and (ii) any material omissions therefrom, and Parent further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to the holders of Shares, in each case as and to the extent required by applicable federal securities Law, the SEC or its staff or Nasdaq. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents and any amendments thereto prior to the filing thereof with the SEC and Parent shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel. Parent shall provide the Company and its counsel a reasonable opportunity to participate in the formulation of any response to any such comments of the SEC or its staff and a reasonable opportunity to participate in any discussions with the SEC or its staff concerning such comments. In addition, Parent agrees to provide the Company and its counsel any comments, whether written or oral, that Parent may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments, and any written or oral responses thereto. The Company and its counsel shall be given a reasonable opportunity to review and comment upon such responses and Parent shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel.
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Section 1.3 Company Actions.
(a) The Company hereby consents to the Offer and to the inclusion in the Offer Documents of the Company Board Recommendation.
(b) As promptly as reasonably practicable on the date of filing by Parent of the Offer Documents, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (such Schedule 14D-9, together with all exhibits, amendments and supplements thereto, the “Schedule 14D-9”), which shall contain the Company Board Recommendation. The Company shall cause the Schedule 14D-9 to (i) include as an exhibit an Information Statement pursuant to Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder and (ii) comply as to form in all material respects with the requirements of applicable Law. If requested by the Company, Parent shall cause the Schedule 14D-9 to be mailed or otherwise disseminated to the Company shareholders together with the Offer Documents. The Company shall cause the Schedule 14D-9 to be disseminated to the holders of Shares, as and to the extent required by applicable federal securities Law. Each of the Company and Parent agrees to (x) promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect and (y) correct material omissions therefrom, and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to the holders of Shares, in each case, as and to the extent required by applicable federal securities Law, the SEC or its staff or Nasdaq. Parent and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 and any amendments thereto prior to the filing thereof with the SEC and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent and its counsel. In addition, the Company agrees to provide Parent and its counsel any comments, whether written or oral, that the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments, and any written or oral responses thereto. Parent and its counsel shall be given a reasonable opportunity to review and comment upon such responses and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent and its counsel.
(c) In connection with the Offer, the Company shall cause its transfer agent to promptly (and in any event within five (5) Business Days following the date hereof) furnish Parent with mailing labels, security position listings, any non-objecting beneficial owner lists and any available listings or computer files containing the names and addresses of the record holders of Shares as of the most recent practicable date and shall furnish Parent with such additional available information (including, but not limited to, periodic updates of such information) and such other assistance as Parent or its agents or representatives may reasonably request in communicating the Offer to the record and beneficial holders of Shares. The date of the list used to determine the Persons to whom the Offer Documents and the Schedule 14D-9 are first disseminated, the “Shareholder List Date”. Parent and its agents shall hold in confidence the information contained in any such labels, lists and files, shall use such information only in connection with the Offer, and, if this Agreement shall be terminated, shall promptly deliver, and shall use their reasonable best efforts to cause their agents to deliver, to the Company (or destroy) all copies and any extracts or summaries from such information then in their possession or control and, if requested by the Company, promptly certify to the Company in writing that all such material has been returned or destroyed.
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Section 1.4 Director Designations.
(a) Parent shall be entitled to nominate the individuals to be proposed by the Company Board pursuant to the Board Modification for conditional election at the Company Shareholder Meeting as members of the Company Board and/or the Compensation Committee of the Company Board with effect as of the Acceptance Time. At Parent’s request, the Company shall (i) seek and accept resignations of incumbent directors effective as of the Acceptance Time and (ii) have such changes registered with the Registrar as promptly as reasonably practicable following the Acceptance Time.
(b) The Company’s obligations to propose and recommend the Board Modification pursuant to this Agreement shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder and Swiss Law, as applicable. The Company shall promptly take all actions, and shall include in the Schedule 14D-9 such information with respect to the Company and directors, as Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder require in order to fulfill its obligations under this Section 1.4 and Section 4.1, so long as Parent has timely provided to the Company in writing any information with respect to itself and its nominees required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder and under Swiss Law. Parent shall promptly supply to the Company in writing and shall be solely responsible for the accuracy and completeness of, all such information.
Section 1.5 Treatment of Company Equity Awards; Warrants.
(a) At the Acceptance Time, each option to purchase Shares (each, a “Company Stock Option”), whether vested or unvested, that is outstanding and unexercised immediately prior to the Acceptance Time shall be cancelled and, in exchange therefor, Parent shall pay to each former holder of any such cancelled Company Stock Option promptly following the Acceptance Time an amount in cash (without interest, and subject to deduction for any applicable withholding Taxes) equal to the product, rounded down to the nearest cent, of (i) the excess, if any, of the Offer Price over the exercise price per Share of such Company Stock Option and (ii) the number of Shares subject to such Company Stock Option (the “Option Consideration”); provided, that if the exercise price per Share of any such Company Stock Option is equal to or greater than the Offer Price, such Company Stock Option shall be automatically cancelled for no consideration and shall have no further force or effect.
(b) The Company Board shall take all actions necessary to provide that, subject to the occurrence of the Acceptance Time, each Share subject to a repurchase option of the Company (each, a “Company Restricted Share”) that is outstanding immediately prior to the Acceptance Time (i) shall automatically become fully vested in accordance with the terms of the applicable Company Restricted Share Purchase Agreement, (ii) shall be treated as fully vested five (5) Business Days prior to the Acceptance Time by lifting any applicable transfer restrictions and removing any restrictive legends only for purposes of enabling each holder of Company Restricted Shares to tender such Company Restricted Shares in the Offer, (iii) shall be subject to an obligation of such holder to tender (and not withdraw) in the Offer, and (iv) shall be treated the same as all other Shares in accordance with Section 1.1 (including prompt payment without any escrow mechanics, and further including subject to deduction for any applicable withholding Taxes).
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(c) At the Acceptance Time, each restricted share unit that corresponds with a Share that vests based solely on the passage of time (each, a “Company RSU Award”) that is outstanding immediately prior to the Acceptance Time shall automatically become fully vested and shall be cancelled and, in exchange therefor, Parent shall pay to each former holder of any such cancelled Company RSU Award an amount in cash (without interest, and subject to deduction for any applicable withholding Taxes) equal to the product, rounded down to the nearest cent, of (i) the Offer Price and (ii) the number of Shares subject to such Company RSU Award as of immediately prior to the Acceptance Time (the “RSU Consideration”) promptly after the Acceptance Time.
(d) At the Acceptance Time, each Company Warrant that is outstanding immediately prior to the Acceptance Time, shall be cancelled and, in exchange therefor, Parent shall pay to each former holder of any such cancelled Company Warrant an amount in cash (without interest, and subject to deduction for any applicable withholding Taxes) equal (x) the product, rounded down to the nearest cent, of (i) the Offer Price and (ii) the number of Shares subject to such Company Warrant as of immediately prior to the Acceptance Time minus (y) the aggregate exercise price of all of the Shares subject to the Company Warrants (the “Warrant Consideration”) promptly after the Acceptance Time and simultaneously with payment of the Offer Price.
(e) Prior to the Acceptance Time, the Company Board (or, if appropriate, any committee administering the Company ESPP) shall adopt such resolutions and take all actions necessary pursuant to the terms of the Company ESPP to provide that no new offering period will be commenced following the date of this Agreement under the Company ESPP.
(f) Prior to the Acceptance Time, the Company shall deliver all required notices (which notices shall have been approved by Parent, in its reasonable discretion, not to be unreasonably withheld or delayed) to each holder of Company Equity Awards setting forth each holder’s rights pursuant to the respective Company Stock Plan or Company Restricted Share Purchase Agreement, stating that such Company Equity Awards shall be treated in the manner set forth in this Section 1.5.
(g) The Company shall take all actions necessary to ensure that, subject to the occurrence of, and effective as of, the Acceptance Time (or, with respect to Company Restricted Shares and the Company Restricted Share Purchase Agreement, the settlement of the Offer), (i) the Company Stock Plans and the Company ESPP shall terminate and (ii) no holder of a Company Equity Award or any participant in any Company Stock Plan or any other employee incentive or benefit plan, program or arrangement or any non-employee director compensation plan, program or arrangement maintained by the Company shall have any rights to acquire, or other rights in respect of, shares of the Company or any of its Subsidiaries, except the right to receive the payment contemplated by this Section 1.5(a) in cancellation and settlement thereof.
(h) Notwithstanding anything to the contrary contained in this Agreement, any payment in respect of any Company RSU Award that, immediately prior to such cancellation, constitutes “nonqualified deferred compensation” subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) shall be made on the applicable settlement date for such Company RSU Award if required in order to comply with Section 409A of the Code.
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(i) Promptly following the Acceptance Time, Parent shall cause the Paying Agent to pay the Company an amount equal to all payments required to be made to former holders of Company Equity Awards pursuant to this Section 1.5 (without yet giving effect to Section 1.7 hereof). Subject to Section 1.7, Parent shall cause the Company to make all payments to former holders of Company Equity Awards required under this Section 1.5 as promptly as practicable following the Acceptance Time and all such payments (other than with respect to any director, consultant or independent contractor) shall be paid through the payroll system or payroll provided of the Company or its applicable affiliate.
(j) Prior to the Acceptance Time, the Company Board (or an applicable committee thereof) shall adopt such resolutions as are necessary to authorize treatment of the Company Equity Awards in accordance with this Section 1.5.
Section 1.6 Exchange and Payment.
(a) Prior to the Acceptance Time, Parent shall designate a bank or trust company reasonably acceptable to the Company (the “Paying Agent”) to act as agent for the holders of Shares to receive the Offer Price pursuant to Section 1.1(c). At or prior to the Acceptance Time, Parent shall deposit, or shall cause to be deposited, with the Paying Agent, cash sufficient to make payment of the Offer Price payable pursuant to Section 1.1(c), the Option Consideration, the RSU Consideration and the Warrant Consideration (such amount paid to the Paying Agent in accordance with the foregoing, the “Payment Fund”). The Payment Fund shall not be used for any other purpose except as otherwise provided in this Agreement.
(b) Prior to the Acceptance Time, Parent and the Company shall use their commercially reasonable efforts to agree on the calculation of cash amounts of all of the Offer Price, Option Consideration, RSU Consideration and Warrant Consideration in accordance with the terms hereof, including as it relates to any applicable withholding amounts. Company agrees to make the relevant calculations and related back-up available to Parent, as reasonably requested by Parent and as required for compliance with Section 1.6(a) hereto. Notwithstanding the foregoing, nothing in this Section 1.6(b) shall limit any Person’s (including Parent’s or the Paying Agent’s) withholding rights under Section 1.7 with respect to the cash amounts deposited pursuant to this Section 1.6(b).
(c) The Paying Agent shall invest any cash included in the Payment Fund as directed by Parent, on a daily basis. Any interest or other income resulting from such investments shall be paid to Parent, upon demand.
(d) None of Parent, the Company (and its successor), the Paying Agent or any other Person shall be liable to any Person in respect of any portion of the Payment Fund properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Any portion of the Payment Fund remaining unclaimed by holders at such time at which such amounts would otherwise escheat to or become the property of any Governmental Entity shall become, to the extent permitted by applicable Law, the property of the Company (or its successor), free and clear of all claims or interest of any Person previously entitled thereto.
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Section 1.7 Withholding Rights. Parent, the Company (or its successor), the Paying Agent and any other applicable withholding agent (each, a “Withholding Agent”) shall each be entitled to deduct and withhold, or cause to be deducted and withheld, from any amount otherwise payable to any Person pursuant to this Agreement, such amounts as the applicable Withholding Agent is required to deduct and withhold under the Internal Revenue Code of 1986, as amended (the “Code”), or any provision of state, local Swiss or other foreign tax Law. Prior to making any such Tax deductions or withholdings, the Withholding Agent shall provide a reasonable opportunity for the recipient of such payment to timely provide any necessary Tax forms (including an Internal Revenue Service (“IRS”) From W-9 or applicable IRS Form W-8) in order to avoid or reduce such withholding where a reduction or relief is reasonably to be expected. To the extent that amounts are so deducted and withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made.
Article
II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as set forth in the corresponding section or subsection of the disclosure letter delivered by the Company to Parent immediately prior to the execution of this Agreement (the “Company Disclosure Letter”) (it being agreed that the disclosure of any information in a particular section or subsection of the Company Disclosure Letter shall be deemed disclosure of such information with respect to any other section or subsection of this Agreement to which the relevance of such information is readily apparent on its face) and (ii) as disclosed in the Company SEC Documents publicly filed since January 1, 2022 and at least two Business Days prior to the date of this Agreement (provided, that (x) in no event shall any information in the “Risk Factors” or “Forward-Looking Statements” sections of such Company SEC Documents or any other cautionary, predictive or forward-looking statements in such Company SEC Documents be deemed to be an exception to or disclosure for the purposes of the Company’s representations and warranties contained in this Article II and (y) clause (ii) shall not apply to any representations and warranties set forth in Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.8, 2.9, 2.20, 2.21, 2.24 and 2.25), the Company represents and warrants to Parent as follows:
Section 2.1 Organization, Standing and Power.
(a) Each of the Company and its Subsidiaries (i) is an entity duly organized, validly existing and in good standing (or the equivalent thereof) under the Laws of the jurisdiction of its organization, (ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted except where any failure to have such power and authority has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (iii) is duly qualified or licensed to do business and is in good standing (or the equivalent thereof) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing (or the equivalent thereof), individually or in the aggregate, has not had and would not reasonably be expected to have, a Material Adverse Effect.
(b) The Company has previously made available to Parent true and complete copies of the Company Articles and the comparable organizational documents of each of its Subsidiaries, in each case as amended as of the date of this Agreement, and each as so delivered is in full force and effect. There are no pending filings or resolutions which would effect or require an amendment of any of these documents other than the Annual Company Shareholder Approval and the Articles Amendment. Except as, individually or in the aggregate, has not had and would not reasonably be expected to have, a Material Adverse Effect, the Company is not in violation of any provision of the Company Articles, and the Company’s Subsidiaries are not in violation of any of their respective organizational documents.
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Section 2.2 Share Capital.
(a) The share capital of the Company consists of 67,391,790 Shares with a par value of CHF 0.05 per share. As of the close of business on May 17, 2023 (the “Measurement Date”), (i) the Company holds in treasury 4,585,752 Shares, (ii) the authorized share capital of the Company amounts to 3,144,360 Shares with a par value of CHF 0.05, (iii) the conditional share capital of the Company consists of (A) 10,826,640 Shares with a par value of CHF 0.05 to be issued in connection with Company Stock Plans, and (B) 9,017,720 Shares with a par value of CHF 0.05 to be issued in connection with certain outstanding financial instruments of the Company, including 9,017,720 Shares reserved for issuance pursuant to the Company Warrants and the Existing Credit Agreements, and (iv) 284,430 Company Restricted Shares are outstanding. As of the Measurement Date, 8,342,954 Company Stock Options to purchase 8,342,954 Shares and 536,534 Company RSU Awards representing the right to receive 536,534 Shares are outstanding under the Company Stock Plans. All outstanding Shares are, and all shares reserved for issuance will be, when issued in accordance with the Company Articles and applicable Law, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any applicable Law, the Company Articles or any Contract to which the Company is a party or is otherwise bound. All outstanding shares and other voting securities or equity interests of each Subsidiary of the Company have been duly authorized and validly issued, are fully paid, nonassessable and not subject to, or issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under applicable law, the organizational documents of such Subsidiary or any Contracts to which such Subsidiary is a party or is otherwise bound. All outstanding shares and other voting securities or equivalent equity interests of each such Subsidiary are owned of record and beneficially, directly or indirectly, by the Company, free and clear of all pledges, claims, liens, charges, options, rights of first refusal, encumbrances and security interests of any kind or nature whatsoever (including any limitation on voting, sale, transfer or other disposition or exercise of any other attribute of ownership) (collectively, “Liens”) other than the Liens agreed under the Existing Credit Agreements. Except for the Company Warrants and the Existing Credit Agreements, neither the Company nor any of its Subsidiaries has outstanding any bonds, debentures, notes or other obligations having the right to vote (or convertible into, or exchangeable or exercisable for, securities having the right to vote) with the shareholders of the Company or such Subsidiary on any matter. Except as set forth above in this Section 2.2(a) and except for changes since the close of business on the Measurement Date resulting from the exercise or settlement, as applicable, of Company Equity Awards or Company Warrants, there are no outstanding (A) shares or other voting securities or equity interests of the Company, (B) securities of the Company or any of its Subsidiaries convertible into or exchangeable or exercisable for shares of the Company or other voting securities or equity interests of the Company or any of its Subsidiaries, (C) stock appreciation rights, “phantom” stock rights, performance units, interests in or rights to the ownership or earnings of the Company or any of its Subsidiaries or other equity equivalent or equity-based awards or rights or (D) subscriptions, options, warrants, calls, commitments, Contracts or other rights to acquire from the Company or any of its Subsidiaries, or obligations of the Company or any of its Subsidiaries to issue, any shares of the Company or any of its Subsidiaries, voting securities, equity interests or securities convertible into or exchangeable or exercisable for shares or other voting securities or equity interests of the Company or any of its Subsidiaries or rights or interests described in the preceding clause (C) obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any such securities or to issue, grant, deliver or sell, or cause to be issued, granted, delivered or sold, any such securities. There are no shareholder agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party.
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(b) Section 2.2(b) of the Company Disclosure Letter sets forth a true and complete list of all holders, as of the close of business on the Measurement Date, of outstanding Company Equity Awards, indicating as applicable, with respect to each Company Equity Award then outstanding, the Service Provider ID of the holder, the type of award granted, the number of Shares subject to such Company Equity Award, the applicable Company Stock Plan or Company Restricted Share Purchase Agreement governing the Company Equity Award (if any), the grant date, vesting schedule and, if applicable, the exercise price and expiration date. The exercise price of each Company Stock Option held by a Service Provider who is a United States taxpayer is no less than the fair market value of a Share as determined on the date of grant of such Company Stock Option. All Company Equity Awards were granted in accordance with the terms and conditions of the applicable Company Stock Plan or Company Restricted Share Purchase Agreement and all applicable Law.
Section 2.3 Subsidiaries. Section 2.3 of the Company Disclosure Letter sets forth a true and complete list of each Subsidiary of the Company, including its jurisdiction of incorporation or formation. Except for the capital stock of, or other equity or voting interests in, its Subsidiaries, the Company does not own, directly or indirectly, any equity, membership interest, partnership interest, joint venture interest, or other equity or voting interest in, or any interest convertible into, exercisable or exchangeable for any of the foregoing, nor is it under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital contribution, guarantee, credit enhancement or other investment in, or assume any liability or obligation of, any Person.
Section 2.4 Authority; Vote Required.
(a) Other than the Company Shareholder Approval, the Company has all requisite corporate power and authority to enter into this Agreement. The execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby to which it is a party have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby other than the Company Shareholder Approval. This Agreement has been duly executed and delivered by the Company and (assuming the due authorization, execution and delivery by the other parties hereto) constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent enforcement is limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equitable principles (whether considered in a proceeding at law or in equity). The Company Shareholder Approval is the only vote of the holders of any class or series of the share capital of the Company or other securities necessary to approve the Articles Amendment, the Board Modification, and the Delisting.
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(b) The Company Board, by resolutions duly adopted at a meeting duly called and held, has: (i) determined that the terms of this Agreement, the Offer and the other transactions contemplated hereby are fair to and in the best interests of the Company and its shareholders, and declared it advisable, to enter into this Agreement and any future agreements implementing the provisions of this Agreement and to effect the Articles Amendment, the Board Modification, and, subject to the occurrence of the Acceptance Time and satisfaction of the applicable requirements under Nasdaq Rules, the Delisting, (ii) approved the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby, including the Offer, and (iii) resolved and agreed to recommend that the Company’s shareholders approve and adopt the Articles Amendment, the Board Modification, and, subject to the occurrence of the Acceptance Time and satisfaction of the applicable requirements under Nasdaq Rules, the Delisting, and accept the Offer and tender their Shares pursuant thereto (the “Company Board Recommendation”), subject to Section 4.3, and directed that the Articles Amendment, the Board Modification, and, subject to the occurrence of the Acceptance Time and satisfaction of the applicable requirements under Nasdaq Rules, the Delisting, be submitted for consideration by the shareholders of the Company at the Company Shareholder Meeting.
Section 2.5 No Conflict; Consents and Approvals.
(a) Neither the execution, delivery and performance of this Agreement by the Company nor the consummation of the Offer and the other transactions contemplated hereby and compliance by the Company with the provisions hereof will conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation, modification or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any Lien in or upon any of the properties, assets or rights of the Company or any of its Subsidiaries under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under, or require any consent, waiver or approval of any Person pursuant to, any provision of (i) the Company Articles or the organizational documents of any Subsidiary of the Company, (ii) any material bond, debenture, note, mortgage, indenture, guarantee, license, lease, purchase or sale order or other contract, commitment, agreement, instrument, obligation, arrangement, understanding, undertaking, permit, concession or franchise, whether oral or written (each, including all amendments thereto, a “Contract”) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective properties or assets may be bound or (iii) subject to the governmental filings and other matters referred to in Section 2.5(b), any federal, state, local or foreign law (including common law), statute, ordinance, rule, code, regulation, order, judgment, injunction, decree or other legally enforceable requirement (“Law”) or any rule or regulation of Nasdaq applicable to the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries or any of their respective properties or assets may be bound, except, in the case of each of clauses (ii) and (iii) above, any conflicts, violations, breaches, defaults, terminations, cancellations, modifications, accelerations or Liens that, individually or in the aggregate, has not had and would not reasonably be expected to have, a Material Adverse Effect.
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(b) No consent, approval, order or authorization of, or registration, declaration, filing with or notice to, any federal, state, local or foreign government or subdivision thereof or any other governmental, administrative, judicial, arbitral, legislative, executive, regulatory or self-regulatory authority, instrumentality, agency, commission or body (each, a “Governmental Entity”) is required by or with respect to the Company or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement by the Company or the consummation by the Company of the Offer and the other transactions contemplated hereby or compliance with the provisions hereof, except for (i) the filing of the pre-merger notification report under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) or any applicable foreign antitrust or competition Laws (“Foreign Antitrust Laws”), (ii) such filings and reports as may be required pursuant to the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act and any other applicable state or federal securities, takeover and “blue sky” Laws, (iii) the filing of an application for the registration of the Articles Amendment and the Board Modification, and (iv) any filings and approvals required under the rules and regulations of Nasdaq.
Section 2.6 SEC Reports; Financial Statements.
(a) The Company has filed with or furnished to the SEC on a timely basis true and complete copies of all forms, reports, schedules, statements and other documents required to be filed with or furnished to the SEC by the Company since January 1, 2022 (all such documents, together with all exhibits and schedules to the foregoing materials and all information incorporated therein by reference, the “Company SEC Documents”). As of their respective filing dates (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), the Company SEC Documents complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as the case may be, including, in each case, the rules and regulations promulgated thereunder, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted 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) The consolidated financial statements (including the related notes and schedules thereto) included (or incorporated by reference) in the Company SEC Documents (i) have been prepared in a manner consistent with the books and records of the Company and its Subsidiaries, (ii) have been prepared in accordance with the International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), (iii) comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto and (iv) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and their respective consolidated results of operations, cash flows and changes in equity for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments that were not, or are not expected to be, material in amount), all in accordance with IFRS and the applicable rules and regulations promulgated by the SEC. Since January 1, 2022, the Company has not made any change in the accounting practices or policies applied in the preparation of its financial statements, except as required by IFRS, SEC rule or policy or applicable Law. The books and records of the Company and its Subsidiaries have been, and are being, maintained in all material respects in accordance with IFRS (to the extent applicable) and any other applicable legal and accounting requirements and reflect only actual transactions.
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(c) The Company has designed and maintains a system of internal control over financial reporting (as defined in Rules 13a–15(f) and 15d–15(f) of the Exchange Act) as required by Rule 13a-15 under the Exchange Act and sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Company financial statements for external purposes in accordance with IFRS. The Company has designed and maintains disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) of the Exchange Act) (i) to provide reasonable assurances that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to enable the chief executive officer and chief financial officer of the Company to make the certifications required under the Exchange Act with respect to such reports, and (ii) to provide reasonable assurance that transactions and dispositions of the assets of the Company and its Subsidiaries are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with the Company’s policies. Since January 1, 2022, neither the Company, nor, to the knowledge of the Company, the Company’s auditors or the audit committee of the Company Board has identified or been made aware of (A) any significant deficiencies or material weaknesses in the design or operation of its internal control over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. Since January 1, 2022, any material change in internal control over financial reporting required to be disclosed in any Company SEC Document has been so disclosed.
(d) Since January 1, 2022, (i) neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices and (ii) no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents to the Company Board or any committee thereof or to any director or officer of the Company or any of its Subsidiaries.
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(e) As of the date of this Agreement, there are no outstanding or unresolved comments in the comment letters received from the SEC staff with respect to the Company SEC Documents. To the knowledge of the Company, none of the Company SEC Documents is subject to ongoing review or outstanding SEC comment or investigation. The Company has made available to Parent true, correct and complete copies of all written correspondence between the SEC, on the one hand, and the Company and any of its Subsidiaries, on the other hand, occurring since January 1, 2022.
(f) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off balance sheet partnership or any similar Contract (including any Contract or arrangement relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company’s or such Subsidiary’s published financial statements or other Company SEC Documents.
(g) The Company is in compliance in all material respects with (i) the provisions of the Sarbanes-Oxley Act and (ii) the rules and regulations of Nasdaq, in each case, that are applicable to the Company.
(h) No Subsidiary of the Company is required to file any form, report, schedule, statement or other document with the SEC.
Section 2.7 No Undisclosed Liabilities. Neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (including as a result of COVID-19 or any COVID-19 Measures), whether accrued, absolute, contingent or otherwise, known or unknown, whether due or to become due, and whether or not required to be recorded or reflected on a balance sheet under IFRS, except (a) to the extent accrued or reserved against in the audited consolidated balance sheet of the Company and its Subsidiaries as at December 31, 2022 included in the Annual Report on Form 20-F filed by the Company with the SEC on April 19, 2023 (without giving effect to any amendment thereto filed on or after the date hereof), (b) for performance or compliance obligations under the terms of any Contract to which the Company or any of its Subsidiaries is a party or by which it is bound (and which do not arise from any failure by the Company or any of its Subsidiaries to perform or comply with such Contract) and that has been made available to Parent, (c) for liabilities or obligations incurred pursuant to the terms of this Agreement or in connection with the Offer, and (d) for liabilities or obligations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 2.8 Certain Information. Each of the Shareholder Approval Invitation and the Schedule 14D-9 will not, at the time it is first filed with the SEC (solely with respect to the Schedule 14D-9), amended or supplemented or first published, distributed or disseminated to the Company’s shareholders and at the time of the Company Shareholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. The Schedule 14D-9 will comply in all material respects with the requirements of the Exchange Act. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to statements included or incorporated by reference in the Shareholder Approval Invitation or the Schedule 14D-9 based on information supplied in writing by or on behalf of Parent specifically for inclusion or incorporation by reference therein. None of the information supplied or to be supplied by or on behalf of the Company specifically for inclusion or incorporation by reference in any of the Offer Documents or the Shareholder Approval Invitation will, at the respective times they are first filed with the SEC (solely with respect to the Schedule 14D-9), amended or supplemented or first published, distributed or disseminated to the Company’s shareholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading.
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Section 2.9 Absence of Certain Changes or Events. Since January 1, 2023 through the date of this Agreement: (a) the Company and its Subsidiaries have conducted their businesses only in the Ordinary Course of Business (except for matters relating to this Agreement and related transactions); (b) there has not been any change, event or development or prospective change, event or development that, individually or in the aggregate, has not had and would not reasonably be likely to have a Material Adverse Effect; and (c) neither the Company nor any of its Subsidiaries has taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in Section 4.2.
Section 2.10 Litigation. There is no material suit, claim, proceeding, hearing, enforcement, subpoena, demand, audit, arbitration, investigation, inquiry, grievance or other action (each, an “Action”) (or basis therefor) pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, any of their respective properties or assets, or any present or former officer, director or employee of the Company or any of its Subsidiaries in such individual’s capacity as such, other than Actions that have not had and would not reasonably be expected to be, individually or in the aggregate, material to the Company. Neither the Company nor any of its Subsidiaries nor any of their respective properties or assets is subject to any material outstanding judgment, order, injunction, rule or decree of any Governmental Entity that have had and would reasonably be expected to be, individually or in the aggregate, material to the Company. There is no Action pending or, to the knowledge of the Company, threatened seeking to prevent, hinder, modify, delay or challenge the Offer or any of the other transactions contemplated by this Agreement. To the knowledge of the Company, there is no Action by the Company or any of its Subsidiaries pending, or which the Company or any of its Subsidiaries has commenced preparations to initiate, against any other Person.
Section 2.11 Compliance with Laws. The Company and each of its Subsidiaries are presently and, at all times since January 1, 2022 have been, in compliance with all Laws applicable to their businesses, operations, properties or assets (including the Products) except where the failure to be in compliance has not had and would not reasonably be expected to be, individually or in the aggregate, material to the Company, and since January 1, 2022, neither the Company nor any of its Subsidiaries has not been given written notice of, or been charged with, any unresolved violation of any Laws applicable to their business, operations, properties or assets (including the Products), except, in each case, for any such violations that have not had and would not reasonably be expected to be, individually or in the aggregate, material to the Company. The Company and each of its Subsidiaries have in effect all material permits, licenses, variances, exemptions, approvals, authorizations, registrations, clearances, consents, operating certificates, franchises, orders and approvals (collectively, “Permits”) of all Governmental Entities necessary for them to own, lease or operate their properties and assets and to carry on their businesses and operations as now conducted, except where the failure to have such Permits in effect has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. There has occurred no material violation of, default (with or without notice or lapse of time) under or event giving to others any right of revocation, non-renewal, adverse modification or cancellation of, with or without notice or lapse of time or both, any such Permit. To the knowledge of the Company, all Permits are in full force and effect.
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Section 2.12 Benefit Plans.
(a) Section 2.12(a) of the Company Disclosure Letter contains a true and complete list of each material Company Plan (other than (i) mandatory government or social security arrangements, (ii) any offer letter on the Company’s standard form made available to Parent providing for at-will employment that may be terminated at any time with less than 30 days’ notice without cost, penalty, payment of severance or any further Liability to the Company and (iii) any grant or award notice in respect of awards of Company Equity Awards in the form authorized under the applicable Company Stock Plan or the applicable form of Restricted Share Purchase Agreement that, in each case, do not deviate in any material respect from the forms made available to Parent).
(b) The Company has provided or made available to Parent, with respect to each material Company Plan, (i) a current, accurate and complete copy of each such Company Plan, including all amendments thereto, or if such Company Plan is not in written form, a written summary of the material terms of such Company Plan, (ii) any related trust agreements, insurance contracts and other funding instruments, (iii) the most recent determination letter, opinion or similar documentation of the IRS or other applicable Tax authority, (iv) the most recent summary plan description and any material modifications thereto, (v) for the most recently completed year (A) the Annual Report (Form 5500 Series) and accompanying schedules and (B) the annual financial report, trustee report, audit report or actuarial report, (vi) any related Tax ruling, request or confirmation, and any further correspondence related thereto, with any Tax authority in the past three years related thereto and (vii) all material, non-routine correspondence received from or provided to any Governmental Entity relating to such Company Plan in the past three years.
(c) Except for those matters that would not reasonably be expected to be material to the Company:
(i) each Company Plan has been maintained, operated, registered and administered in compliance with its terms and with applicable Law, including ERISA and the Code to the extent applicable thereto;
(ii) all contributions or other amounts payable by the Company or any of its Subsidiaries with respect to each Company Plan in respect of current or prior plan years have been paid or accrued in accordance with applicable accounting principles or, with respect to each Company Plan covering Service Providers located in the United States, generally applicable accounting principles (other than with respect to amounts not yet due);
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(iii) each Company Plan if intended to be “qualified” within the meaning of Section 401(a) of the Code, has received a favorable determination letter from the IRS or is entitled to rely upon a favorable opinion issued by the IRS, and there are no facts or circumstances likely to result in the loss of the qualification of such Company Plan under Section 401(a) of the Code;
(iv) none of the Company, its Subsidiaries or any ERISA Affiliate nor any predecessor of any such entity, trade or business, has now or any time in the previous six years contributed to, sponsored, or maintained (or has been required to contribute to, sponsor or maintain), or would reasonably be expected to have, any Liability (contingent or otherwise) with respect to a “multiemployer plan” (within the meaning of Section 4001(a) of ERISA) or a plan that has two or more contributing sponsors at least two of whom are not under common control within the meaning of Section 4063 of ERISA;
(v) none of the Company, any of its Subsidiaries or any ERISA Affiliate has now or at any time in the previous six years contributed to, sponsored or maintained (or has been required to contribute to, sponsor or maintain) a plan that is subject to Section 302 of Title IV of ERISA or Section 412 or 4971 of the Code;
(vi) no liability under Title IV of ERISA has been incurred, or is reasonably expected to be incurred by the Company or any of its Subsidiaries (including indirectly with respect to an ERISA Affiliate), in each case, that has not been satisfied in full, and no condition, event or circumstance exists that presents a risk to the Company, any of its Subsidiaries or, to the knowledge of the Company, any ERISA Affiliate of the Company or any of its Subsidiaries of incurring a liability thereunder;
(vii) none of the Company, any of its Subsidiaries or any Company Plan that is subject to ERISA, any trust created thereunder or any trustee or administrator thereof, has engaged in a nonexempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code);
(viii) there are no pending, or to the knowledge of the Company, threatened Actions (including any audit or other administrative proceeding) by, on behalf of or against any of the Company Plans or any trusts related thereto, or against any fiduciary of any Company Plan (other than routine claims for benefits in accordance with the terms of the Company Plans) nor are there any facts or circumstances that exist that could reasonably give rise to any such Actions;
(ix) except as set forth on Section 2.12(c)(ix) of the Company Disclosure Letter, no Company Plan is maintained through a human resources and benefits outsourcing entity, professional employer organization or other similar vendor or provider, except to provide third-party administrative or recordkeeping services to a Company Plan sponsored by the Company or any of its Subsidiaries;
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(x) no Company Plan provides medical, life insurance or other welfare benefits with respect to Participants beyond their retirement or other termination of service, other than coverage mandated by applicable Law; and
(xi) with respect to each Company Plan that is not subject exclusively to United States Law (a “Non-U.S. Benefit Plan”): (i) all employer and employee contributions to each Non-U.S. Benefit Plan required by applicable Law or by the terms of such Non-U.S. Benefit Plan or pursuant to any other contractual obligation (including contributions to all mandatory provident fund schemes) have been timely made in accordance with applicable Law; (ii) from and after the Acceptance Time, such funds, accruals or reserves under the Non-U.S. Benefit Plans shall be used exclusively to satisfy benefit obligations accrued under such Non-U.S. Benefit Plans or else shall remain or revert to Parent and its Affiliates in accordance with the terms of such Non-U.S. Benefit Plan or applicable Law; (iii) each Non-U.S. Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities; and (iv) no Non-U.S. Benefit Plan is subject to any funding deficit.
(d) Except as set forth on Section 2.12(d) of the Company Disclosure Letter, the execution and delivery of this Agreement will not, either alone or in combination with any other event, (A) entitle any Participant to severance, change in control or other pay or benefits, (B) cause any payments or funding (through a grantor trust or otherwise) to become due or accelerate the time of payment or vesting, or increase the amount of or otherwise enhance any compensation or benefit due to any Participant, (C) result in any forgiveness of indebtedness of any Participant or (D) result in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code to any Person.
(e) Each Company Plan that constitutes in any part a “nonqualified deferred compensation plan” within the meaning of Section 409A(d)(1) of the Code subject to Section 409A of the Code has been operated and maintained in compliance in all material respects with Section 409A of the Code and the regulations and other administrative guidance promulgated thereunder. No Participant under any Company Plan is entitled to any gross-up, make-whole or other additional payment from the Company or any of its Subsidiaries in respect of any Tax (including Federal, state, local or foreign income, excise or other Taxes (including Taxes incurred pursuant to Sections 409A or 4999 of the Code)) or interest or penalty related thereto.
Section 2.13 Labor Matters.
(a) Section 2.13(a) of the Company Disclosure Letter sets forth, for each Service Provider as of the date hereof, the following information, as applicable: (i) employee ID, (ii) employer, (iii) title or position held, (iv) work location, (v) date of hire or commencement of service, (vi) status as full-time or part-time, (vii) classification as exempt or non-exempt from the Fair Labor Standards Act (the “FLSA”), (viii) annual salary or wage rate (or other manner of compensation), (ix) most recent annual bonus received and current annual bonus opportunity, and (x) whether active or on leave (and if on leave, the nature of the leave and expected return date). 10 Business Days prior to the Acceptance Time, the Company shall provide Parent with an accurate and complete revised version of the information described in this Section 2.13(a), updated as of such date.
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(b) Each of the Company and its Subsidiaries is and during the past three years has been, in compliance with all applicable Laws relating to labor and employment, including, without limitation, those relating to immigration, employment practices, social security and Taxes in connection with employees and independent contractors, including all Laws respecting terms and conditions of employment, hiring, promotion, termination, workers’ compensation, health and occupational safety (including, but not limited to, COVID-19), non-discrimination, harassment, child labor, privacy, disability rights or benefits, equal opportunity, plant closings, mass layoffs, affirmative action, payment of social security dues and contributions, profit sharing, labor relations, right to organize and to bargain collectively, pay equity, overtime pay, employee leave issues, worker classification, exempt and non-exempt classification, compensation and benefits, unemployment insurance, wages and hours, and the Worker Adjustment and Retraining Notification Act of 1988, as amended, and state and local equivalents, except where any failure to comply would not reasonably be expected to be, individually or in the aggregate, material to the Company.
(c) During the past three years, there has not been, and as of the date of this Agreement there is (i) not pending or, to the knowledge of the Company, threatened, any labor grievances, hand-billing, picketing, labor dispute, work stoppage, labor strike, lockout, or similar organized labor activity against the Company or any of its Subsidiaries by employees and (ii) no unfair labor practice, labor dispute or labor arbitration proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries.
(d) Except as has not had and would not reasonably be expected to be, individually or in the aggregate, material to the Company, the Company and its Subsidiaries are not delinquent in payments to any employees or former employees for any services or amounts required to be reimbursed or otherwise paid.
(e) Neither the Company nor any of its Subsidiaries is a party to or bound by, and no employee of the Company or its Subsidiaries is covered by, any labor agreement, collective bargaining agreement or any other labor-related agreements or arrangements with any labor union, labor organization, works council or similar employee group and no such agreements or arrangements are currently being negotiated by the Company or any of its Subsidiaries. No labor union or organization, works council or group of employees of the Company or any of its Subsidiaries has made a pending written demand for recognition or certification. To the knowledge of the Company, there has not been any activity on behalf of any labor union, labor organization, works council, or similar employee group to organize any employees of the Company or any of its Subsidiaries. There are no, and there have historically not been, any representation or certification claims or petitions pending before the National Labor Relations Board or any other labor relations tribunal or authority or, to the knowledge of the Company, threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority.
(f) No notice, consent or consultation obligations with respect to any employee of the Company or any of its Subsidiaries, or any labor union, labor organization, works council or similar employee group of the Company or any of its Subsidiaries, will be a condition precedent to, or triggered by, the execution of this Agreement or the consummation of the transactions contemplated thereby.
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(g) Since January 1, 2022, (i) no material allegations of workplace sexual harassment, discrimination or other misconduct have been made, initiated, filed or, to the knowledge of the Company, threatened against the Company, any of its Subsidiaries or any of their respective Service Providers in their capacities as such or any current or former directors, officers or senior level management employees, (ii) to the knowledge of the Company, no material incidents or any such workplace sexual harassment, discrimination or other misconduct have occurred, and (iii) neither the Company nor any of its Subsidiaries have entered into any settlement agreement or similar out-of-court or pre-litigation arrangement related to allegations of sexual harassment, discrimination or other misconduct by any of their Service Providers.
Section 2.14 Environmental Matters.
(a) Except for those matters that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) the Company and its Subsidiaries are, and since January 1, 2022 have been, in compliance with all applicable Environmental Laws, which compliance includes obtaining, maintaining or complying with all Permits required under Environmental Laws for the operation of their respective business, (b) there is no Action relating to or arising under any Environmental Law that is pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any Leased Real Property, and there have been no such Actions against the Company or any of its Subsidiaries since January 1, 2022, (c) since January 1, 2022, neither the Company nor any of its Subsidiaries have received any written notice, report or other information of or entered into any legally-binding agreement, order, settlement, judgment, injunction or decree involving uncompleted, outstanding or unresolved violations, liabilities or requirements on the part of the Company or any of its Subsidiaries relating to or arising under Environmental Laws, (d) to the knowledge of the Company, no Person has been exposed to any Hazardous Materials at a property or facility owned, leased or used by the Company or any of its Subsidiaries at levels in excess of applicable permissible exposure levels, (e) there are and have been no Hazardous Materials present or Released on, at, under or from any property or facility, including the Leased Real Property, in both cases in a manner and concentration that would reasonably be likely to result in any claim against or liability of the Company or any of its Subsidiaries under any Environmental Law, and (f) neither the Company nor any of its Subsidiaries has assumed, undertaken, or otherwise become subject to any liability of another Person relating to Environmental Laws other than any indemnities in Material Contracts or leases for real property.
(b) For purposes of the Agreement:
(i) “Environment” means any air (whether ambient outdoor or indoor), surface water, drinking water, groundwater, land surface, wetland, subsurface strata, soil, sediment, plant or animal life, any other natural resources, and the sewer, septic and waste treatment, storage and disposal systems servicing real property or physical buildings or structures;
(ii) “Environmental Law” means any Law (including common law) or any binding agreement, memorandum of understanding or consent order issued or entered by or with any Governmental Entity or Person relating to: (A) the Environment, including pollution, contamination, cleanup, preservation, protection and reclamation of the Environment, (B) human health and safety with regard to exposure to any Hazardous Materials, (C) any Release or threatened Release of any Hazardous Materials, including investigation, assessment, testing, monitoring, containment, removal, remediation and cleanup of any such Release or threatened Release, (D) the management of any Hazardous Materials, including the use, labeling, processing, disposal, storage, treatment, transport, or recycling of any Hazardous Materials or (E) the presence of Hazardous Materials in any building, physical structure, product or fixture;
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(iii) “Hazardous Materials” means any pollutant, contaminant, constituent, chemical, raw material, product or by-product, substance, material or waste that by virtue of its hazardous, toxic, poisonous, explosive, caustic, flammable, corrosive, infectious, pathogenic, carcinogenic or otherwise dangerous and deleterious properties is defined by or subject to regulation or gives rise to liability under any Environmental Law, including without limitation mold, petroleum or any fraction thereof, asbestos or asbestos-containing material, polychlorinated biphenyls, perfluoroalkyl and polyfluoroalkyl substances, lead paint, insecticides, fungicides, rodenticides, pesticides and herbicides; and
(iv) “Release” means any release, spill, emission, escape, leak, pumping, injection, emptying, pouring, dumping, deposit, disposal (including the abandonment or discarding of barrels, containers or other receptacles containing Hazardous Materials), discharge, dispersal, leaching or migration into the indoor or outdoor Environment.
Section 2.15 Taxes.
(a) Except for matters that, individually or in the aggregate, have not had, and would not reasonably be expected to have a Material Adverse Effect: (i) all income and other material Tax Returns required to be filed by or with respect to the Company and its Subsidiaries have been timely filed (taking into account any valid extensions of time to file), (ii) all such Tax Returns filed by or with respect to the Company or any of its Subsidiaries are true, complete and correct in all material respects, and were prepared in compliance with all applicable Laws, (iii) all Taxes of or payable by the Company or any of its Subsidiaries, whether or not shown as due and payable on any Tax Return or Tax invoice, have been timely paid and (iv) the Company and its Subsidiaries have complied in all material respects with all applicable Laws relating to the accounting, declaration, collection or withholding of Taxes and have, within the time and manner prescribed by Law, paid over to the proper Governmental Entity all amounts required to be collected or withheld and paid over under applicable Laws.
(b) Except for matters that, individually or in the aggregate, would not reasonably be expected to be material to the Company:
(i) No claim has been made by any Governmental Entity in a jurisdiction where the Company or any of its Subsidiaries does not file a particular Tax Return or pay a particular Tax that indicates that the Company or any of its Subsidiaries is or may be required to file such a Tax Return or pay such Tax.
(ii) Neither the Company nor any of its Subsidiaries have deferred any payment of any material Taxes (that would otherwise be due) through any extension or other grant of relief applied for by the Company or its Subsidiaries under applicable Law, which extension or other grant of relief remains outstanding or, if such other grant of relief remains outstanding, there is no reason to believe that such relief will not be granted.
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(iii) There are no Liens on any of the assets of the Company or any of its Subsidiaries for any amount of Taxes, other than Permitted Liens.
(iv) All transactions of the Company and its Subsidiaries have been conducted at arm’s length terms.
(v) No federal, state, provincial, local or non-U.S. Tax audits or administrative or judicial Tax proceedings are currently being conducted or pending or have been threatened in writing with respect to the Company or any of its Subsidiaries. No deficiency or proposed adjustment with respect to the payment of any Taxes has been asserted against the Company or any of its Subsidiaries by any Governmental Entity, which has not been fully paid or finally settled.
(vi) Neither the Company nor any of its Subsidiaries has granted any waiver of any statute of limitations in respect of any Tax or Tax Return which has not yet expired or agreed to any extension of time with respect to the assessment or collection of any Tax which has not yet expired (excluding extensions of time to file Tax Returns obtained in the ordinary course).
(vii) Neither the Company nor any of its Subsidiaries (i) has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code or (ii) has a permanent establishment (within the meaning of an applicable Tax treaty), or other fixed place of business in a country other than the country of its formation.
(viii) Neither the Company nor any of its Subsidiaries is liable for the Taxes of another Person (other than another Subsidiary of the Company) pursuant to applicable Law or contract (other than any contract, such as a loan agreement or lease agreement, entered into in the Ordinary Course of Business that is not primarily related to Taxes).
(ix) Neither the Company nor of its Subsidiaries has participated in or been the promoter of a “listed transaction,” as set forth in Treasury Regulations Section 1.6011-4(b)(2) or any comparable provision of state, local or non-U.S. Law.
(x) Neither the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) beginning after the Acceptance Time as a result of (i) any prepaid amount received or deferred revenue accrued by the Company or any of its Subsidiaries on or prior to the Acceptance Time outside the Ordinary Course of Business, (ii) any change in method of accounting for a taxable period ending on or prior to the Acceptance Time, (iii) any use of an improper method of accounting for a taxable period ending on or prior to the Acceptance Time, (iv) intercompany transaction or excess loss account described in Treasury Regulation under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Law), (v) any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Law) executed on or prior to the Acceptance Time, or (vii) any installment sale or open transaction disposition made on or prior to the Acceptance Time.
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(xi) Neither the Company nor any of its Subsidiaries has distributed the stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code in the two years prior to the date of this Agreement.
(xii) Neither the Company nor any Subsidiary (other than VectivBio US, Inc.) (i) is or was a “surrogate foreign corporation” within the meaning of Section 7874(a)(2)(B) of the Code or is treated as a U.S. corporation under Section 7874(b) of the Code; or (ii) was created or organized in the United States such that such entity would be taxable in the United States as a domestic entity pursuant to United States Treasury Regulations Section 301.7701-5(a).
(xiii) Neither the Company nor any of its Subsidiaries has made any entity classification election pursuant to Treasury Regulations Section 301.7701-3.
Section 2.16 Contracts.
(a) Section 2.16 of the Company Disclosure Letter lists each Contract of the following types to which the Company or any of its Subsidiaries is a party or by which any of their respective properties or assets is bound as of the date of this Agreement:
(i) any Contract that would be required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed by the Company on a Current Report on Form 6-K;
(ii) any Contract (A) that limits the ability of the Company or any of its Subsidiaries (or, following the consummation of the Offer and the other transactions contemplated by this Agreement, would limit the ability of Parent or any of its Subsidiaries) to compete in any line of business or with any Person or in any geographic area, (B) that restricts the right of the Company or any of its Subsidiaries (or, following the consummation of the Offer and the other transactions contemplated by this Agreement, that would limit the ability of Parent or any of its Subsidiaries) to use the Company Intellectual Property or to sell to or purchase from any Person or to hire any Person, (C) that contains any “most favored nation”, “right of first offer”, “right of first access”, “right of first look” or “right of first refusal” terms and conditions (including with respect to pricing) or otherwise contains any type of special discount rights granted by the Company or any of its Subsidiaries, or (D) that contains any exclusivity obligations or restrictions or otherwise limits the freedom or right of the Company or any of its Subsidiaries to sell, distribute, license or manufacture any products or services or any technology or other assets to or for any other Person;
(iii) any Contract that prohibits the payment of dividends or distributions in respect of the capital stock of the Company or any of its Subsidiaries, the pledging of the capital stock or other equity interests of the Company or any of its Subsidiaries or prohibits the issuance of any guaranty by the Company or any of its Subsidiaries;
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(iv) each Contract for any joint venture, partnership, strategic alliance, collaboration, joint development, joint commercialization, material research or development project or similar arrangement, excluding, in each case, any material transfer agreements entered into in the Ordinary Course of Business;
(v) any shareholders’, investor rights, registration rights, tax receivables or similar or related Contract or arrangement, or any Contract or arrangement relating to the exercise of any voting rights in respect of securities of the Company;
(vi) any Contract relating to Indebtedness and having an outstanding principal amount in excess of $300,000;
(vii) any Contract entered into since January 1, 2022 that relates to the acquisition or disposition of any material business, a material amount of stock or assets of any Person or any real property (whether by merger, sale of stock, sale of assets or otherwise);
(viii) any Contract that by its terms calls for or otherwise may require royalties, milestone payments or similar payments, including upon the achievement of regulatory or commercial milestones, by the Company or any of its Subsidiaries under such Contract;
(ix) any Contract pursuant to which the Company or any of its Subsidiaries has continuing “earn-out” or other contingent payment obligations, in each case that could result in payments in excess of $300,000;
(x) any Contract that obligates the Company or any of its Subsidiaries to make any capital commitment, loan or similar expenditure;
(xi) any Contract with any Governmental Entity;
(xii) any Contract with a Top Supplier or involved in the supply or manufacturing of any Product;
(xiii) any Contract (1) that relates to the research, testing, clinical trial, development, commercialization, manufacture, marketing, importation, exportation, sale, distribution, supply or license of any Product, including Contracts with contract manufacturing organizations or contract research organizations, or (2) under which clinical, pre-clinical or non-clinical data relating to any Product is or may be generated, and in each case that is material to the Company’s business;
(xiv) any Contract that requires a consent to or otherwise contains a provision relating to a “change in control,” or that would prevent, materially delay or impair the consummation of the transactions contemplated by this Agreement;
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(xv) each lease, sublease or other agreement under which the Company or any of its Subsidiaries leases, subleases or licenses any real property (whether as lessor or lessee);
(xvi) each Contract (1) relating to the employment of, or the performance of services by, any Service Provider reasonably expected to receive payments in excess of $250,000 per annum, (2) the terms of which obligate or may in the future obligate the Company or any of its Subsidiaries to make any severance, termination or similar payment to any current or former employee in excess of $250,000 per annum, (3) pursuant to which the Company or any of its Subsidiaries may be obligated to make any bonus or similar payment to any current or former employee or director in excess of $100,000, or (4) that provides for indemnification (or reimbursement or advancement of legal fees or expenses) of any current or former officer, director or employee of the Company or any of its Subsidiaries;
(xvii) each Contract not otherwise disclosed pursuant to this Section 2.16 requiring or otherwise involving the potential payment by or to the Company or any of its Subsidiaries of more than an aggregate of $300,000 per annum and that is not terminable without penalty by the Company or any of its Subsidiaries on less than 90 days’ notice; and
(xviii) each IP Contract.
Each contract of the type described in clauses (i) through (xviii) is referred to herein as a “Material Contract.”
(b) (i) Each Material Contract is valid and binding on the Company and any of its Subsidiaries, as applicable, and to the knowledge of the Company, each other party thereto, and is in full force and effect and enforceable in accordance with its terms; (ii) the Company and each of its Subsidiaries, and, to the knowledge of the Company, each other party thereto, has performed all material obligations required to be performed by it under each Material Contract; and (iii) there is no default or breach under any Material Contract by the Company or any of its Subsidiaries or, to the knowledge of the Company, any other party thereto, and no event or condition has occurred that constitutes, or, after notice or lapse of time or both, would constitute, a default or breach on the part of the Company or any of its Subsidiaries or, to the knowledge of the Company, any other party thereto under any such Material Contract, nor has the Company or any of its Subsidiaries received any notice of any such default, event or condition. The Company has made available to Parent true and complete copies of all written Material Contracts, including all amendments thereto.
Section 2.17 Insurance. The Company has made available to Parent a copy of (a) all material Company Insurance Policies and (b) all the claims made (whether currently open or not) and reported to the applicable insurers under any Company Insurance Policy during the last five years. Section 2.17 of the Company Disclosure Letter sets forth each material insurance policy (including policies providing casualty, liability, medical and workers compensation coverage) to which the Company or any of its Subsidiaries is a party. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each insurance policy under which the Company or any of its Subsidiaries is an insured or otherwise the principal beneficiary of coverage is in full force and effect, and (i) neither the Company nor any of its Subsidiaries is in breach or default under any such insurance policy, (ii) no notice of cancellation, termination, non-renewal or reduction in coverage has been received with respect to any insurance policy and (iii) no event has occurred which, with notice or lapse of time, would constitute such breach or default, or permit termination, or modification, under any such insurance policy, except as would not reasonably be expected to be material to the Company. There are no pending material claims under any insurance policy to which the Company or any of its Subsidiaries is a party as to which any insurer has, in a written notice to the Company or one its Subsidiaries, denied coverage, other than in routine reservation of rights letters.
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Section 2.18 Properties.
(a) The Company or one of its Subsidiaries has good and valid title to, or in the case of leased property and leased tangible assets, a valid leasehold interest in, all of its real properties and tangible assets that are necessary for the Company and its Subsidiaries to conduct their respective businesses as currently conducted, free and clear of all Liens other than (i) Liens for current Taxes and assessments not yet past due or the amount or validity of which is being contested in good faith by appropriate proceedings, (ii) mechanics’, workmen’s, repairmen’s, warehousemen’s and carriers’ Liens arising in the Ordinary Course of Business of the Company or such Subsidiary, (iii) any such matters of record, Liens and other imperfections of title that do not, individually or in the aggregate, materially impair the continued ownership, use and operation of the assets to which they relate in the business of the Company and its Subsidiaries as currently conducted and (iv) non-exclusive licenses to Intellectual Property granted in the Ordinary Course of Business of the Company or its Subsidiaries (“Permitted Liens”). Except as would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, the tangible personal property currently used in the operation of the business of the Company and its Subsidiaries is in good working order, repair and condition (reasonable wear and tear excepted).
(b) Each of the Company and its Subsidiaries has complied with the terms of all leases to which it is a party, and all such leases are in full force and effect, except for any such noncompliance or failure to be in full force and effect that, individually or in the aggregate, would not reasonably be expected to be material to the Company. Each of the Company and its Subsidiaries enjoys peaceful and undisturbed possession under all such leases, except for any such failure to do so that, individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries owns or has ever owned any real property. Section 2.18(c) of the Company Disclosure Letter sets forth a true and complete list of all real property leased or licensed for the benefit of the Company or any of its Subsidiaries (the “Leased Real Property”).
Section 2.19 Intellectual Property.
(a) Section 2.19(a) of the Company Disclosure Letter sets forth an accurate, true and complete list, as of the date of this Agreement, of all (i) Company Registered IP and specifies, where applicable, for each item of Company Registered IP, (A) the status, (B) the record owner, (C) the issuance, registration or application number and date, the jurisdictions in which each such item of Company Registered IP has been applied for, issued or registered and (D) all actions required to be taken with respect to such Company Registered IP during the six (6) months following the date hereof; (ii) all unregistered Company Intellectual Property that is material to the operation of the business of the Company and its Subsidiaries other than Know-How and confidential information; and (iii) any Non-Owned Company Intellectual Property other than Know-How that is material to the operation of the business of the Company and its Subsidiaries. The Company has maintained all material Company Registered Intellectual Property in the ordinary course consistent with reasonable business practices. All Company Registered IP that is registered or has been issued or granted is valid, enforceable, subsisting and in full force and effect and all Company Registered IP that is the subject of a pending application for registration, issuance or grant is subsisting. Except as specified in Section 2.19(a) of the Company Disclosure Letter, none of the Company Registered IP is jointly owned with any third Person.
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(b) (i) None of the Owned Company Intellectual Property has been or currently is the subject of any pending Action; (ii) to the knowledge of the Company, none of the Non-Owned Company Intellectual Property has been or currently is the subject of any pending Action; and (iii) none of the Company Intellectual Property has been or currently is the subject of any threatened Action (including, in each case, (i)-(iii), with respect to Patents, inventorship challenges, post-grant review proceedings, inter partes review proceedings, derivation proceedings, interferences, reexaminations, invalidity actions, and pre- and post-grant oppositions, and, with respect to Trademarks, invalidity, nullity, opposition, cancellation, concurrent use, or similar Action), in each case, other than routine examination proceedings during original prosecution of applications with respect to pending applications. No Owned Company Intellectual Property and, to the knowledge of the Company, no Non-Owned Company Intellectual Property has been or currently is the subject of any judgment or order of any Governmental Entity restricting the Company’s or any of its Subsidiaries’ rights in, to and under such Company Intellectual Property or the validity, enforceability, use, right to use, ownership, registration, right to register, priority, duration, scope, or effectiveness of any such Company Intellectual Property or triggering any additional payment obligations with respect to any such Company Intellectual Property, in each case, other than routine office actions issued during original prosecution of pending applications.
(c) (i) The Company or any of its Subsidiaries (1) solely and exclusively held the right to claim priority to each of the Patents within the Owned Company Intellectual Property at the respective times that the Patents were filed, (2) solely and exclusively owned each of the Patents within the Owned Company Intellectual Property at the respective times that the Patents were filed, and (3) is the sole and exclusive owner of all Owned Company Intellectual Property; (ii) all Owned Company Intellectual Property is free and clear of all Liens, except for Permitted Liens and Liens pursuant to the terms of the Existing Credit Agreements; and (iii) the Owned Company Intellectual Property constitutes all of the Intellectual Property that is necessary to operate and conduct the business of the Company and its Subsidiaries as such business is currently operated and conducted and as such business is currently contemplated to be operated and conducted.
(d) Except as set forth on Section 2.19(d) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is party to any Contracts with any third parties that materially limit or materially restrict the use of the Company Intellectual Property by the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has with respect to any Owned Company Intellectual Property and, to the knowledge of the Company, no third party licensor has, with respect to any Non-Owned Company Intellectual Property, entered into any Contract granting another Person, or permitting another Person to retain, the right (1) to bring any infringement, misappropriation, or other enforcement actions with respect to, or otherwise to enforce, any such Company Intellectual Property or Non-Owned Company Intellectual Property, as applicable, (2) to defend any claim of infringement, misappropriation, or other violation arising from the practice or other exploitation of any such Company Intellectual Property or Non-Owned Company Intellectual Property, as applicable (or pursuant to which the Company or any of its Subsidiaries expressly agrees to indemnify any Person against any such claim) or (3) to control the prosecution of any such Company Intellectual Property or Non-Owned Company Intellectual Property, as applicable.
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(e) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, no third party has interfered with, infringed upon, misappropriated, diluted, violated or otherwise conflicted with any Company Intellectual Property. Neither the Company nor its Subsidiaries has, since January 1, 2022, provided any third Person with written notice claiming that such third Person is interfering with, infringing upon, misappropriating, diluting, violating or otherwise conflicting with any material Company Intellectual Property. To the knowledge of the Company, the conduct of the business of the Company and its Subsidiaries as such business has been conducted, as it currently is being conducted or as it currently is contemplated to be conducted with respect to Apraglutide, has not, does not presently and will not (including, from and when Apraglutide is commercialized) interfere with, infringe upon, misappropriate, dilute, violate or otherwise conflict with any Intellectual Property or other proprietary rights of any third party, or constitute unfair competition or unfair trade practices pursuant to the Laws of any jurisdiction.
(f) Neither the Company nor any of its Subsidiaries has (i) received any notice from any third party (including any unsolicited written offer to license such third party’s Intellectual Property or any request for indemnification), or (ii) been involved in any Action, alleging that the operation of the business of the Company or any of its Subsidiaries or of the Company’s or any of its Subsidiaries’ Products interferes with infringes upon, misappropriates, dilutes, violates, or otherwise conflicts with any such third party’s Intellectual Property or constitutes unfair competition or unfair trade practices pursuant to the laws of any jurisdiction.
(g) (i) All issuance, renewal, maintenance, and other payments that have become due and invoiced as of the date of this Agreement for the period that is within the six (6) months following the date hereof with respect to any Owned Company Intellectual Property have been timely paid in full; (ii) all documents and other material required to be filed with the applicable Intellectual Property office or registrar with respect to the Owned Company Intellectual Property for the purposes of maintaining such Owned Company Intellectual Property have been filed in a timely manner; and (iii) each of the Patents included in the Company Registered IP that is Owned Company Intellectual Property properly identifies each inventor of the claims thereof as determined in accordance with the applicable Law of the jurisdiction in which such Patent is issued or is pending or, in the case of any abandoned Patent that is the basis of a priority claim, was pending.
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(h) The Company and its Subsidiaries have taken commercially reasonable measures to protect, preserve, and maintain the confidentiality of all Know-How.
(i) The Company and its Subsidiaries have (i) caused each Person who was or is involved in the creation or development of any Intellectual Property as an employee, consultant, agent of, or independent contractor to the Company or any of its Subsidiaries to execute a binding and enforceable written agreement which includes provisions or causes the application of Law in a manner sufficient to ensure that the Company or one of its Subsidiaries is the exclusive owner of any and all Intellectual Property created or developed by such Person within the scope of, or resulting from, his or her employment or engagement by the Company or any of its Subsidiaries or with the use of the Company’s or any of its Subsidiaries’ facilities or equipment and, in the case of such agent, consultant, or contractor, from the services such agent, consultant, or contractor performs for the Company or any of its Subsidiaries and (ii) caused all employees and other Persons (who are not otherwise bound by confidentiality and nondisclosure obligations to the Company or its Subsidiaries by operation of Law) with access to any non-public Company Intellectual Property to execute a binding and enforceable written confidentiality agreement that includes customary confidentiality terms and restrictions on use sufficient to protect the proprietary interests of the Company with respect to such Company Intellectual Property. No current or former employee of, consultant of, or independent contractor to, the Company or any of its Subsidiaries owns any right, title, or interest in or to any Intellectual Property created or developed by such employee, consultant, agent or independent contractor during his or her employment or other engagement with the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries has received any written notice or claim to the contrary. There has been no unauthorized disclosure of any non-public Company Intellectual Property to any employee or other Person who has not executed a binding and enforceable written confidentiality agreement or is not otherwise bound by confidentiality and nondisclosure obligations to the Company by operation of Law, as described in clause (ii) of this Section 2.19(g).
(j) Except as set forth in Section 2.19(i) of the Company Disclosure Letter, no Company Intellectual Property related to Apraglutide has been developed or otherwise obtained, in whole or in part, through the use of funding or other resources of any Governmental Entity or institution of higher learning.
(k) None of the execution and delivery of this Agreement, the consummation of the transactions contemplated by this Agreement, or the performance by the Company or any of its Subsidiaries of its obligations hereunder will conflict with, or without notice or lapse of time, will result in (i) an alteration or impairment of any of the Company’s or any of its Subsidiaries’ rights in, to and under any Company Intellectual Property or the validity, enforceability, use, right to use, ownership, registration, right to register, priority, duration, scope, or effectiveness of any such Company Intellectual Property, (ii) the release, disclosure or delivery of any Company Intellectual Property by or to any escrow agent or other Person, (iii) the grant, assignment or transfer to any other Person of any license or other right or interest under, to, or in any Company Intellectual Property, or (iv) the Company or any of its Subsidiaries being obligated to pay any royalties or other amounts to any third Person in excess of those payable by the Company or its Subsidiaries prior to the execution of this Agreement.
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(l) Section 2.19(i) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a complete and correct list of all IP Contracts to which the Company or any of its Subsidiaries is a party. The Company has made available to Parent true and correct copies of all such IP Contracts. Except as set forth on Section 2.19(i) of the Company Disclosure Letter, the consummation of the transactions contemplated by this Agreement will not by itself afford any other party to IP Contracts to which the Company or any of its Subsidiaries is a party the right to terminate any such IP Contracts or change any of the terms of such IP Contracts or the Company’s or any of its Subsidiaries’ rights in any Intellectual Property under such IP Contracts.
(m) To the knowledge of the Company, except as, individually or in the aggregate, has not had and would not reasonably be likely to have a Material Adverse Effect on the Company, all of the computer hardware, firmware, databases, Software, systems, information technology infrastructure, and other similar or related items of automated, computerized or software systems and infrastructure used, controlled, or relied upon by the Company and the Subsidiaries in the operation of their business (whether or not outsourced) (collectively, the “Company Systems”) are sufficient in all material respects for the current needs of the business of the Company and its Subsidiaries. In the last 12 months, the Company Systems have not suffered any material failures or defects. The Company and its Subsidiaries have implemented and maintain backup and disaster recovery technology and procedures consistent with reasonable information technology security practices for a company of the size and nature of the Company, and at least as consistent with applicable industry standards and practices.
Section 2.20 Takeover Laws. No “moratorium,” “fair price,” “business combination,” “interested shareholder,” “control share acquisition” or similar provision of any anti-takeover Law (collectively, “Takeover Laws”) is, or at the Acceptance Time will be, applicable to this Agreement, the Offer or any of the other transactions contemplated hereby.
Section 2.21 No Rights Plan. There is no shareholder rights plan, “poison pill” anti-takeover plan or other similar device in effect to which the Company is a party or is otherwise bound.
Section 2.22 FDA and Regulatory Matters.
(a) The Company and its Subsidiaries hold, and have held at all times since January 1, 2022, all Permits, including all such Permits required pursuant to any applicable Healthcare Laws, necessary for the lawful operation of the businesses of the Company and its Subsidiaries as currently conducted or have been conducted since January 1, 2022 (the “Company Permits”), and all such Company Permits are valid and in full force and effect. There has not occurred any material violation of or default (with or without notice or lapse of time or both) under any Company Permit, and to the Company’s knowledge, no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or result in any other material impairment of the rights of the holder of any such Company Permit. The Company and each of its Subsidiaries are in compliance in all material respects with the terms of all Company Permits. Since January 1, 2022, neither the Company nor any of its Subsidiaries has received written or oral notice of any pending or threatened Action from any Governmental Entity alleging that any operation or activity of the Company or any of its Subsidiaries is in material violation of any Law that applies to a Company Permit. The transactions contemplated by this Agreement, in and of themselves, will not cause the revocation or cancellation of any Company Permit pursuant to the terms of any such Company Permit.
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(b) The clinical, pre-clinical and other studies and tests conducted by or on behalf of or sponsored by the Company or its Subsidiaries, or in which the Products have participated, were and, if still pending, are being conducted in all material respects in accordance with applicable Healthcare Laws and the rules, policies and regulations to which they are subject, including without limitation, any applicable Good Clinical Practice and Good Laboratory Practice requirements. No IND filed or submitted by or on behalf of the Company or its Subsidiaries with the FDA, nor any comparable application filed with or submitted to another Governmental Entity, has been subject to a clinical hold or otherwise terminated or suspended by the FDA or such Governmental Entity, and neither the FDA nor such Governmental Entity, nor any Review Board has commenced, or, to the knowledge of the Company or its Subsidiaries, threatened to initiate, any action to place a clinical hold order on, or otherwise modify, terminate or suspend, any proposed or clinical investigation being conducted or proposed to be conducted by or on behalf of the Company or its Subsidiaries.
(c) Since January 1, 2022, all of the Company’s and its Subsidiaries’ Products that are subject to the jurisdiction of the FDA or other Governmental Entity are being researched, manufactured, imported, exported, processed, developed, labeled, stored, tested, marketed, promoted, advertised, detailed and distributed by or on behalf of the Company or any of its Subsidiaries in all material respects in compliance with all applicable requirements under any Company Permit or Law, including applicable Healthcare Laws. Since January 1, 2022, all applications, notifications, submissions, information, claims, reports and data utilized by the Company or its Subsidiaries as the basis for, or submitted by or on behalf of the Company or its Subsidiaries in connection with, any and all requests for the Company Permits relating to the Company or any of its Subsidiaries, or the Products, when submitted to the FDA or other Governmental Entity, were true and correct in all material respects as of the date of submission, and any material updates, changes, corrections or modification to such applications, notifications, submissions, information, claims, reports and data required under applicable Laws have been submitted to the FDA or other Governmental Entity.
(d) Since January 1, 2022, neither the Company nor any of its Subsidiaries have committed any act, made any statement or failed to make any statement that would reasonably be likely to provide a basis for the FDA or any other Governmental Entity to invoke its policy with respect to “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,” or other similar Laws. Neither the Company, any of its Subsidiaries, nor any of their respective officers, employees, contractors, suppliers, agents or other Persons performing research or work on behalf of the Company or any of its Subsidiaries is or has been subject to any kind of consent decree, individual or corporate integrity agreement, deferred or non-prosecution agreement, or other similar form of agreement with any Governmental Entity or convicted of any crime or engaged in any conduct that has resulted, or would reasonably be likely to result, in debarment under applicable Law, including 21 U.S.C. Section 335a. To the knowledge of the Company, no Actions that would reasonably be likely to result in such a debarment or exclusion are pending or threatened against the Company or any of its Subsidiaries or any of their respective officers, employees, contractors, suppliers, agents or other Persons performing research or work on behalf of the Company or any of its Subsidiaries.
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(e) Since January 1, 2022, the manufacture of Products by or on behalf of the Company and its Subsidiaries has been and is being conducted in material compliance with all applicable Laws, including applicable Good Manufacturing Practices. Since January 1, 2022, none of the Company, any of its Subsidiaries, or, to the knowledge of the Company, any of their respective contract manufacturers for Products, has received any (i) FDA Form 483, (ii) warning letter, (iii) untitled letter, (iv) requests or requirements to make changes to the Company’s or any of its Subsidiaries’ Products, manufacturing processes or procedures related to any Product, or (v) other similar correspondence or written notice from the FDA or any other Governmental Entity alleging or asserting material noncompliance with any applicable Laws or the Company Permits with respect to any Product. Since January 1, 2022, no manufacturing site owned by the Company, its Subsidiaries, or, to the knowledge of the Company, any of their respective contract manufacturers for Products, is or has been subject to a shutdown or import or export prohibition imposed or requested by FDA or another Governmental Entity. To the knowledge of the Company, no event has occurred which would reasonably be likely to lead to any Action by any Governmental Entity or any FDA Form 483-related warning letter, untitled letter or request or requirement to make changes to the Products or the manner in which the Products are manufactured, distributed or marketed.
(f) Since January 1, 2022, (i) there have been no adverse events that should have been reported by the Company or a Subsidiary of the Company, but were not reported, to the FDA or other Governmental Entity or Review Board with respect to the safety or efficacy of any Product, and (ii) to the knowledge of the Company, with respect to a Product being developed or marketed by a Collaboration Partner, there have been no adverse events that should have been reported by such Collaboration Partner, but were not reported, to the FDA or other Governmental Entity or Review Board with respect to the safety or efficacy of such Product.
(g) The Company has made available to Parent and its advisors true, and correct copies of the following materials in the possession of the Company or any of its Subsidiaries as of the date of this Agreement: (i) each active IND, or non-United States equivalent, submitted to regulatory authorities (including the FDA, EMA and any other Governmental Entity performing functions similar to those performed by the FDA or EMA) by or on behalf of the Company or any of its Subsidiaries, including any supplements thereto, relating to the Products, (ii) all material correspondence to or from the FDA or any other Governmental Entity, or any minutes or similar summary documentation with respect to meetings with the FDA or any other Governmental Entity, in each case in this clause (ii) held by the Company or any of its Subsidiaries concerning (A) any Product, (B) the Company’s and its Subsidiaries’ compliance with applicable Laws regarding the Products, and (C) the likelihood or timing of, or requirements for, regulatory approval of any Product and (iii) all material information requested by Parent concerning the safety, efficacy, side effects, toxicity, or manufacturing quality and controls of the Products.
(h) The Company and its Subsidiaries and, to the knowledge of the Company, any Collaboration Partner to the extent related to any Product, are, and at all times since January 1, 2021 have been, in material compliance with all applicable Healthcare Laws, and to the knowledge of the Company there is no civil, criminal, administrative, or other Action pending, received by or, threatened against the Company or any of its Subsidiaries or any Collaboration Partner to the extent related to any Product, related to such Healthcare Laws.
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(i) Neither the Company, any of its Subsidiaries nor any of their respective directors, officers or employees, nor, to the knowledge of the Company, any other Representative or other Person acting on behalf of the Company or any of its Subsidiaries has (i) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, any applicable Law enacted in any jurisdiction in connection with or arising under the OECD Convention Combating Bribery of Foreign Public Officials in International Business Transactions, any provision of the UK Bribery Act of 2010 or any other Law relating to bribery, corruption, fraud or improper payments (the “Anti-Corruption Laws”); (ii) made, offered to make, promised to make, facilitated or authorized the payment or giving of, directly or indirectly, any bribe, rebate, payoff, influence payment, kickback or other unlawful advantage or payment or gift of money or anything of value, regardless of form or amount, to any Person for the purpose of securing an unlawful advantage, inducing the recipient to violate an official or lawful duty, reward the recipient for an unlawful advantage already given, or for any other improper purpose; (iii) requested, agreed to receive, or accepted a payment, gift or hospitality from a Person if it is known or suspected that it is offered with the expectation that it will obtain a business advantage for them; (iv) established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties; (v) to the knowledge of the Company, been or is, under administrative, civil, or criminal investigation, indictment, information, suspension, debarment, or audit by any party, in connection with alleged or possible violations of any Anti-Corruption Laws; (vi) since January 1, 2022, received written notice from, or made a voluntary disclosure to, any Governmental Entity with regard to any alleged or potential violations of any Anti-Corruption Laws; or (vii) violated or is in violation of any other Laws regarding use of funds for political activity or commercial bribery. None of the Representatives of the Company are (A) an employee of any Governmental Entity, (B) an employee of any commercial enterprise that is owned or controlled by a Governmental Entity, including any state-owned or controlled university or medical facility, (C) an employee of any public international organization, such as the International Monetary Fund, the United Nations or the World Bank, (D) a Person acting as the director of or in an official capacity for any Governmental Entity, enterprise, or organization identified above, or (E) any official of a political party or candidate for political office.
(j) Since January 1, 2022, none of the Company, its Subsidiaries or their respective directors, officers or employees, or, to the knowledge of the Company, any other Representative or Person acting at the direction of or on behalf of the Company or any of its Subsidiaries with respect to any Product: (i) has been charged with or convicted of any criminal offense relating to the delivery of an item or service under any Federal Health Care Program, (ii) has been debarred, excluded or suspended from participation in any Federal Health Care Program, (iii) has had a civil monetary penalty assessed against it, him or her under 42 U.S.C. §1320a-7a, (iv) is currently listed on the list of parties excluded from federal procurement programs and non-procurement programs as maintained in the Government Services Administration’s System for Award Management or other federal agencies, (v) has received written notice that it is the target of any investigation relating to any Federal Health Care Program-related offense or (vi) to the knowledge of the Company, has engaged in any activity that is in violation of, or is cause for civil penalties, debarment or mandatory or permissive exclusion under federal or state Laws.
(k) None of the Company, any of its Subsidiaries, any officer, director or employee of the Company or any of its Subsidiaries or, to the knowledge of the Company, any other Representative acting at the direction of or on behalf of the Company or any of its Subsidiaries, is a Person that is, or is owned or controlled by Persons that are (i) the subject of any economic sanctions administered or enforced by the United States Department of Treasury’s Office of Foreign Assets Control, the United States Department of State, Her Majesty’s Treasury or any applicable prohibited party list maintained by any United States Governmental Entity, the European Union or Her Majesty’s Treasury or (ii) organized or resident in a country or region that is the subject of such sanctions. Since January 1, 2022, the Company and its Subsidiaries have been in compliance in all material respects with all applicable export controls, economic sanctions, and antiboycott Laws.
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Section 2.23 Privacy and Security.
(a) Each of the Company, its Subsidiaries and their respective officers, employees, and any third party Processing Personal Information on their behalf (“Data Partners”), comply in all material respects with and have at all times complied in all material respects with all applicable (i) Privacy Laws, (ii) policies, notices and/or statements related to the Personal Information (“Privacy Policies”), and (iii) contractual commitments related to the Processing of Personal Information (collectively (i) through (iii), the “Privacy Requirements”). All Personal Information (including the Personal Information of clinical trial participants, patients, patient family members, caregivers or advocates, physicians and other health care professionals, clinical trial investigators, researchers, and pharmacists) has been Processed by the Company and its Subsidiaries in compliance in all material respects with the Privacy Requirements.
(b) Each of the Company and its Subsidiaries have in place, and require the Data Partners to have in place, appropriate rules, policies, and procedures for the Processing of Personal Information that comply in all material respects with all applicable Privacy Requirements.
(c) Each of the Company and its Subsidiaries has, in accordance with all applicable Privacy Requirements: (i) provided, where required, individuals with relevant and accurate information, including making accessible a Privacy Policy to individuals prior to collection of any Personal Information; (ii) obtained, where required, individuals’ valid consent in relation to the Processing of their Personal Information; (iii) implemented and complied in all material respects with their respective audit, training and, where required, data protection impact assessment procedures; (iv) where the Company or any of its Subsidiaries has engaged a Data Partner, entered into data processing agreements which comply in all material respects with the requirements of applicable Privacy Requirements; (v) where the Company or any of its Subsidiaries acts as a processor, entered into a data processing agreement which complies in all material respects with the requirements of applicable Privacy Laws and complied in all material respects with all contractual obligations thereunder; and (vi) stored Personal Information for no longer than is necessary for the purposes for which Personal Information is processed pursuant to a data retention policy implemented in compliance with the Privacy Requirements.
(d) Neither the Company nor any of its Subsidiaries, and to the knowledge of the Company, nor the Data Partners has been and are not currently: (i) under audit or investigation by any Governmental Entity, including regarding the Processing of Personal Information, or (ii) subject to any third party notification, claim, complaint, demand, audit or action in relation to Personal Information, including a notification, claim, complaint, demand, or action alleging that the Company or any of its Subsidiaries has Processed Personal Information in violation of the Privacy Requirement.
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(e) Each of the Company and its Subsidiaries have, and have required all Data Partners to have, implemented appropriate technical, physical, and organizational measures and security systems and technologies that meets or exceeds all data security requirements and standards for the industry and complies with applicable Privacy Requirements to (i) ensure the integrity and security of such Personal Information and all Company data and (ii) prevent any accidental, unlawful or unauthorized destruction, loss, alteration, corruption, modification, unauthorized access or disclosure, or other misuse (a “Security Incident”) thereto, in compliance with all applicable Privacy Laws.
(f) Neither the Company nor any of its Subsidiaries, nor to the Company’s knowledge any Data Partners, have experienced any Security Incidents, and the Company is not aware of any facts suggesting the likelihood of the foregoing, including any breach of security. Neither the Company nor any of its Subsidiaries, nor to the Company’s knowledge any Data Partners has (i) notified or been required to notify any customer, consumer, employee, Governmental Authority, or other Person of a Security Incident, or (ii) received any notice, inquiry, request, claim, complaint, correspondence or other communication from, or been the subject of any investigation or enforcement action by, any Governmental Authority or other Person relating to a Security Incident. No circumstance has arisen in which Privacy Requirements would require the Company or any of its Subsidiaries to notify a Person or Governmental Entity of a data security breach or security incident.
(g) The Company maintains insurance coverage containing industry standard policy terms and limits that are appropriate to the risk of liability relating to any Security Incident, unauthorized Processing of Personal Information, or violation of the Privacy Requirements, and no material claims have been made under such insurance policy(ies).
(h) The execution, delivery and performance of this Agreement will not: (a) violate or breach any Privacy Requirements; (b) require the consent or provision of notice to any Person concerning such Person’s Personal Information; or (c) otherwise prohibit or limit the transfer for Personal Information to Parent. Upon execution of this Agreement, Parent shall continue to have the right to use and Process any Personal Information Processed by the Company and its Subsidiaries immediately prior to the date of this Agreement in order to be able to operate the Company in the Ordinary Course of Business.
(i) Neither the Company nor its Subsidiaries is a “covered entity” or “business associate” as those terms are defined in 45 C.F.R. § 160.103.
Section 2.24 Brokers. No broker, investment banker, financial advisor or other Person, other than Centerview Partners, the fees and expenses of which will be paid by the Company, is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its Affiliates. The Company has furnished to Parent a true and complete copy of any Contract between the Company and Centerview Partners pursuant to which Centerview Partners could be entitled to any payment from the Company of any of its Subsidiaries relating to the transactions contemplated hereby.
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Section 2.25 Opinion of Financial Advisor. The Company has received the written opinion of Centerview Partners, dated the date of this Agreement, to the effect that, as of such date, the Offer Price is fair, from a financial point of view, to the holders of Shares, and such opinion has not been withdrawn, revoked or modified. A signed true and complete copy of such opinion has been or will promptly be provided to Parent.
Section 2.26 Related Party Transactions. No present or former director, executive officer, shareholder, partner, member, employee, consultant, or Affiliate of the Company or any of its Subsidiaries, nor any of such Person’s Affiliates or immediate family members (each of the foregoing, a “Related Party”), is a party to any Contract with or binding upon the Company or any of its Subsidiaries or any of their respective properties or assets or has any interest in any property owned by the Company or any of its Subsidiaries or has engaged in any transaction with any of the foregoing within the last 12 months, in each case, that is of a type that would be required to be disclosed in the Company SEC Documents pursuant to Item 404 of Regulation S-K (an “Affiliate Transaction”) that has not been so disclosed. Any Affiliate Transaction as of the time it was entered into and as of the time of any amendment or renewal thereof contained such terms, provisions and conditions as were at least as favorable to the Company or any of its Subsidiaries as would have been obtainable by the Company in a similar transaction with an unaffiliated third party.
Section 2.27 Suppliers and Manufacturers. Section 2.27 of the Company Disclosure Letter sets forth a true, correct and complete list of the top 10 suppliers and third-party manufacturers (the “Top Suppliers”) by the aggregate amounts paid by the Company and its Subsidiaries during the 12 months ended December 31, 2022. Since December 31, 2022, (a) there has been no termination of the business relationship of the Company or its Subsidiaries with any Top Supplier, (b) there has been no material change in the material terms of its business relationship with any Top Supplier adverse to the Company or its Subsidiaries and (c) no Top Supplier has notified the Company or any of its Subsidiaries that it intends to terminate or change the pricing or other terms of its business in any material respect adverse to the Company or its Subsidiaries.
Section 2.28 No Other Representations or Warranties. Except for the representations and warranties expressly set forth in this Article II or in any certificate delivered by the Company to Parent in accordance with the terms hereof, none of the Company, any of its Affiliates or any other Person on behalf of the Company makes any express or implied representation or warranty with respect to the Company, its Subsidiaries or their respective businesses or with respect to any other information provided, or made available, to Parent or its Representatives or Affiliates in connection with the Offer or any of the other transactions contemplated by this Agreement, including the accuracy or completeness thereof. In connection with Parent’s investigation of the Company, Parent may have received from or on behalf of the Company certain projections and other forecasts and plans, and the Company makes no representations and warranties whatsoever with respect to such projections and other forecasts and plans (including the reasonableness of the assumptions underlying such projections and other forecasts and plans).
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Article
III.
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the corresponding section or subsection of the Disclosure Letter delivered by Parent to the Company immediately prior to the execution of this Agreement (the “Parent Disclosure Letter”) (it being agreed that the disclosure of any information in a particular section or subsection of the Parent Disclosure Letter shall be deemed disclosure of such information with respect to any other section or subsection of this Agreement to which the relevance of such information is readily apparent on its face), Parent represents and warrants to the Company as follows:
Section 3.1 Organization, Standing and Power. Parent (a) is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or formation and (b) has all requisite organizational power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except in the case of clause (b) as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. For purposes of this Agreement, “Parent Material Adverse Effect” means any event, change, circumstance, occurrence, effect or state of facts that materially impairs the ability of Parent to consummate, or prevents or materially delays Parent’s ability to effect, the Offer or any of the other transactions contemplated by this Agreement.
Section 3.2 Authority. Parent has all necessary organizational power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Offer and the other transactions contemplated hereby. The execution, delivery and performance of this Agreement by Parent and the consummation by Parent of the Offer and the other transactions contemplated hereby have been duly authorized by all necessary organizational action on the part of Parent and no other organizational proceedings on the part of Parent are necessary to approve this Agreement or to consummate the Offer and the other transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent and, assuming the due authorization, execution and delivery by the Company and the other parties thereto, this Agreement constitutes a valid and binding obligation of Parent enforceable against Parent in accordance with its terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity).
Section 3.3 No Conflict; Consents and Approvals.
(a) Neither the execution, delivery and performance of this Agreement by Parent, nor the consummation of the Offer and the other transactions contemplated hereby and compliance by Parent with the provisions hereof will, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation, modification or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any Lien in or upon any of the properties, assets or rights of Parent under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under, or require any consent, waiver or approval of any Person pursuant to, any provision of (i) the certificate of incorporation or bylaws or equivalent organizational documents of Parent, (ii) any Contract to which Parent is a party by which Parent or any of its properties or assets may be bound or (iii) subject to the governmental filings and other matters referred to in Section 3.3(b), any Law or any rule or regulation of the Nasdaq Global Select Market applicable to Parent or by which Parent or any of its properties or assets may be bound, except as, in the case of clauses (ii) and (iii) as individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.
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(b) No consent, approval, order or authorization of, or registration, declaration, filing with or notice to, any Governmental Entity is required by or with respect to Parent in connection with the execution, delivery and performance of this Agreement by Parent or the consummation by Parent of the Offer and the other transactions contemplated hereby or compliance with the provisions hereof, except for (i) the filing of the pre-merger notification report under the HSR Act and any Foreign Antitrust Laws set forth on Section 3.3(b) of the Company Disclosure Letter, (ii) such filings and reports as required pursuant to the applicable requirements of the Securities Act, the Exchange Act and any other applicable state or federal securities, takeover and “blue sky” Laws, (iii) any filings required under the rules and regulations of the Nasdaq Global Select Market and (iv) such other consents, approvals, orders, authorizations, registrations, declarations, filings or notices the failure of which to be obtained or made, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
Section 3.4 Certain Information. The Offer Documents will not, at the respective times they are first filed with the SEC, amended or supplemented or first published, distributed or disseminated to the Company’s shareholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. The Offer Documents will comply in all material respects with the requirements of the Exchange Act. Notwithstanding the foregoing, Parent makes no representation or warranty with respect to statements included or incorporated by reference in the Offer Documents based on information supplied in writing by or on behalf of the Company specifically for inclusion or incorporation by reference therein. None of the information supplied or to be supplied by or on behalf of Parent specifically for inclusion or incorporation by reference in the Schedule 14D-9 or the Shareholder Approval Invitation will, at the time it is first published, distributed or disseminated to the Company’s shareholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, Parent makes no representation or warranty with respect to statements included or incorporated by reference in the Schedule 14D-9 or Shareholder Approval Invitation based on information supplied in writing by or on behalf of the Company specifically for inclusion or incorporation by reference therein.
Section 3.5 Absence of Litigation. There is no Action pending or, to the knowledge of Parent, threatened against Parent, except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 3.6 Brokers. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent, other than any such arrangements the fees and expenses of which shall be the sole responsibility of Parent.
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Section 3.7 Ownership of Shares. Neither Parent nor any of Parent’s Subsidiaries directly or indirectly owns, and at all times for the past three years, neither Parent nor any of Parent’s controlled Subsidiaries has owned, beneficially or otherwise, any shares of the Company’s capital stock or any securities, contracts or obligations convertible into or exercisable or exchangeable for shares of the Company’s capital stock.
Section 3.8 Adequacy of Funds. Parent has, and will, as of the Acceptance Time, have, access to sufficient funds to consummate the Offer and the other transactions contemplated hereby on the terms and subject to the conditions contemplated by this Agreement.
Section 3.9 No Other Representations or Warranties. Except for the representations and warranties expressly set forth in this Article III or in any certificate delivered by Parent to the Company in accordance with the terms hereof, neither Parent nor any of its Affiliates, or any other Person on behalf of Parent makes, any express or implied representation or warranty with respect to Parent or its business or with respect to any other information provided, or made available, to the Company, or its Representatives or Affiliates in connection with the Offer or any of the other transactions contemplated by this Agreement, including the accuracy or completeness thereof. In connection with the Company’s investigation of Parent, the Company may have received from or on behalf of Parent certain projections and other forecasts and plans, and Parent makes no representations and warranties whatsoever with respect to such projections and other forecasts and plans (including the reasonableness of the assumptions underlying such projections and other forecasts and plans).
Article
IV.
COVENANTS
Section 4.1 Preparation of Shareholder Approval Invitation; Shareholder Meeting.
(a) As promptly as practicable after the date hereof, the Company shall (i) establish a date for the Company Shareholder Meeting for the purpose of obtaining the Company Shareholder Approval and (ii) publish and make available to the shareholders of the Company the invitation for the Company Shareholder Meeting together with all required documents (such as proxy forms) in accordance with applicable Law and the Company Articles (the “Shareholder Approval Invitation”).
(b) Each of the Company and Parent shall furnish all information concerning such person and its Affiliates to the other as may be reasonably requested in connection with the preparation, publication and distribution of the Shareholder Approval Invitation. Prior to publishing or making available the Shareholder Approval Invitation (or any amendment or supplement thereto), the Company (i) shall provide Parent an opportunity to review and comment on such documents, (ii) shall consider in good faith all such comments reasonably proposed by Parent and (iii) shall not publish or mail such documents prior to receiving the approval of Parent. If, at any time prior to the Company Shareholder Meeting, any information relating to the Company, Parent or any of their respective Affiliates, officers or directors should be discovered by the Company or Parent which should be set forth in an amendment or supplement to the Shareholder Approval Invitation, so that the Shareholder Approval Invitation shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other parties hereto, and an appropriate amendment or supplement describing such information shall be, to the extent required by applicable Law, disseminated to the shareholders of the Company in accordance with applicable Law and the Company Articles. Except in connection with an Adverse Recommendation Change expressly permitted by Section 4.3, no amendment or supplement to the Shareholder Approval Invitation shall be made by the Company without the approval of Parent.
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(c) The Company agrees that the Shareholder Approval Invitation shall comply as to form in all material respects with all requirements of applicable Law and the Company Articles and that none of the information included or incorporated by reference in the Shareholder Approval Invitation shall, at the date the Shareholder Approval Information is published or mailed to the Company shareholders or at the time of the Company Shareholder Meeting, or at the time of any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no covenant is made by the Company with respect to statements made in the Shareholder Approval Invitation based on information supplied in writing by or on behalf of Parent specifically for inclusion or incorporation for reference therein. Parent agrees that no information supplied in writing by or on behalf of Parent specifically for inclusion or incorporation for reference in the Shareholder Approval Invitation shall, at the date the Shareholder Approval Invitation is published or mailed to the shareholders of the Company or at the time of the Company Shareholder Meeting, or at the time of any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
(d) Notwithstanding anything to the contrary in this Agreement, the Company shall be permitted to postpone the Company Shareholder Meeting if, but only if, (i) the Company Board has determined in good faith (after consultation with outside legal counsel) that such delay is required (A) by applicable Law or (B) to allow for the dissemination of any supplement or amendment to the Shareholder Approval Invitation that is required to be disseminated under applicable Law or (ii) the Company is required to do so by a court of competent jurisdiction in connection with any Legal Proceeding commenced after the date hereof against the Company or any of its directors (in their capacity as such) by any Company Shareholders relating to this Agreement or transactions contemplated hereby. To the extent permitted by applicable Law, the Company may (and will, if directed by Parent) postpone the Company Shareholder Meeting if there are not sufficient affirmative votes at such meeting to adopt to obtain the Company Shareholder Approval. In no event shall the record date of the Company Shareholder Meeting be changed without Parent’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), except if the Company Shareholder Meeting is postponed in accordance with the terms set forth herein. The Shareholder Approval Invitation shall include the proposals of the Company Board to adopt the Articles Amendment, the Board Modification, and, subject to the occurrence of the Acceptance Time and satisfaction of the applicable requirements under Nasdaq Rules, the Delisting, as well as the Company Board’s recommendation to approve such proposals. Except to the extent an Adverse Recommendation Change expressly permitted by Section 4.3 has been effected, (1) the Company Board shall include the Company Board Recommendation in the Shareholder Approval Invitation and (2) the Company shall use its reasonable best efforts to solicit votes of the Company shareholders in favor of obtaining the Company Shareholder Approval to the extent permitted by applicable Law. Without limiting the generality of the foregoing, but subject to Section 4.3 and the Company’s rights to terminate this Agreement under the circumstances set forth in Section 5.1(d)(ii), the Company agrees that its obligations pursuant to this Section 4.1(d) shall not be affected by the commencement, public proposal, public disclosure or communication to the Company or any other person of any Acquisition Proposal. To the extent permitted by applicable Law, the Company shall provide updates to Parent with respect to the Company Shareholder Meeting, as reasonably requested by Parent.
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Section 4.2 Conduct of Business. During the period from the execution of this Agreement to the Acceptance Time, except as consented to in writing in advance by Parent which consent shall not be unreasonably withheld, delayed or conditioned, or as otherwise specifically required by this Agreement, the Company shall, and shall cause each of its Subsidiaries to (x) carry on its business in the Ordinary Course of Business and in compliance with all applicable Laws and (y) use commercially reasonable best efforts to preserve intact its business organization, preserve its assets, Permits, rights and properties in good repair and condition, keep available the services of its current officers, employees and consultants and preserve its goodwill and its relationships with customers, suppliers, licensors, licensees, distributors, Collaboration Partners, and others having business dealings with it. In addition to and without limiting the generality of the foregoing, during the period from the execution of this Agreement to the Acceptance Time, except (1) as set forth in Section 4.2 of the Company Disclosure Letter, (2) as consented to in writing in advance by Parent which consent shall not be unreasonably withheld, delayed or conditioned (unless such consent would violate applicable Law, including Antitrust Law, in which case consent shall not be required) or (3) as otherwise specifically required by this Agreement, the Company shall not, and shall not permit any of its Subsidiaries to:
(a) (i) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its Shares or other equity interests, except for dividends by a wholly owned Subsidiary of the Company to its parent, (ii) purchase, redeem or otherwise acquire shares or other equity interests of the Company (except in accordance with the terms of a Company Restricted Share Purchase Agreement) or its Subsidiaries or any options, warrants, or rights to acquire any such shares or other equity interests or (iii) split, combine, reclassify or otherwise amend the terms of any of its Shares or other equity interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for Shares or other equity interests;
(b) except as set forth on Section 4.2(b) of the Company Disclosure Letter, issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien any Shares or other equity interests or any securities convertible into, exchangeable for or exercisable for any such shares or other equity interests, or any rights, warrants or options to acquire, any such shares or other equity interests, or any stock appreciation rights, “phantom” stock rights, performance units, rights to receive Shares of the Company on a deferred basis or other rights linked to the value of Shares, including pursuant to Contracts as in effect on the date hereof (other than the issuance of Shares upon the exercise, vesting or settlement of Company Stock Options or Company RSU Awards outstanding on the Measurement Date in accordance with their terms as in effect on such date, and (iii) the issuance of Shares upon the exercise of the Company Warrants or the conversion rights under the Existing Credit Agreements);
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(c) amend or otherwise change, or authorize or propose to amend or otherwise change the Company Articles or similar organizational documents of the Company or any of its Subsidiaries (other than proposed by the Company Board to the Annual Company Shareholder Meeting prior to the date hereof or validly proposed by one or more shareholders of the Company and approved by the general meeting of shareholders of the Company against the recommendation of the Company Board);
(d) directly or indirectly acquire or agree to acquire (i) by merging or consolidating with, purchasing a substantial equity interest in or a substantial portion of the assets of, making an investment in or loan or capital contribution to or in any other manner, any corporation, partnership, association or other business organization or division thereof or (ii) any assets that are otherwise material to the Company except, in the case of any of the foregoing (A) in the Ordinary Course of Business (including entering into non-exclusive license agreements in the Ordinary Course of Business), (B) pursuant to dispositions of obsolete, surplus or worn out assets that are no longer useful in the conduct of the business of the Company, or (C) as provided for in the Company’s capital expenditure budget set forth in Section 4.2(h) of the Company Disclosure Letter;
(e) directly or indirectly sell, lease, license, sell and leaseback, abandon, mortgage or otherwise encumber or subject to any Lien or otherwise dispose in whole or in part of any of its properties, assets or rights or any interests therein, except sales of inventory in the Ordinary Course of Business or pursuant to the capital expenditure budget set forth in Section 4.2(h) of the Company Disclosure Letter;
(f) adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(g) (i) incur, create, assume or otherwise become liable for, or repay or prepay, in each case, any Indebtedness, or amend, modify or refinance any Indebtedness or (ii) make any loans, advances or capital contributions to, or investments in, any other Person, other than the Company or any direct or indirect wholly owned Subsidiary of the Company except for (A) short-term borrowings, of not more than $500,000 in the aggregate, incurred in the Ordinary Course of Business or (B) advances to employees and consultants for travel and other business-related expenses of not more than $50,000 in the aggregate;
(h) incur or commit to incur any capital expenditure or authorization or commitment with respect thereto except that the Company may make capital expenditures (i) provided for in the capital expenditure budget set forth in Section 4.2(h) of the Company Disclosure Letter, and (ii) that are consistent with past practice and solely for purposes of maintaining, repairing or replacing equipment used in the manufacturing process, that do not exceed $250,000 individually and $500,000 in the aggregate;
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(i) (i) pay, discharge, settle or satisfy any claims, liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course of Business or as required by their terms as in effect on the date of this Agreement of claims, liabilities or obligations reflected or reserved against in the most recent audited financial statements (or the notes thereto) of the Company included in the Company SEC Documents filed prior to the date hereof (for amounts not in excess of such reserves) or incurred since the date of such financial statements in the Ordinary Course of Business, (ii) cancel or otherwise forgive any Indebtedness owed to the Company or any of its Subsidiaries (including loans made to Service Providers) or (iii) waive, release, grant or transfer any right of material value;
(j) (i) modify, amend, terminate, waive, release or assign any rights under, cancel, extend, determine not to renew, or exercise any material option under any Material Contract, (ii) enter into any Contract that if in effect on the date hereof would be a Material Contract, or (iii) amend or modify any Contract in existence on the date hereof that, after giving effect to such amendment or modification, would be a Material Contract;
(k) convene any ordinary general meeting or extraordinary general meeting (or any postponement thereof) of the Company’s shareholders other than the Annual Company Shareholder Meeting and the Company Shareholder Meeting or to the extent required by an order of a court of competent jurisdiction or validly requested by one or several shareholders of the Company;
(l) commence any Action (other than an Action as a result of an Action commenced against the Company or any of its Subsidiaries), or compromise, settle or agree to settle any Action that results solely in a monetary obligation involving only the payment of monies by the Company of not more than $1,000,000 in the aggregate, except with respect to a breach of this Agreement or any other agreements contemplated hereby;
(m) change its financial accounting methods, principles or practices, except insofar as may have been required by a change in IFRS or applicable Law, or revalue any of its material assets;
(n) change its fiscal year;
(o) settle or compromise any material liability for Taxes other than consistent with past practice applying for the waiver of issuance stamp duty according to article 12 of the Swiss Stamp Duties Act make, revoke or modify any material Tax election; surrender any right to claim a material Tax refund; consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of a material amount of Taxes; fail to pay any material amount of Taxes when due or fail to file any income or other material Tax Return when due (taking into account any valid extensions); enter into any Tax ruling or Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement, Tax holiday or any closing or other similar agreement which will remain in force after the Acceptance Time (in each case, other than a contract (such as a loan agreement or lease agreement) entered into in the Ordinary Course of Business that is not primarily related to Taxes); or change any material method of accounting for Tax purposes;
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(p) except as set forth on Section 4.2(p) of the Company Disclosure Letter, and other than as required by any Company Plan as in effect on the date of this Agreement or by applicable Law, (i) increase the compensation or benefits of any Service Provider, other than in the Ordinary Course of Business consistent with past practice with respect to any Service Provider whose total annual cash compensation opportunity does not exceed $250,000, provided that any such increases do not exceed, (x) in the aggregate, 5% of the total annual target cash compensation for all Services Providers and (y) with respect to any individual Service Provider, 10% of such Service Provider’s total annual target cash compensation, (ii) grant or pay to any Service Provider any severance, termination, retention, change in control, transaction or similar payments or benefits, (iii) establish, adopt, enter into, amend in any material respect or terminate any Company Plan or any collective bargaining agreement, other than offer letters, employment agreements or consulting agreements that do not include severance protections or change in control payments with respect to any Service Provider whose total annual cash compensation opportunity does not exceed $250,000, (iv) take any action to amend or waive any performance or vesting criteria or accelerate the vesting, exercisability, funding or payment of any compensation or benefit under any Company Plan or other Contract other than as set out in this Agreement or (v) hire or terminate (other than for cause or due to death or disability) any Service Provider whose annual cash compensation opportunity exceeds $250,000, except that the Company or its relevant Subsidiary may enter into any replacement arrangements for a Service Provider;
(q) fail to keep in force insurance policies or replacement or revised provisions regarding insurance coverage with respect to the assets, operations and activities of the Company and its Subsidiaries as currently in effect;
(r) terminate, allow to lapse or expire, suspend, modify or otherwise take any step to limit the effectiveness or validity of, or fail to maintain as valid and in full force and effect, any Permit (including all Company Permits);
(s) enter into any new lease or license or amend the terms of any existing lease or license of real property except for in the Ordinary Course of Business;
(t) (i) sell, assign, transfer all or any portion of, mortgage, encumber or create or incur any Lien on the Owned Company Intellectual Property, (ii) grant any licenses of Intellectual Property, (iii) abandon, permit to lapse or cease to prosecute or maintain any of the Company Registered IP or any other Company Intellectual Property, or (iv) disclose to any third party, other than under a confidentiality agreement or other legally binding confidentiality undertaking, any material trade secret of the Company or any of its Subsidiaries that is included in the Company Intellectual Property in a way that results in loss of material trade secret protection thereon, except for any such disclosures made as a result of publication of a patent application filed by the Company or any of its Subsidiaries or in connection with any required regulatory filing;
(u) adopt or implement any shareholder rights plan or similar arrangement;
(v) take any action (or omit to take any action) if such action (or omission) could reasonably be expected to result in any of the Offer Conditions not being satisfied;
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(w) other than in the Ordinary Course of Business (which, for the avoidance of doubt, shall not include any activities related to Apraglutide) (i) commence, alone or with any third party, any research program or pre-clinical or clinical study that has not been disclosed to Parent prior to the date of this Agreement, (ii) unless mandated by any Governmental Entity, discontinue, terminate or suspend any ongoing material research program or clinical study or (iii) make any change to, discontinue, terminate or suspend any ongoing material clinical study, in each case, relating to the Products; or
(x) authorize any of, or commit, resolve or agree to take any of, the foregoing actions.
Notwithstanding the foregoing, nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct the operations of the Company prior to the Acceptance Time. Prior to the Acceptance Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its business, assets and operations.
Section 4.3 No Solicitation.
(a) During the period from the execution of this Agreement through the Acceptance Time, the Company shall not, and shall cause its Subsidiaries and its and their directors, officers, employees, investment bankers, financial advisors, attorneys, accountants or other advisors, agents or representatives (collectively, “Representatives”) to not directly or indirectly (i) whether publicly or otherwise, solicit, initiate, endorse, encourage or facilitate any inquiry, proposal or offer with respect to, or the making or completion of, any Acquisition Proposal, or any inquiry, proposal or offer that is reasonably likely to lead to, facilitate the making of or assist in the submission of any Acquisition Proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any Person (other than Parent or any designees or Representatives of Parent) any information or data with respect to, or otherwise cooperate in any way with, any Acquisition Proposal, (iii) furnish to any Person (other than Parent or any designees or Representatives of Parent) any non-public information relating to the Company, or afford to any Person (other than Parent or any designees or Representatives of Parent) access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company, in any such case with the intent to, or that would reasonably be expected to, facilitate the making, submission or announcement of any proposal that constitutes or would reasonably be likely to lead to an Acquisition Proposal, (iv) enter into any merger agreement, purchase agreement, letter of intent or similar agreement with respect to an Acquisition Transaction (other than an Acceptable Confidentiality Agreement entered into pursuant to Section 4.3(b)) or (v) resolve, agree or propose to do any of the foregoing. The Company shall, and shall cause each of its Subsidiaries and the Representatives of the Company and its Subsidiaries to, (A) immediately cease and cause to be terminated all existing discussions and negotiations with any Person (other than Parent or any designees or Representatives of Parent) conducted heretofore with respect to any Acquisition Proposal or potential Acquisition Proposal and immediately terminate all physical and electronic data room access previously granted to any such Person, (B) request the prompt return or destruction of all confidential information previously furnished with respect to any Acquisition Proposal or potential Acquisition Proposal, and (C) not terminate, waive, amend, release or modify any provision of any confidentiality or standstill agreement to which it or any of its Affiliates or Representatives is a party with respect to any Acquisition Proposal or potential Acquisition Proposal, and shall enforce the provisions of any such agreement, which shall include seeking any injunctive relief available to enforce such agreement.
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(b) Notwithstanding Section 4.3(a), if at any time following the execution of this Agreement and prior to the Acceptance Time, (1) the Company receives a written bona fide Acquisition Proposal, (2) such Acquisition Proposal was unsolicited and did not otherwise result from a breach of this Section 4.3, (3) the Company Board determines in good faith (after consultation with outside counsel and its financial advisor) that such Acquisition Proposal constitutes or is reasonably likely to lead to a Superior Proposal, and (4) the Company Board determines in good faith (after consultation with outside legal counsel and financial advisors) that the failure to take the actions referred to in clause (x) or (y) below would reasonably be likely to result in a breach of its fiduciary duties to the Company and its shareholders under applicable Law, then the Company may (x) furnish information with respect to the Company and its Subsidiaries to the Person making such Acquisition Proposal pursuant to a customary confidentiality agreement containing confidentiality terms substantially similar to, and no less favorable to the Company than, those set forth in the Confidentiality Agreement (an “Acceptable Confidentiality Agreement”); provided, that (I) the Company shall provide Parent a redacted copy of each confidentiality agreement the Company has executed in accordance with this Section 4.3 concurrently with the execution thereof and (II) that any non-public information provided to any such Person shall have been previously provided to Parent or shall be provided to Parent prior to the time it is provided to such Person, and (y) participate in discussions or negotiations with the Person making such Acquisition Proposal regarding such Acquisition Proposal. The Company shall not provide (and shall not permit any of its Representatives to provide) any commercially or competitively sensitive non-public information in connection with the actions permitted by this Section 4.3(b), except in accordance with “clean room” or other similar procedures designed to limit any adverse effect of the sharing of such information on the Company, which procedures shall be consistent in all material respects with the Company’s practices in dealing with the disclosures of such information to Parent or its Representatives.
(c) Neither the Company Board nor any committee thereof shall: (i) (A) withdraw (or modify, amend or qualify in any manner adverse to Parent), or fail to include in the Schedule 14D-9, the Company Board Recommendation, (B) recommend or otherwise declare advisable the approval by the Company shareholders of any Acquisition Proposal, or upon a request to do so by Parent, fail to publicly reaffirm the Company Board Recommendation within 10 Business Days after the date any Acquisition Proposal or any material modification thereto is first commenced, publicly announced, distributed or disseminated to the Company’s shareholders, (C) if any Acquisition Proposal is structured as a tender offer or exchange offer for the Shares and is commenced pursuant to Rule 14d-2 under the Exchange Act (other than by Parent or an Affiliate of Parent), fail to recommend, within 10 Business Days after such commencement, against acceptance by the Company shareholders of such tender offer or exchange offer, (D) resolve, agree or propose to take any such actions, or (E) make any public announcements with respect to the foregoing matters (each such action set forth in this Section 4.3(c)(i) being referred to herein as an “Adverse Recommendation Change”); or (ii) cause or permit the Company or any of its Subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other Contract, except for an Acceptable Confidentiality Agreement (each, an “Alternative Acquisition Agreement”), in each case constituting or related to, or which is intended to or is reasonably likely to lead to, any Acquisition Proposal, or resolve, agree or propose to take any such actions.
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(d)
(i) Notwithstanding Section 4.3(c), at any time prior to the Acceptance Time, in response to an Acquisition Proposal received after the date hereof that was unsolicited and did not otherwise result from a breach of this Section 4.3 and that the Company Board determines in good faith, after consultation with outside legal counsel and financial advisors, constitutes a Superior Proposal, the Company Board may, if the Company Board determines in good faith (after consultation with outside legal counsel and financial advisors) that the failure to do so would reasonably be likely to result in a breach of its fiduciary duties under applicable Law or otherwise violate applicable Law, taking into account all adjustments to the terms of this Agreement that may be offered by Parent pursuant to this Section 4.3, (x) make an Adverse Recommendation Change and (y) cause the Company to terminate this Agreement in accordance with Section 5.1(d)(ii) and concurrently enter into a binding and definitive Alternative Acquisition Agreement with respect to such Superior Proposal; provided, however, that the Company may not make an Adverse Recommendation Change in response to a Superior Proposal or terminate this Agreement pursuant to Section 5.1(d)(ii) unless:
(a) the Company notifies Parent in writing at least four Business Days before taking that action of its intention to do so, and specifies the reasons therefor, including the terms and conditions of, and the identity of the Person making, such Superior Proposal, and contemporaneously furnishes a copy (if any) of the proposed Alternative Acquisition Agreement and any other related transaction documents (it being understood and agreed that any amendment to any of the terms of such Superior Proposal shall require a new written notice by the Company and a new five Business Day period); and
(b) if Parent makes a proposal during such four Business Day period to adjust the terms and conditions of this Agreement, the Company Board, after taking into consideration the adjusted terms and conditions of this Agreement as proposed by Parent, continues to determine in good faith (after consultation with outside counsel and its financial advisors) that such Superior Proposal continues to be a Superior Proposal and that the failure to make an Adverse Recommendation Change or terminate this Agreement, as applicable, would reasonably be likely to result in a breach of its fiduciary duties under applicable Law or otherwise violate applicable Law.
(ii) During the four Business Day period prior to its effecting an Adverse Recommendation Change or terminating this Agreement as referred to above, the Company shall, and shall cause its financial and legal advisors to, negotiate with Parent in good faith (to the extent Parent seeks to negotiate) regarding any revisions to the terms of the transactions contemplated by this Agreement proposed by Parent. Notwithstanding anything to the contrary contained herein, neither the Company nor any of its Subsidiaries shall enter into any Alternative Acquisition Agreement unless this Agreement has been terminated in accordance with its terms (including payment of the Termination Fee pursuant to Section 5.3(b), if applicable).
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(e) In addition to the obligations of the Company set forth in Section 4.3(a), Section 4.3(b), Section 4.3(c) and Section 4.3(d), the Company promptly (and in any event within 36 hours) shall advise Parent in the event the Company or any of its Subsidiaries or Representatives receives (i) any indication by any Person that it is considering making an Acquisition Proposal, (ii) any inquiry or request for information, discussion or negotiation that is reasonably likely to lead to or that contemplates an Acquisition Proposal, or (iii) any proposal or offer that is or is reasonably likely to lead to an Acquisition Proposal, in each case together with a summary description of the material terms and conditions of and facts surrounding any such indication, inquiry, request, proposal or offer, the identity of the Person making any such indication, inquiry, request, proposal or offer, and a copy of any written proposal, offer or draft agreement provided by such Person. The Company shall, upon written request from Parent, keep Parent informed (orally or in writing) of the status and details of any such Acquisition Proposal, request, inquiry, proposal or offer, including furnishing copies of any written inquiries, correspondence and draft documentation.
(f) The Company agrees that any violation of the restrictions set forth in this Section 4.3 by any Representative of the Company or any of its Subsidiaries, whether or not such Person is purporting to act on behalf of the Company or any of its Subsidiaries or otherwise, shall be deemed to be a material breach of this Agreement by the Company.
(g) The Company shall not, and shall cause its Subsidiaries not to, enter into any confidentiality agreement with any Person subsequent to the execution of this Agreement that would restrict the Company’s ability to comply with any of the terms of this Section 4.3, and represents that neither it nor any of its Subsidiaries is a party to any such agreement.
(h) Nothing contained in Section 4.3 shall prohibit the Company from taking and disclosing a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act; provided, however, that any such disclosure (other than a “stop, look and listen” communication or similar communication of the type contemplated by Section 14d-9(f) under the Exchange Act) shall be deemed to be an Adverse Recommendation Change (including for purposes of Section 5.1(c)(ii)) unless the Company Board expressly reaffirms the Company Board Recommendation in such disclosure and expressly rejects any applicable Acquisition Proposal.
(i) For purposes of this Agreement:
(i) “Acquisition Proposal” means any proposal or offer with respect to any transaction or series of related transactions by any Person or “group” (as defined in or under Section 13(d) of the Exchange Act) relating to, in a single transaction or series of related transactions, any (a) acquisition or license of assets of the Company equal to 10% or more of the assets or consolidated assets of the Company and its Subsidiaries or to which 10% or more of the revenues or earnings of the Company and its Subsidiaries are attributable, (b) acquisition of 10% or more of the outstanding Shares, (c) recapitalization, tender offer or exchange offer that if consummated would result in any Person or group beneficially owning 10% or more of the outstanding Shares or other voting securities representing 10% or more of the combined voting power of the Company, (d) merger, consolidation, amalgamation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company that if consummated would result in any Person or group beneficially owning 10% or more of the outstanding Shares or other voting securities representing 10% or more of the combined voting power of the Company or (e) acquisition or exclusive license of all or substantially all of the rights to the Company Product in any jurisdiction, in each case other than the Transactions; and
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(ii) “Superior Proposal” means any unsolicited bona fide written Acquisition Proposal that did not result from a breach of Section 4.3 that the Company Board determines in good faith (after consultation with outside counsel and its financial advisor), is more favorable to the Company or its shareholders than the Offer and the other transactions contemplated by this Agreement, taking into account (A) any revisions to this Agreement made or proposed in writing by Parent prior to the time of such determination, and (B) those factors and matters deemed relevant in good faith by the Company Board (or any committee thereof), which factors shall include: (x) the identity of the Person making the proposal; (y) the likelihood of consummation in accordance with the terms of such Acquisition Proposal; and (z) the legal, financial (including the financing terms, any breakup fees and expense reimbursement provisions), regulatory, timing and other aspects of such Acquisition Proposal, including the reasonable likelihood to receive all required governmental approvals on a timely basis; provided, that, for purposes of this definition of “Superior Proposal,” references in the term “Acquisition Proposal” to “10%” shall be deemed to be references to “50%”.
Section 4.4 Access to Information; Confidentiality. The Company shall, and shall cause each of its Subsidiaries to, afford to Parent and its Representatives reasonable access during normal business hours, during the period prior to the Acceptance Time or the termination of this Agreement in accordance with its terms, to all their respective properties, assets, books, contracts, commitments, personnel and records and, during such period, the Company shall, and shall cause each of its Subsidiaries to, furnish promptly to Parent: (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of foreign, federal or state securities Laws and (b) all other information concerning its business, properties and personnel as Parent may reasonably request (including Tax Returns filed and those in preparation and the workpapers of its auditors); provided, however, that the foregoing shall not require the Company to disclose any information to the extent such disclosure would contravene applicable Law, and provided that the Company shall be permitted to provide any such information electronically or by other remote access where practicable. All such information shall be held confidential in accordance with the terms of the Non-Disclosure Agreement between Parent and the Company dated as of March 29, 2023 (the “Confidentiality Agreement”). No investigation pursuant to this Section 4.4 or information provided, made available or delivered to Parent pursuant to this Agreement shall affect any of the representations, warranties, covenants, rights or remedies, or the conditions to the obligations of, the parties hereunder.
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Section 4.5 Standard of Efforts; Governmental Approvals.
(a) Subject to the terms and conditions provided herein, each party agrees to use (and shall cause its respective Subsidiaries to use) its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including (i) preparing and filing as promptly as practicable with any Governmental Entity all documentation to effect all necessary notices, reports and other filings and (ii) obtaining as promptly as practicable and maintaining all Permits necessary or advisable to be obtained from any Governmental Entity in order to consummate the transactions contemplated by this Agreement; provided that in no event shall Parent be obligated to, and none of Company or any of its Subsidiaries shall, be obligated to, and shall not, without the prior written consent of Parent, agree to or proffer, any consent fee, concession or other modification to the terms and conditions of any Contract in order to obtain the Permits contemplated by clause (ii). The Company and Parent agree that they will consult with each other with respect to the obtaining of all such necessary Permits and (1) the Company shall have the right to review and approve in advance all characterizations of the information relating to the Company and its Subsidiaries, (2) Parent shall have the right to review and approve in advance all characterizations of the information relating to Parent, and (3) each of the Company and Parent shall have the right to review and approve in advance all characterizations of the information relating to the transactions contemplated by this Agreement, in each case, that appear in any filing made in connection with the transactions contemplated by this Agreement.
(b) In furtherance of, and not in limitation of the foregoing, each of the Company and Parent (and their respective controlled Affiliates, if applicable) shall: (i) as promptly as practicable, and in any event within 7 Business Days (or such other time as mutually agreed by the parties) after the date hereof, file or cause to be filed with the United States Federal Trade Commission (“FTC”) and the United States Department of Justice (“DOJ”) any notifications required to be filed under the HSR Act with respect to the transactions contemplated by this Agreement, (ii) as promptly as practicable after the date hereof, make appropriate filings pursuant to any Foreign Antitrust Law set forth on Section 4.5(b) of the Company Disclosure Letter and (iii) supply as promptly as practicable any additional information and documentary material that may be requested and to use their reasonable best efforts to take all other actions necessary to cause the expiration or termination of the applicable waiting periods or obtain any required authorizations under such Antitrust Laws as soon as practicable. Neither Parent nor the Company will commit to or agree with the FTC or DOJ or any other Governmental Entity to not consummate the transactions contemplated by this Agreement for any period of time, or to stay, toll or extend, directly or indirectly, any applicable waiting period under the HSR Act or other applicable Antitrust Law, and will not pull and refile any filing made under the HSR Act, in each case without the prior written consent of the other (such consent not to be unreasonably withheld, conditioned or delayed).
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(c) Each party will (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry with respect to the transactions contemplated by this Agreement, (ii) promptly notify the other party of any communication received from, or given to, any Governmental Entity with respect to the transactions contemplated by this Agreement and keep the other parties reasonably informed as to the status of any such request, inquiry, investigation, or other communication, (iii) subject to applicable Law, and to the extent practicable, permit the other party to review in advance any proposed communication by it to any Governmental Entity with respect to the transactions contemplated by this Agreement, and incorporate the other party’s reasonable comments, (iv) not agree to participate in any substantive meeting or discussion with any Governmental Entity in respect of any filing, investigation or inquiry concerning this Agreement or the transactions contemplated by this Agreement unless it consults with the other party in advance and, to the extent permitted by such Governmental Entity, gives the other party the opportunity to attend, and (v) furnish the other party with non-confidential copies of all correspondence, filings and written communications between them and their Affiliates and their respective Representatives on one hand, and any such Governmental Entity or its staff on the other hand, with respect to this Agreement or the transactions contemplated by this Agreement. Materials required to be provided pursuant to this Section 4.5 may be redacted (i) to remove references concerning the valuation of the Company, (ii) as necessary to comply with contractual arrangements; and (iii) as necessary to preserve attorney-client or other legal privilege concerns. Each party, as each deems advisable and necessary, may designate any competitively sensitive material provided to the other under this Section 4.5 as “Antitrust Counsel Only Material.” Such materials and the information contained therein shall be given only to the outside antitrust counsel of the recipient unless express written permission is obtained in advance from the source of the materials or its legal counsel. The parties shall use their respective best efforts to certify substantial compliance (in accordance with Section 18a.(e)(2) of the HSR Act) with any requirement to submit additional information or documentary material relevant to the transactions contemplated by this Agreement issued pursuant to Section 18a.(e) of the HSR Act (a “Second Request”) within 60 days of the receipt of such Second Request by the parties from the relevant Governmental Entity.
(d) At Parent’s request, the Company shall give (or shall cause its applicable Subsidiary to give) any notices to third parties, and use, and cause each of its Subsidiaries to use, reasonable best efforts to obtain any third party consents, approvals or waivers required to be obtained under any Material Contracts or other Contracts in connection with and contingent upon the consummation of the transactions contemplated by this Agreement; provided that neither the Company nor any of its Subsidiaries shall, without the prior written consent of Parent, agree to, or proffer, any consent fee, concession or other modification to the terms and conditions of any Contract in order to obtain any such consent. The Company shall coordinate and cooperate with Parent in determining whether any actions, consents, approvals or waivers are required to be obtained from parties to any Material Contracts in connection with the consummation of the transactions contemplated by this Agreement and seeking any such actions, consents, approvals or waivers.
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(e) Notwithstanding the foregoing or any other provision of this Agreement, (i) nothing in this Section 4.5 shall limit any applicable rights a party may have to terminate this Agreement pursuant to Article V and (ii) in no event shall Parent be required to offer, accept or agree to, and the Company shall not be required to offer, accept or agree to, and shall not, without Parent’s prior written consent, offer, accept or agree to (1) divest, dispose of or hold separate, or cause any of the Company’s Subsidiaries to dispose of or hold separate, any portion of the businesses, operations, assets or product lines of Parent, the Company or any of their respective Subsidiaries (or a combination of the respective businesses, operations, assets or product lines of Parent, the Company or any of their respective Subsidiaries), (2) restrict, prohibit or limit the ability of Parent, the Company or any of their respective Subsidiaries to conduct its business or own its assets, (3) restrict, prohibit or limit the ownership or operation by the Company, Parent or any of their respective Subsidiaries of all or any portion of the business or assets of Parent, the Company or any of their respective Affiliates in any part of the world, (4) cause Parent or any of its Subsidiaries to divest any Shares, or (5) impose limitations on the ability of Parent or any of its Subsidiaries effectively to acquire, hold or exercise full rights of ownership of, any Shares, including the right to vote the Shares acquired or owned by Parent or any of its Subsidiaries on all matters properly presented to the shareholders of the Company (any such action described in this clause (ii), a “Non-Required Remedy”). Notwithstanding the foregoing or any other provision of this Agreement to the contrary, in no event shall Parent or any of its Subsidiaries, or the Company, be obligated to (x) enter into any settlement, undertaking, consent decree, stipulation or agreement with any Governmental Entity in connection with the transactions contemplated by this Agreement involving a Non-Required Remedy or (y) litigate or participate in the litigation of any Action, whether judicial or administrative, brought by any Governmental Entity challenging or seeking to restrain, prohibit or place conditions on the consummation of the Offer or the other transactions contemplated by this Agreement or the ownership or operation by Parent, the Company or any of their respective Subsidiaries of all or any portion of their respective businesses.
(f) Prior to the Acceptance Time, Parent shall not (and Parent shall cause each of its controlled Affiliates not to) acquire or agree to acquire, whether by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any Person or portion thereof, or otherwise acquire or agree to acquire any assets, if the entering into of such agreement, or the consummation of such transaction, acquisition, merger or consolidation would reasonably be expected to (i) impose any material delay in the obtaining of, or significantly increase the risk of not obtaining, any authorizations, consents, clearances, orders, declarations or approvals of any Governmental Entity necessary to consummate the transactions contemplated by this Agreement or the expiration or termination of any applicable waiting period, (ii) increase the risk of any Governmental Entity entering, threatening to enter or increase the risk of not being able to remove or successfully challenge any permanent, preliminary or temporary injunction or other decree, decision, determination or judgment that would delay, restrain, prevent, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement or (iii) otherwise materially delay or impede the consummation of the transactions contemplated by this Agreement.
Section 4.6 Takeover Laws. The Company and the Company Board shall (a) take no action to cause any Takeover Law to become applicable to this Agreement, the Offer or any of the other transactions contemplated hereby and (b) if any Takeover Law is or becomes applicable to this Agreement, the Offer or any of the other transactions contemplated hereby, take all action necessary to ensure that the Offer and the other transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such Takeover Law with respect to this Agreement, the Offer and the other transactions contemplated hereby.
Section 4.7 Shareholder Litigation. The Company shall promptly notify Parent of any shareholder litigation commenced or, to the knowledge of the Company, threatened against the Company or any of its directors or executive officers relating to this Agreement, the Offer or the other transactions contemplated hereby and shall keep Parent promptly and reasonably informed regarding any such litigation (including by providing copies of all pleadings with respect thereto). The Company shall give Parent the opportunity to participate in the defense and settlement of any shareholder litigation against the Company or its officers or directors relating to any of the Offer or any of the other transactions contemplated by this Agreement and shall give due consideration to Parent’s views with respect thereto. The Company shall not enter into any settlement agreement in respect of any shareholder litigation against the Company or its directors or officers relating to the Offer or any of the other transactions contemplated hereby without Parent’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).
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Section 4.8 Notification of Certain Matters.
(a) The Company and Parent shall promptly notify each other of (a) any notice or other communication received by such party from any Governmental Entity in connection with the transactions contemplated hereby or from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated hereby, (b) any other notice or communication from any Governmental Entity in connection with the transactions contemplated hereby, (c) any Action commenced or, to such party’s knowledge, threatened against, relating to or involving or otherwise affecting such party or any of its Subsidiaries which relate to the transactions contemplated hereby or (d) any change, condition or event (i) that renders or would reasonably be likely to render any representation or warranty of such party set forth in this Agreement (disregarding any materiality qualification contained therein) to be untrue or inaccurate in any material respect or (ii) that results or would reasonably be likely to result in any failure of such party to comply with or satisfy in any material respect any covenant, condition or agreement (including any of the Offer Conditions) to be complied with or satisfied hereunder; provided, however, that no such notification shall affect any of the representations, warranties, covenants, rights or remedies, or the conditions to the obligations of, the parties hereunder.
(b) In furtherance of and not in limitation of any other provision of this Agreement, to the extent permitted by applicable Law, the Company will keep Parent informed on a current basis of any developments concerning Apraglutide and any material developments concerning any other Products (including the occurrence of any adverse event concerning Apraglutide and any serious adverse event concerning any other Products), meetings (including videoconferences or calls), conferences, discussions or negotiations relating to the Products (including in relation to any clinical trial relating to a Product). Without limiting the generality of the foregoing, to the extent permitted by applicable Law, the Company will (i) (A) promptly inform Parent of any meetings concerning Apraglutide and any material meetings concerning any other Products (including videoconferences or calls), conferences, filings, submissions, discussions, negotiations, correspondence or other activities or communications made by or on behalf of the Company or any of its Subsidiaries or any of their respective contract manufacturing organizations, contract research organizations or other Collaboration Partners to, between or with the FDA, the European Medicines Agency (“EMA”) or any other Governmental Entity performing functions similar to those performed by the FDA or EMA relating to any Product and (B) with respect to activities or communications relating to or concerning Apraglutide, not carry out or agree to carry out any of the foregoing activities or communications without prior consultation with Parent (and consider in good faith the views and comments of Parent in connection with, and reasonably in advance of, any such activity or communication, and, to the extent requested by Parent to participate in any such activity or communication), (ii) promptly furnish Parent with all such filings, submissions, and written correspondence and communications, and (iii) (A) without limiting the restrictions set forth in Section 4.2, promptly inform Parent of any change to any study protocol concerning Apraglutide and any material change to any study protocol concerning any other Products, adding any new trial, making any change to a manufacturing plan or process concerning Apraglutide or any material change to a manufacturing plan or process concerning any other Products, making any change to a development timeline or plan concerning Apraglutide or any material change to a development timeline or plan concerning any other Products, or initiating or making any change to Apraglutide or any material change to any other Product and (B) with respect to changes relating to or concerning Apraglutide, shall not carry out or agree to carry out any such change without prior consultation with Parent (and consider in good faith the views and comments of Parent in connection with, and reasonably in advance of, any such change).
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Section 4.9 Indemnification, Exculpation and Insurance.
(a) With effect from the Acceptance Time, Parent and the Company (or its successor) agree to refrain from making and enforcing any claim against, to waive any claim against, and to release and discharge from any claim, and to procure that their respective Subsidiaries refrain from making and enforcing any claim against, waive any claim against, and release and discharge from any claim, each current or former director and officer of the Company and each current or former director representing the Company in its Subsidiaries, for damages any of them has or may have based on directors’ or officers’ liability arising out of any matter, cause or event occurring on or before the Acceptance Time; provided, that the foregoing shall not apply in connection with any fraud, willful acts or omissions of a director or officer, as the case may be.
(b) Parent agrees that all rights to indemnification existing as of the date hereof in favor of the current or former directors and officers of the Company as provided in the Company Articles and the Contracts with such directors and officers of the Company as provided to Parent and in effect on the date of this Agreement for acts or omissions occurring prior to the Acceptance Time shall be assumed and performed by the Company (or its successor) and its Subsidiaries and shall continue in full force and effect for a period of six years after the Acceptance Time with respect to any claims against such directors or officers arising out of such acts or omissions, except as otherwise required by applicable Law.
(c) For a period of six years after the Acceptance Time, Parent shall cause to be maintained in effect the Company’s current directors’ and officers’ liability insurance covering each Person currently covered by the Company’s directors’ and officers’ liability insurance policy (a correct and complete copy of which has been heretofore made available to Parent) for acts or omissions occurring prior to the Acceptance Time; provided, that Parent may (i) substitute therefor policies of an insurance company the terms of which, including coverage and amount, are no less favorable in any material respect to such directors and officers than the Company’s existing policies as of the date hereof or (ii) request that the Company obtain such extended reporting period coverage under its existing insurance programs (to be effective as of the Acceptance Time); and provided, further, that in no event shall Parent or the Company be required to pay annual premiums for insurance under this Section 4.9(b) in excess of 300% of the most recent annual premiums paid by the Company for such purpose (which annual premiums are hereby represented and warranted by the Company to be as set forth in Section 4.9(c) of the Company Disclosure Letter), it being understood that Parent shall nevertheless be obligated to provide as much coverage as may be obtained for such 300% amount.
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(d) Following the Acceptance Time, subject to the occurrence of any fraud, willful acts or omissions by such current or former director or officer of the Company, Parent shall, or shall cause its respective Subsidiaries (including the Company (or its successor) and the Company’s Subsidiaries) holding Shares in the Company or shares in any of its Subsidiaries to, grant full discharge to each current or former director and officer of the Company and each current or former director representing the Company in its Subsidiaries at the next extraordinary and annual general meeting of shareholders for their term of office.
Section 4.10 Public Announcements. Each of the parties hereto agrees to consult with the other party before issuing, and give such other party a reasonable opportunity to review and comment upon, any press release or other public statements (including filings with the SEC) with respect to this Agreement, the Offer and the other transactions contemplated hereby and shall not issue any such press release or make any other public statements (including filings with the SEC) the other party’s written consent (such consent not to be unreasonably withheld, conditioned or delayed), except (a) as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system, or (b) to the extent consistent with prior press releases or public statements made pursuant to this Section 4.10. Each of the parties hereto agrees that, promptly following execution of this Agreement, (i) the Company and Parent shall issue an initial joint press release with respect to the transactions contemplated by this Agreement, in a form mutually agreed to by the Company and Parent, (ii) the Company shall (A) file a current report on Form 6-K with the SEC attaching such initial press release and copy of this Agreement as exhibits and (B) file a pre-commencement communication on Schedule 14D-9 with the SEC attaching such initial press release and (iii) Parent shall file a current report on Form 8-K and a pre-commencement communication on Schedule TO, each with the SEC attaching such initial press release.
Section 4.11 Stock Exchange Delisting; Deregistration. Prior to the Acceptance Time, the Company shall cooperate with Parent and use its commercially reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws and rules and policies of Nasdaq to enable the Delisting and the Deregistration to occur as soon as practicable after the Acceptance Time, and in any event, at such time as determined by the Company Board as composed after the Acceptance Time in its discretion.
Section 4.12 Support of the Merger.
(a) Prior to the Acceptance Time and as requested by Parent, the Company shall use its commercially reasonable efforts to assist Parent and Merger Sub with the preparation of an interim balance sheet as of June 30, 2023 or such later date as requested by Parent, which statement shall be audited by the Company’s statutory auditors after the Acceptance Time.
(b) Following the Acceptance Time and provided that at such time Parent directly or indirectly has acquired or controls at least 90% of the then outstanding Shares of the Company (excluding any Shares held by the Company or any of its Subsidiaries), the Company shall use its commercially reasonable efforts to support any action requested by Parent and Merger Sub, as may be required to prepare, launch or execute the Merger.
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Section 4.13 Employee Matters.
(a) From the Acceptance Time and for a period of twelve months following the Acceptance Time, Parent shall provide or cause any of its Affiliates to provide to each employee of the Company or any of its Subsidiaries as of immediately prior to the Acceptance Time during such Continuing Employee’s continued employment with Parent or any of its Affiliates on or after the Acceptance Time (each, a “Continuing Employee”) with (i) base salary or base wages, as applicable, and target short term incentive cash compensation opportunities, which, in each case, are no less favorable than those available to such Continuing Employees immediately prior to the Acceptance Time and (ii) health and welfare benefits that are no less favorable in the aggregate to such health and welfare benefits provided to employees of the Parent immediately prior to the execution of this Agreement.
(b) Parent shall, and shall cause its Affiliates to, use commercially reasonable efforts to: (i) cause to be waived any eligibility waiting periods, any evidence of insurability requirements and the limitations of any pre-existing condition, if any, under any employee benefit plan that is a health plan established or maintained by Parent with respect to the plan year in which the Acceptance Time occurs to the same extent satisfied or waived under a comparable Company Plan; and (ii) cause Continuing Employees to receive credit for purposes of eligibility (including for purposes of any vacation, sick, personal time off plans or programs) and vesting for years of service with Company (or its applicable Subsidiary), as applicable, prior to the Acceptance Time in the applicable employee benefit plans established or maintained by Parent, provided, however, that no such credit shall be provided (a) to the extent that such credit would result in duplication of benefits for the same period of service, (b) for purposes of benefit accrual under any defined benefit pension plan and/or (c) under any post-termination or retiree welfare plan.
(c) Prior to the Acceptance Time, the Compensation Committee of the Company Board shall have taken all steps as may be necessary to (i) approve as an “employment compensation, severance or other employee benefit arrangement” within the meaning of Rule 14d-10(d)(1) under the Exchange Act, any agreement, plan, program, arrangement or understanding entered into or established by the Company or any of its Subsidiaries with or on behalf of its officers, directors or employees, in each case, at or prior to the expiration time of the Offer, including any amendment or modification thereto, and (ii) satisfy the requirements of the non-exclusive safe harbor under Rule 14d-10(d) under the Exchange Act with respect to such agreement, plan, program, arrangement or understanding.
(d) Nothing in this Section 4.14, express or implied, (i) is intended to or shall confer upon any Person other than the parties hereto, including any Service Provider or any beneficiary or dependent thereof, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, (ii) shall establish, or constitute an amendment, termination or modification of, or an undertaking to amend, establish, terminate or modify, any benefit plan, program, agreement or arrangement, (iii) shall create any obligation on the part of the Company, Parent or any of their respective Affiliates to employ or engage any Service Provider for any period following the Acceptance Time or otherwise interfere with Parent’s or any of its Affiliates’ right to terminate the employment or service of any Service Provider for any reason or (iv) shall limit the ability of the Company or any of its Affiliates (including, following the Acceptance Time, Parent and its Subsidiaries) to amend, modify or terminate in accordance with its terms any benefit or compensation plan, program, agreement, contract, policy or arrangement at any time assumed, established, sponsored or maintained by any of them.
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Section 4.14 Payoff. The Company shall use its commercially reasonable best efforts to obtain and deliver to Parent, at least three Business Days prior to the Acceptance Time, (a) customary payoff letters with respect to the Existing Credit Agreements and (b) other customary documents relating to the release of in full guarantees and liens under the Existing Credit Agreement and any related security documents. For the avoidance of doubt, any payoff amounts with respect to the Existing Credit Agreements shall be payable after the Acceptance Time.
Section 4.15 Company Warrants. Prior to the Acceptance Time, the Company shall use its commercially reasonable efforts to take all actions reasonably required to cancel all exercisable Company Warrants granted or to be granted pursuant to the Warrant Agreements immediately prior to the Acceptance Time and terminate the Warrant Agreements, in each case effective as at the Acceptance Time, in consideration for the payment of the Warrant Consideration by Parent in accordance with the terms of this Agreement.
Section 4.16 Resignation of Directors. The Company shall use its reasonable best efforts to obtain and deliver to Parent on or prior to the Acceptance Time the resignation of the Company’s directors as set forth in Section 1.4.
Section 4.17 Tax Matters.
(a) Except as otherwise provided in this Section 4.18, or as otherwise required by applicable Law, Parent shall not make, or cause to be made, any Tax election that has a retroactive effect to any taxable period (or portion thereof) of the Company or any of its Subsidiaries ending on or before the date including the Acceptance Time. Notwithstanding the foregoing, or anything to the contrary in this Agreement, Parent shall be permitted to make, or cause to be made, in its sole discretion any election under Section 338(g) of the Code with respect to the Company or any of its Subsidiaries.
(b) Promptly following the end of the taxable year of the Company or its Subsidiaries that includes the Acceptance Time, Parent shall make due inquiry with its U.S. Tax Advisors regarding the status of the Company as a PFIC and make such status available to the shareholders of the Company prior to the Acceptance Time (the “Pre-Closing Holders”). In the event the Company is a PFIC for its taxable year that includes the Acceptance Time, Parent shall use commercially reasonable efforts to make available to the Pre-Closing Holders any information reasonably required by such Pre-Closing Holders to file any Tax Returns relating to their ownership of the Company prior to the Acceptance Time, including a PFIC Annual Information Statement and any other information reasonably necessary to permit such Pre-Closing Holders to make or maintain a “Qualified Electing Fund” election under section 1295 of the Code with respect to the Company.
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Section 4.18 Swiss Tax Rulings. The Parent shall prepare and file a request for the Swiss Tax Rulings. The Company and its counsel shall be given a reasonable opportunity to review and timely comment on the request for the Swiss Tax Rulings and any amendments thereto prior to filing of any request for any Swiss Tax Ruling with the competent Swiss Taxing Authorities and Parent shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel. The Company shall use reasonable best efforts to timely assist the Parent with the preparation of the request for the Swiss Tax Rulings, including by providing information as reasonably requested by the Parent or the applicable Swiss Taxing Authorities in connection with such rulings. In the event that a Swiss Taxing Authority refuses to issue a Swiss Tax Ruling, each of the Company and Parent shall consider in good faith any reasonable modifications to the structure of the transactions contemplated in this Agreement that will facilitate receipt of such rulings.
Section 4.19 Old Reserves Tax Ruling. The Company shall prepare and file a Tax ruling request with the Swiss Federal Tax Administration for the purpose of Swiss Withholding Tax confirming that the old reserves practice (Altreservenpraxis) of the Swiss Federal Tax Administration which, if applicable, could lead to Swiss Withholding Tax liabilities of the Company is not applicable in connection with the Transactions.
Section 4.20 Annual Company Shareholder Meeting. In the event that a shareholder or group of shareholders submits (i) a valid motion at the Annual Company Shareholder Meeting or (ii) any proposal not included in any invitation to or agenda for the Annual Company Shareholder Meeting distributed by the Company prior to the date hereof, the Company Board shall recommend the shareholders present or represented at the Annual Company Shareholder Meeting to vote against such motion.
Article
V.
TERMINATION, AMENDMENT AND WAIVER
Section 5.1 Termination. This Agreement may be terminated at any time prior to the Acceptance Time:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (A) the Acceptance Time shall not have occurred on or before the Outside Date; provided, however, that (x) at any time in the five (5) Business Days prior to the Outside Date, if as of such time any of the Offer Conditions set forth in paragraphs (b), (d)(i) or (d)(ii) of Exhibit A (with respect to paragraphs (d)(i) and (d)(ii), solely to the extent that such Restraint arises under the HSR Act or any Antitrust Law) to this Agreement are not satisfied, then Parent may (in its sole discretion) extend the Outside Date until December 31, 2023 upon written notice thereof to the Company (and such date will then be the Outside Date), and (y) at any time in the five (5) Business Days prior to the Outside Date as extended pursuant to clause (x), if as of such time any of the Offer Conditions set forth in paragraphs (b), (d)(i) or (d)(ii) of Exhibit A (with respect to paragraphs (d)(i) and (d)(ii), solely to the extent that such Restraint arises under the HSR Act or any Antitrust Law) to this Agreement are not satisfied and the Company shall have failed to comply with its obligations pursuant to the final sentence of Section 4.5(c), then Parent may (in its sole discretion) extend the Outside Date until February 15, 2024 upon written notice thereof to the Company (and such date will then be the Outside Date), or (B) the Offer shall have expired without extension pursuant to Section 1.1(b) or been terminated in accordance with its terms without Parent having purchased any Shares pursuant thereto; provided, that the right to terminate this Agreement pursuant to this Section 5.1(b)(i) shall not be available to any party whose failure to fulfill in any material respect any of its obligations under this Agreement has been the primary cause of, or the primary factor that resulted in, the event specified in either of the foregoing clauses (A) or (B); or
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(ii) if any court of competent jurisdiction or other Governmental Entity shall have issued a judgment, order, injunction, rule or decree, or taken any other action restraining, enjoining or otherwise prohibiting any of the transactions contemplated by this Agreement and such judgment, order, injunction, rule, decree or other action shall have become final and non-appealable (collectively, a “Restraint”); provided, that the party seeking to terminate this Agreement pursuant to this Section 5.1(b)(ii) shall have used its reasonable best efforts to contest, appeal and remove such judgment, order, injunction, rule, decree, ruling or other action to the extent required under Section 4.5;
(c) by Parent, at any time prior to the Acceptance Time:
(i) if the Company shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement (other than with respect to a breach of Section 4.3, as to which Section 5.1(c)(ii) will apply), or if any representation or warranty of the Company shall have become untrue, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing at the scheduled Expiration Date (A) would result in the failure of an Offer Condition to be satisfied and (B) cannot be or has not been cured by the earlier of (1) the Outside Date and (2) 30 days after the giving of written notice to the Company of such breach or failure; provided, that Parent shall not have the right to terminate this Agreement pursuant to this Section 5.1(c)(i) if Parent is then in material breach of any of its covenants or agreements set forth in this Agreement; or
(ii) if (A) an Adverse Recommendation Change shall have occurred or (B) the Company shall have breached or failed to perform any of its obligations set forth in Section 4.3 in any material respect;
(d) by the Company, at any time prior to the Acceptance Time:
(i) if Parent shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, or if any representation or warranty of Parent shall have become untrue, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing at the scheduled Expiration Date (A) would result in a Parent Material Adverse Effect and (B) cannot be or has not been cured by the earlier of (1) the Outside Date and (2) 30 days after the giving of written notice to Parent of such breach or failure; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 5.1(d)(i) if it is then in material breach of any of its covenants or agreements set forth in this Agreement;
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(ii) in order to accept a Superior Proposal in accordance with Section 4.3(d); provided, that the Company shall have (A) simultaneously with such termination entered into the associated Alternative Acquisition Agreement, (B) otherwise complied with all provisions of Section 4.3(d), including the notice provisions thereof, and (C) paid any amounts required to be paid by the Company pursuant to Section 5.3(b); or
The party desiring to terminate this Agreement pursuant to this Section 5.1 (other than pursuant to Section 5.1(a)) shall give written notice of such termination to the other party specifying the provision or provisions pursuant to which such termination is being effected and such termination shall be effective immediately upon the delivery of written notice in accordance with Section 6.2.
Section 5.2 Effect of Termination. In the event of termination of the Agreement, this Agreement shall immediately become void and have no effect, without any liability or obligation on the part of Parent or the Company, provided, that:
(a) the Confidentiality Agreement and the provisions of this Section 5.2, Section 5.3 (Fees and Expenses), Section 6.2 (Notices), Section 6.5 (Entire Agreement), Section 6.6 (No Third Party Beneficiaries), Section 6.7 (Governing Law), Section 6.8 (Submission to Jurisdiction), Section 6.9 (Assignment; Successors), Section 6.10 (Specific Performance), Section 6.12 (Severability), Section 6.13 (Waiver of Jury Trial) and Section 6.16 (No Presumption Against Drafting Party) shall survive the termination hereof;
(b) the Company and Parent may have liability as provided in Section 5.3; and
(c) no such termination shall relieve any party from any liability or damages arising out of a Willful Breach of any of its representations, warranties, covenants or agreements set forth in this Agreement or fraud, in which case the non-breaching party shall be entitled to all rights and remedies available at Law or in equity.
Section 5.3 Fees and Expenses.
(a) Except as otherwise provided in this Section 5.3, all fees and expenses incurred in connection with this Agreement, the Offer and the other transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Offer is consummated, and all filing fees payable pursuant to the HSR Act or any Foreign Antitrust Laws shall be borne solely by Parent.
(b) In the event that:
(i) (A) an Acquisition Proposal (whether or not conditional) or intention to make an Acquisition Proposal (whether or not conditional) is made directly to the Company’s shareholders or is otherwise publicly disclosed or otherwise communicated to senior management of the Company or the Company Board, (B) this Agreement is terminated by the Company or Parent pursuant to Section 5.1(b)(i) or by Parent pursuant to Section 5.1(c)(i), and (C) within 12 months after the date of such termination, the Company enters into an agreement in respect of any Acquisition Proposal, or recommends or submits an Acquisition Proposal to its shareholders for adoption, or a transaction in respect of any Acquisition Proposal is consummated, which, in each case, need not be the same Acquisition Proposal that was made, disclosed or communicated prior to termination hereof (provided, that for purposes of this clause (C), each reference to “10%” in the definition of “Acquisition Proposal” shall be deemed to be a reference to “50%”);
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(ii) this Agreement is terminated by Parent pursuant to Section 5.1(c)(ii); or
(iii) this Agreement is terminated by the Company pursuant to Section 5.1(d)(ii);
then, in any such event, the Company shall pay to Parent a fee of $23,680,000 (the “Termination Fee”), it being understood that in no event shall the Company be required to pay the Termination Fee on more than one occasion; provided, that the payment by the Company of the Termination Fee pursuant to this Section 5.3 shall not relieve the Company from any liability or damage resulting from a Willful Breach of any of its representations, warranties, covenants or agreements set forth in this Agreement or fraud.
(c) In the event that this Agreement is terminated by either the Company or Parent pursuant to Section 5.1(b)(i) and no Reverse Termination Fee is due pursuant to Section 5.3(e), the Company shall, as promptly as reasonably practicable (and in any event (i) not later than the next Business Day following such termination in the case of a termination by Parent and (ii) prior to or simultaneously with the termination in the case of a termination by the Company), pay to Parent, by wire transfer of immediately available funds, an amount equal to Reimbursable Expenses, with such amount not to exceed $18,000,000 in the aggregate.
(d) Payment of the Termination Fee shall be made by wire transfer of same-day funds to the accounts designated by Parent (i) on the earliest of the execution of a definitive agreement with respect to, submission to the shareholders of, or consummation of, any transaction contemplated by an Acquisition Proposal, as applicable, in the case of a Termination Fee payable pursuant to Section 5.3(b)(i), (ii) as promptly as reasonably practicable after termination (and, in any event, within two Business Days thereof), in the case of termination by Parent pursuant to Section 5.1(c)(ii) or Section 5.1(b)(i), or (iii) simultaneously with, and as a condition to the effectiveness of, termination, in the case of a termination by the Company pursuant to Section 5.1(d)(ii) or Section 5.1(b)(i).
(e) In the event that: (A) this Agreement is terminated by Parent or the Company pursuant to Section 5.1(b)(i), and at such time all Offer Conditions have been met other than any of the Offer Conditions set forth in paragraphs (b), (d)(i) or (d)(ii) of Exhibit A (with respect to paragraphs (d)(i) and (d)(ii), solely to the extent that such order, injunction, decision, directive, decree, Law, or Action arises under, is in respect of or is pursuant to any Antitrust Laws) or (B) this Agreement is terminated by Parent or the Company pursuant to Section 5.1(b)(ii) and the judgment, order, injunction, rule, decree or action arises under, is in respect of or is pursuant to any Antitrust Laws, then, in either event, Parent will promptly pay or cause to be paid to the Company a reverse termination fee (the “Reverse Termination Fee”) of $59,200,000 in cash, but in no event later than two (2) Business Days after such termination in the event of a termination by the Company and concurrently with and as a condition to termination in the event of a termination by Parent. Parent will not be required to pay the Reverse Termination Fee pursuant to this Section 5.3(e) more than once.
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(f) Each of the Company and Parent acknowledges that the agreements contained in this Section 5.3 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the Company and Parent would not enter into this Agreement. Accordingly, if Parent or the Company fails promptly to pay any amounts required to be paid pursuant to this Section 5.3, and, in order to obtain such payment, Parent or the Company, as applicable, commences a suit that results in a judgment against the Company or Parent for the amounts set forth in this Section 5.3 required to be paid by the Company, the Company shall pay to Parent, or Parent shall pay to the Company, its costs and expenses (including reasonable attorneys’ fees and expenses) in connection with such suit, together with interest on the amounts due pursuant to this Section 5.3 from the date such payment was required to be made until the date of payment at the prime lending rate as published in The Wall Street Journal in effect on the date such payment was required to be made.
Section 5.4 Amendment or Supplement. This Agreement may be amended, modified or supplemented by the parties by action taken or authorized by their respective Boards of Directors at any time prior to the Acceptance Time. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each of the parties in interest at the time of the amendment.
Section 5.5 Extension of Time; Waiver. At any time prior to the Acceptance Time, the parties hereto may, by action taken or authorized by their respective Boards of Directors, to the extent permitted by applicable Law, (a) extend the time for the performance of any of the obligations or acts of the other parties, (b) waive any inaccuracies in the representations and warranties of the other parties set forth in this Agreement or any document delivered pursuant hereto or (c) subject to applicable Law, waive compliance with any of the agreements or conditions of the other parties contained herein. Any agreement on the part of a party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder.
Article
VI.
GENERAL PROVISIONS
Section 6.1 Non-Survival of Representations and Warranties. None of the representations, warranties, covenants or agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Acceptance Time, other than those covenants or agreements of the parties which by their terms apply, or are to be performed in whole or in part, after the Acceptance Time.
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Section 6.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly delivered and received hereunder (a) two Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (b) one Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service, (c) immediately upon delivery by hand, or (d) on the date of receipt, if delivered by email (to the extent that no “bounce back” or similar message indicating non-delivery is received with respect thereto), in each case, to the intended recipient as set forth below (or to such other recipient or address as designated in a written notice to the other parties hereto in accordance with this Section 6.2):
(a) if to Parent, to:
Ironwood Pharmaceuticals, Inc.
100 Summer Street, Suite 2300
Boston, MA 02110
| Attention: | John Minardo, Chief Legal Officer | |
| Email: | [*****] | |
| [*****] |
with a copy (which shall not constitute notice) to:
Latham
& Watkins, LLP
1271 Avenue of the Americas
New York, NY 10020
| Attention: | Charles K. Ruck | |
| Daniel E. Rees | ||
| Andrew Clark | ||
| Ian Nussbaum | ||
| E-mail: | Charles.Ruck@lw.com | |
| Daniel.Rees@lw.com | ||
| Andrew.Clark@lw.com | ||
| Ian.Nussbaum@lw.com |
(b) if to Company, to:
VectivBio AG
Aeschenvorstadt 36
4051 Basel
Switzerland
| Attention: | Scott Applebaum, Chief Legal Officer and Corporate Secretary | |
| Email: | [*****] |
with a copy (which shall not constitute notice) to:
Cooley (UK) LLP
22 Bishopsgate
London EC2N 4BQ, UK
| Attention: | Michal Berkner | |
| Brandon Fenn | ||
| E-mail: | mberkner@cooley.com | |
| bfenn@cooley.com |
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Section 6.3 Certain Definitions. For purposes of this Agreement:
(a) “Acceptable Confidentiality Agreement” means an agreement with the Company that contains provisions that require any counterparty thereto (and any of its Affiliates and Representatives) that receive information of, or with respect to, the Company or its Affiliates to keep such information confidential; provided, however, that, in each case, the confidentiality and use provisions contained therein are no less favorable, and the other provisions contained therein are no less favorable in the aggregate, to the Company than the terms of the Confidentiality Agreement; provided, further, that an “Acceptable Confidentiality Agreement” shall not include any provision (i) granting any exclusive right to negotiate with such counterparty (ii) prohibiting the Company or its Affiliates from satisfying its or their obligations hereunder or (iii) requiring the Company or any of its Subsidiaries to pay or reimburse the counterparty’s fees, costs or expenses;
(b) “Affiliate” of any Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person;
(c) “Annual Company Shareholder Approval” means the approval by the Annual Company Shareholder Meeting of all proposals submitted by the Company Board by invitation published in the Swiss Official Gazette of Commerce on May 10, 2023;
(d) “Annual Company Shareholder Meeting” means the annual general meeting of shareholders of the Company scheduled to be held on June 1, 2023;
(e) “Antitrust Laws” means the HSR Act, the Sherman Act of 1890, as amended, the Clayton Antitrust Act of 1914, as amended, the Federal Trade Commission Act of 1914, as amended, and any other federal, state or foreign Law, regulation, or decree designed to prohibit, restrict, or regulate actions for the purpose or effect of monopolization or restraint of trade or significant impediment of effective competition;
(f) “Articles Amendment” means the amendment to the Company Articles in agreement between the parties as of the date hereof, (A) which shall remove (i) the second and third sentence of Article 5 para. 2, (ii) the second sentence of Article 5 para. 4, (iii) Article 5 paras. 5 and 6, and (iv) Article 12 para. 2 and (v) amend Article 12 para. 1, each of which limits a shareholder from exercising, directly or indirectly, voting rights with respect to Shares owned or represented thereby in excess of 18% of the share capital registered in the Commercial Register, or (B) which shall remove any other registration, voting or similar restrictions which would prevent the consummation of the Offer adopted by the Annual Company Shareholder Meeting against the recommendation of the Company Board, in each case subject to the occurrence of, and effective as of, the Acceptance Time;
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(g) “Board Modification” means the election to the Board and the Compensation Committee of the Company Board by the Company shareholders of the individuals designated by Parent pursuant to Section 1.4, in each case subject to the occurrence of, and effective as of, the Acceptance Time;
(h) “Business Day” means any date other than a Saturday, Sunday or other day on which banking institutions in New York, Boston or the canton of Basel-Stadt, Switzerland are obligated by Law or executive order to be closed;
(i) “CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136 (H.R. 748)), and any successor statute(s), together with any regulations, rulings, orders or guidance related thereto issued by any applicable Governmental Entity;
(j) “Collaboration Partners” means any of the Company’s or any of its Subsidiaries’ licensees or licensors or any third party with which the Company or any of its Subsidiaries has entered into a Contract that relates to the research, development, supply, manufacturing, testing, distribution, import, export or commercialization of any Product;
(k) “Company Equity Award” means each Company Stock Option, each award of Company Restricted Shares and each Company RSU Award;
(l) “Company ESPP” means the Company’s 2021 Employee Share Purchase Program;
(m) “Company Insurance Policies” means all insurance policies, self-insurance programs and arrangements and fidelity bonds maintained by the Company or any of its Subsidiaries;
(n) “Company Intellectual Property” means all Intellectual Property owned (whether wholly or jointly with others), licensed to or used or held for use by, the Company or any of its Subsidiaries, including all Owned Company Intellectual Property, all Non-Owned Company Intellectual Property and all Company Registered IP;
(o) “Company Plan” means each “employee benefit plan” (as defined in Section 3(3) of ERISA) (whether or not such plan is subject to ERISA), each bonus, incentive or deferred compensation or equity or equity-based compensation plan, program, policy, agreement or arrangement, and each employment, consulting, severance, change in control, retention, termination, pension, retirement, disability benefit, health, welfare, vacation, life insurance, fringe benefit, supplemental benefit plan, program, policy, agreement, scheme or arrangement, in each case, sponsored, maintained, contributed to or required to be contributed to by the Company or any Subsidiary for the benefit of any Participant, or with respect to which the Company or any Subsidiary has any direct or indirect liability, excluding any “multiemployer plan” (within the meaning of Section 4001(a) of ERISA) and further excluding any statutory plan, program or arrangement that is required under applicable law, other than the laws of the United States, and maintained by any Governmental Entity;
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(p) “Company Registered IP” means (i) issued Patents and pending Patent applications, (ii) Trademark registrations and applications, (iii) domain name registrations and applications (both gTLDs and ccTLDs), and (iv) Copyright registrations and applications that, in each case, are either owned (wholly or jointly with others) by, or exclusively licensed to, the Company or any of its Subsidiaries;
(q) “Company Restricted Share Purchase Agreements” means the Restricted Share Purchase Agreements entered into between the Company and Service Providers, pursuant to which the Service Provider purchased restricted Shares;
(r) “Company Shareholder Approval” means the affirmative vote of at least two thirds of all Shares represented at the Company Shareholder Meeting to adopt and approve the Articles Amendment and, subject to the occurrence of the Acceptance Time and satisfaction of the applicable requirements under Nasdaq Rules, the Delisting, and the affirmative vote of a majority of the Shares represented at the Company Shareholder Meeting to resolve on the Board Modification;
(s) “Company Shareholder Meeting” means the extraordinary general meeting of shareholders of the Company to which the Company Board will submit its proposals for the Company Shareholder Approval;
(t) “Company Stock Plan” means each of the Company’s 2021 Equity Incentive Plan, 2020 Equity Incentive Plan and the 2019 Equity Incentive Plan;
(u) “Company Warrants” means the warrants to purchase Company Shares pursuant to the Warrant Agreements;
(v) “control” (including the terms “controlled,” “controlled by” and “under common control with”) 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 voting securities, by contract or otherwise;
(w) “Copyrights” means all copyrights (including all copyrights in any packaging, package inserts, website content, social media content, marketing or promotional materials, labeling information or other text provided to consumers), mask works, and similar rights, whether registered or unregistered, and all rights in any copyrightable works, in each case, throughout the world, all registrations and applications for any of the foregoing and all extensions, restorations and renewals thereof, and all rights and priorities afforded under any Law with respect to any of the foregoing in any jurisdiction;
(x) “COVID-19” means SARS-CoV-2 or COVID-19, and any variants or evolutions thereof or related or associated epidemics, pandemic or disease outbreaks;
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(y) “COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” social distancing, shut down, closure, sequester or any other Law, order, directive, guideline or recommendation by any Governmental Entity or public health agency in connection with or in response to COVID-19, including, but not limited to, the CARES Act and all guidelines and requirements of OSHA and the Centers for Disease Control and Prevention, such as social distancing, cleaning, and other similar or related measures;
(z) “Delisting” means the delisting of the Shares from Nasdaq;
(aa) “Deregistration” means the deregistration of the Shares under the Exchange Act;
(bb) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder;
(cc) “ERISA Affiliate” means any entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the Company or any of its Subsidiaries, or that is, or was at the relevant time, a member of the same “controlled group” as the Company or any of its Subsidiaries pursuant to Section 4001(a)(14) of ERISA;
(dd) “Existing Credit Agreements” means that certain Term Loan Agreement, dated March 26, 2022, by and among the Company, Kreos UK and the other parties thereto and that certain Convertible Loan Agreement, dated March 26, 2022, by and among the Company, Kreos UK and the other parties thereto, in each case, as amended pursuant to that certain Amendment Deed, dated as of October 12, 2022, by and among the Company, Kreos UK and the other parties thereto;
(ee) “FDA” means the United States Food and Drug Administration, or any successor thereto;
(ff) “FDCA” means the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.), as amended, and the rules and regulations promulgated thereunder;
(gg) “Federal Health Care Program” has the meaning set forth in 42 U.S.C. 1320a-7b(f);
(hh) “Good Clinical Practices” means the applicable requirements for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical trials, protection of human subjects, financial disclosure by clinical investigators, and Review Boards, including as promulgated by the FDA at 21 C.F.R. Parts 50, 54, 56 and 312 and other applicable regulations promulgated under the FDCA, as well as the International Conference on Harmonization Guideline E6(R2) Good Clinical Practice, or any comparable applicable Laws outside the United States;
(ii) “Good Laboratory Practices” means the FDA’s standards for conducting non−clinical laboratory studies codified in 21 C.F.R. Part 58 or any comparable applicable Laws outside the United States;
(jj) “Good Manufacturing Practices” means the current good manufacturing practices for drugs, finished pharmaceutical products and biological products contained in (a) 21 C.F.R. Parts 210, 211, 601, and 610, (b) 21 U.S.C. § 351, or (c) any other requirements of an applicable Governmental Entity in each jurisdiction where any of the Company, its Subsidiaries and a third party acting on the Company or any of its Subsidiaries’ behalf, is undertaking or has undertaken a clinical trial or manufacturing activities as of or prior to the Acceptance Time, as in effect at the time of manufacture;
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(kk) “Healthcare Laws” means (i) all federal and state fraud and abuse Laws, including, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code and the regulations promulgated pursuant to such statutes, (ii) Titles XVIII (42 U.S.C. §1395 et seq.) and XIX (42 U.S.C. §1396 et seq.) of the Social Security Act and any other Law pertaining to or governing a governmental health care program, and the regulations promulgated thereunder, (iii) the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (42 U.S.C. §1395w-101 et seq.) and the regulations promulgated thereunder, (iv) the so-called federal “Sunshine Law” or Open Payments (42 U.S.C. § 1320a-7h) and state or local Laws regulating or requiring reporting of interactions between pharmaceutical manufacturers and members of the healthcare industry and regulations promulgated thereunder, (v) the FDCA, the PHSA and all comparable statutes, rules or regulations of applicable governmental authorities applicable to the ownership, testing, research, development, manufacture, quality, safety, accreditation, packaging, storage, use, distribution, labeling, promotion, sale, offer for sale, import, export or disposal of pharmaceutical products, and (vi) any comparable applicable Laws outside the United States;
(ll) “IND” means an investigational new drug application submitted to the FDA pursuant to 21 C.F.R. Part 312, and any amendments thereto;
(mm) “Indebtedness” means, as of any time, without duplication and with respect to any Person, shall mean (a) any indebtedness for borrowed money (including the issuance of any debt security) to any Person other than the Company, (b) any obligations evidenced by notes, bonds, debentures or similar Contracts to any Person other than the Company or its Subsidiaries, (c) any obligations in respect of letters of credit and bankers’ acceptances, (d) any guaranty of any such obligations described in clauses (a) through (c) of any Person other than the Company or its Subsidiaries or (e) all obligations of the type referred to in clauses (a) though (d) of other Persons secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Liens on any property or asset of such Person (whether or not such obligation is assumed by such Person) (other than, in any case, accounts payable to trade creditors and accrued expenses, in each case arising in the Ordinary Course of Business);
(nn) “Intellectual Property” means all intellectual property and proprietary rights of any kind or nature, whether protected, created or arising under any Law, including the following: (i) Patents, (ii) Trademarks, (iii) Copyrights, (iv) Know-How, (v) all rights in designs, databases, data, collections of data, and compilations of data, (vi) domain names (both gTLDs and ccTLDs), social media tags, handles, and other identifiers, and all accounts therefor, (vii) all rights to sue for past, present, and future infringements, misappropriations, or other violations of any of the foregoing, (viii) all rights to secure or recover the proceeds of the foregoing, including licenses, royalties, income, payments, claims, and damages and (ix) all other rights similar or pertaining to any of the foregoing in any country worldwide;
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(oo) “IP Contracts” means all Contracts (i) under which the Company or any of its Subsidiaries grants any license or sublicense, or other right to any Person with respect to Company Intellectual Property (other than non-disclosure agreements and Contracts granting a non-exclusive right to use Company Intellectual Property which is non-incidental to and not material to the performance under the applicable Contract), (ii) under which the Company or any of its Subsidiaries receives any license or other right from any person with respect to any Intellectual Property (other than (1) non-disclosure agreements, (2) employee invention assignment agreements and similar agreements with independent contractors entered into in the Ordinary Course of Business who have not developed or contributed to the development of material Company Intellectual Property, and (3) Off-the-Shelf Software, or (iii) that contains a covenant not to sue, right of first refusal, right of first negotiation, right of first offer, option, co-existence agreement, settlement agreement, or other right, title or interest in or to (including any right to enforce, defend, or control the prosecution of)) any Intellectual Property;
(pp) “Know-How” means all trade secrets (including those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory and common law), know-how, and similar proprietary rights in confidential information of any kind, inventions (whether patentable or not and whether or not reduced to practice), discoveries, analytic models, improvements, compounds, processes, techniques, assays, chemical and biological materials, devices, methods, patterns, formulations, and specifications;
(qq) “knowledge” of any party means the actual knowledge of any executive officer of such party or other officer having primary responsibility for the relevant matter, after due inquiry and reasonable investigation;
(rr) “Kreos” means Kreos Capital VI (Expert Fund) LP;
(ss) “Kreos UK” means Kreos Capital VI (UK) Limited;
(tt) “Material Adverse Effect” means any event, change, circumstance, occurrence, effect or state of facts that (A) is or would reasonably be expected to be materially adverse to the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole or (B) materially impairs the ability of the Company to consummate, or prevents or materially delays, the Offer or any of the other transactions contemplated by this Agreement or would reasonably be likely to do so; provided, however, that in the case of clause (A) only, Material Adverse Effect shall not include any event, change, circumstance, occurrence, effect or state of facts to the extent resulting from (1) changes or conditions generally affecting the industry in which the Company and its Subsidiaries operate, or the economy or the financial or securities markets, in the United States or Switzerland, (2) the outbreak or escalation of war or acts of terrorism, (3) any acts of god, force majeure events, plagues, pandemics (including COVID-19) or any escalation or worsening or subsequent waves thereof, epidemics, hurricane, tornado, tsunami, flood, volcanic eruption, earthquake, or other natural disaster, (4) any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or similar Laws, directives, restrictions, guidelines, responses or recommendations of or promulgated by any Governmental Entity, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to any pandemic (including COVID-19), (5) any failure, in and of itself, by the Company to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period ending on or after the date hereof (but not, in each case, the underlying cause thereof, unless such cause is otherwise excepted from this definition of Material Adverse Effect), (6) any change in and of itself in the market price or trading volume of the Shares (but not, in each case, the underlying cause thereof, unless such cause is otherwise excepted from this definition of Material Adverse Effect), (7 ) relating to any action or omission taken by the Company at the written request of Parent, or (8) changes in Law or IFRS first proposed after the date hereof; provided, that, (i) with respect to clauses (1), (2), (3) and (4), the impact of such event, change, circumstance, occurrence, effect or state of facts is not disproportionately adverse to the Company and its Subsidiaries, taken as a whole, as compared to other participants in the industry in which the Company and its Subsidiaries operate, and (ii) the facts or occurrences giving rise to or contributing to such change or condition that are not otherwise excluded from the definition of “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect;
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(uu) “Non-Owned Company Intellectual Property” means all Company Intellectual Property that is licensed from a third Person or otherwise used or held for use in the business of the Company or any of its Subsidiaries that is not Owned Company Intellectual Property;
(vv) “Off-the-Shelf Software” means software, other than open source software, obtained from a third party (i) on general commercial terms and that continues to be widely available on such commercial terms, (ii) that is not distributed with or incorporated in any product or services of the Company, Parent or any of their Subsidiaries, as applicable, (iii) that is used for business infrastructure or other internal purposes and (iv) was licensed for fixed payments of less than $250,000 in the aggregate or annual payments of less than $250,000 per year;
(ww) “Owned Company Intellectual Property” means all Company Intellectual Property owned or purported to be owned, whether wholly or jointly with others, by the Company or any of its Subsidiaries;
(xx) “Ordinary Course of Business” means, with respect to any Person, the ordinary course of business consistent with the applicable Person’s past custom and practice;
(yy) “Participant” means any current or former director, officer, employee, individual independent contractor or individual consultant of the Company or any of its Subsidiaries;
(zz) “Patents” means all national, regional and international statutory invention registrations, issued patents, and patent applications of any kind, including all applications and filings made pursuant to the Patent Cooperation Treaty (PCTs), provisional applications, non-provisional applications, converted provisional applications, requests for continued examination, continuation applications, continuation-in-part applications, divisional applications, substitutions, additions, reexaminations, reissue applications, supplemental examinations, oppositions, inter partes review, post-grant review, transitional program for covered business method patent review, interference proceedings, derivation proceedings, all rights in respect of design patents, utility models, certificates of invention, and any similar rights, including so-called pipeline protection, patent term extension, and supplemental protection certificates, all patent rights in inventions disclosed in each such registration, patent or patent application, and all rights and priorities afforded under any Law with respect to any of the foregoing in any jurisdiction, including all earlier-filed applications from which benefit or priority rights are derived, and all extensions, restorations, and renewals of any of the foregoing;
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(aaa) “Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including any Governmental Entity;
(bbb) “Personal Information” means any information or data, in any form, that is capable, directly or indirectly, of being associated with, related to or linked to, or used to identify, describe, contact or locate, a natural Person, device or household, including name, address, telephone number, email address, billing information, driver’s license number, other government-issued identifier, vehicle identification number, online identifier, device identifier, IP address, browsing history, search history or other website, application or online activity or usage data, location data, or biometric data, and/or is considered “personal data”, “personally identifiable information” or “personal information” or any functional equivalent of these terms relevant under any Privacy Laws;
(ccc) “PFIC” means a passive foreign investment company as defined in Section 1297(a) of the Code.
(ddd) “PFIC Annual Information Statement” means a PFIC Annual Information Statement as described in Treasury Regulation Section 1.1295-1(g)(1).
(eee) “PHSA” means the Public Health Service Act (42 U.S.C. § 201 et seq.), as amended, and the rules and regulations promulgated thereunder;
(fff) “Privacy Laws” means any applicable Law, rules, guidance, standards and guidelines from Governmental Entities, in each case as amended, consolidated, re-enacted or replaced from time to time, relating to privacy, data security, data protection, electronic mail, telephone and text message communication, data breach notification, Processing and security of payment card information, cookies, trackers and collection, Processing of Personal Information, including the European General Data Protection Regulation of April 27, 2016 (Regulation (EU) 2016/679) or any implementing or equivalent national applicable Laws, the UK Data Protection Act 2018 (“DPA”) and the UK General Data Protection Regulation as defined by the DPA as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations 2019 (together with the DPA, the “UK GDPR”), the Privacy and Electronic Communications Directive 2002/58/EC and national implementing Laws, the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais), as well as U.S. federal and state applicable Laws, including the Health Insurance Portability and Accountability Act of 1996 (18 U.S.C. §§669, 1035, 1347 and 1518; 42 U.S.C. §1320d et seq.), the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, the Children’s Online Privacy Protection Act, the California Consumer Privacy Act of 2018, the California Privacy Rights Act, and the New York SHIELD Act;
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(ggg) “Process”, “Processed” or “Processing” means any operation or set of operations which is performed on Personal Information, such as the use, collection, processing, storage, recording, organization, adaption, alteration, transfer, retrieval, consultation, disclosure, dissemination or combination of such Personal Information, and/or is considered “processing” by any applicable Laws and/or Privacy Requirements;
(hhh) “Products” means (i) Apraglutide, (ii) any other product that the Company or any of its Subsidiaries has developed, tested, manufactured, distributed, marketed or sold, or is developing, testing, manufacturing, distributing, marketing, or selling and (iii) any other products currently under preclinical or clinical development by the Company or any of its Subsidiaries;
(iii) “Reimbursable Expenses” means all documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, consultants, financial advisors, investment bankers and other advisors) incurred by Parent or on its behalf in connection with or related to the authorization, preparation, negotiation, execution, financing and performance of this Agreement and all other matters contemplated hereby;
(jjj) “Review Board” means all institutional review boards, privacy boards, data safety monitoring boards or ethics committees responsible for review, oversight, or approval of any clinical trial involving a Product in any jurisdiction;
(kkk) “Service Provider” means, at any relevant time, any director, officer, employee (whether temporary, part-time or full-time), individual consultant or individual independent contractor of the Company or any of its Subsidiaries;
(lll) “Software” means computer programs and applications (whether in source code, object or executable code form), including firmware, software compilations, software implementations of algorithms, software tool sets, compilers, software implementations of application programming interfaces, software implementations of databases and software development tools;
(mmm) “Subsidiary” means, with respect to any Person, any other Person of which stock or other equity interests having ordinary voting power to elect at least 50% of the board of directors or other governing body are owned, directly or indirectly, by such first Person;
(nnn) “Swiss Code of Obligations” means the Swiss Code of Obligations as of March 30, 1911, as amended (SR 220);
(ooo) “Swiss Merger Act” means the Swiss Federal Act on Merger, Demerger, Transformation and Transfer of Assets of October 3, 2003 (SR 221.301);
(ppp) “Swiss Tax Rulings” means (i) the Tax ruling to be filed with the Cantonal Tax Administration of Basel-Stadt in connection with the Merger confirming that the Merger has no Swiss corporate income tax consequences for the Company and Merger Sub, and confirming certain Swiss corporate income tax consequences for the Merger Sub such as the continued use of any tax-relevant losses carried forward and the continuation of any holding periods of participations for the purpose of the application of the participation exemption, (ii) the Tax ruling to be filed with the Swiss Federal Tax Administration in connection with the Offer and the Merger confirming that neither the Merger, including, for the avoidance of doubt, the payment of the Offer Price to the remaining Company shareholders, nor the Offer has Swiss Withholding Tax, Swiss issuance stamp Tax or Swiss securities transfer stamp Tax consequences, and (iii) a filing regarding the treaty eligibility of the Parent under Article 10 paragraph 2(a) of the Double Taxation Agreement Switzerland-USA;
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(qqq) “Swiss Withholding Tax” means Taxes imposed under the Swiss Federal Tax Act on the Withholding Tax of 13 October 1965 together with the related ordinances, regulations and guidelines, all as amended and applicable from time to time;
(rrr) “Tax Return” means any return, declaration, report, certificate, bill, election, claim for refund, information return, statement or other written information and any other document filed or supplied or required to be filed or supplied to any Governmental Entity with respect to Taxes, including any schedule, attachment or supplement thereto, and including any amendment thereof;
(sss) “Swiss Stamp Duties Act” means the Swiss Federal Act on Stamp Duties of June 27, 197, as amended (SR 641.10);
(ttt) “Taxes” means all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, stock, ad valorem, transfer, transaction, franchise, profits, gains, registration, license, wages, lease, service, service use, employee and other withholding, social security, unemployment, welfare, disability, payroll, employment, excise, severance, stamp, environmental, occupation, workers’ compensation, premium, real property, personal property, windfall profits, net worth, capital, value-added, alternative or add-on minimum, customs duties, estimated and other taxes, fees, assessments, charges or levies, in each case, in the nature of a tax (whether imposed directly or through withholding and including taxes of any third party in respect of which a Person may have a duty to collect or withhold and remit and any amounts resulting from the failure to file any Tax Return), whether disputed or not, together with any interest and any penalties, additions to tax or additional amounts with respect thereto;
(uuu) “Trademarks” means all trademarks, trade names, trade dress, service marks, logos, trade styles, certification marks, collective marks, designs, product configuration rights, industrial designs, and other identifiers of source, origin, or quality, and all other general intangibles of a like nature, whether registered or unregistered, all registrations and applications for any of the foregoing and all renewals thereof, all rights and priorities afforded under any Law with respect to any of the foregoing in any jurisdiction and all goodwill associated with any of the foregoing;
(vvv) “U.S. Tax Advisors” means one of Deloitte, Ernst & Young (EY), KPMG, or PricewaterhouseCoopers (PwC).
(www) “Warrant Agreements” means that certain Warrant Agreement, dated as of March 26, 2022, by and between the Company and Kreos and that certain Second Warrant Agreement, dated as of October 12, 2022, by and between the Company and Kreos; and
(xxx) “Willful Breach” means a material breach of this Agreement that is the consequence of an act or omission by the breaching party with the knowledge that the taking of such act or failure to take such action would reasonably be likely to constitute a material breach of this Agreement.
Section 6.4 Interpretation. When a reference is made in this Agreement to a Section, Article, Exhibit or Schedule such reference shall be to a Section, Article, Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Exhibit or Schedule are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” References to days mean calendar days unless otherwise specified. The Company shall be deemed to have disclosed or made available materials or documents referenced in this Agreement if the same has been made available to Parent by posting such materials in the “data room” established in connection herewith by 11:59 p.m. ET on the date that is two Business Days before the date of the execution and delivery of this Agreement.
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Section 6.5 Entire Agreement. This Agreement (including the Exhibits hereto), the Company Disclosure Letter, the Parent Disclosure Letter, the Confidentiality Agreement and the Support Agreements constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings among the parties with respect to the subject matter hereof and thereof; provided that for avoidance of doubt, the Confidentiality Agreement shall survive any termination of this Agreement and shall continue in full force and effect until the earlier to occur of (a) the Acceptance Time and (b) the date on which the Confidentiality Agreement expires in accordance with its terms or is validly terminated by the parties thereto. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT OR ANY OF ITS REPRESENTATIVES, ON THE ONE HAND, NOR THE COMPANY OR ANY OF ITS REPRESENTATIVES, ON THE OTHER HAND, MAKES ANY REPRESENTATIONS OR WARRANTIES TO THE OTHER, AND EACH PARTY HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), OR AS TO THE ACCURACY OR COMPLETENESS OF ANY OTHER INFORMATION, MADE (OR MADE AVAILABLE BY) BY ITSELF OR ANY OF ITS REPRESENTATIVES, WITH RESPECT TO, OR IN CONNECTION WITH, THE NEGOTIATION, EXECUTION OR DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER’S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
Section 6.6 No Third-Party Beneficiaries.
(a) Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement, except for Section 4.9 (which shall be for the benefit of the current or former directors and officers of the Company as of the Acceptance Time).
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(b) The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 6.7 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Delaware (other than those provisions set forth herein that are required to be governed by the Laws of Switzerland), without regard to the Laws of any other jurisdiction that might be applied because of the conflicts of Laws principles of the State of Delaware.
Section 6.8 Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its Affiliates against any other party or its Affiliates shall be brought and determined in the Court of Chancery of the State of Delaware, provided, that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then any such legal action or proceeding may be brought in any federal or state court located in the State of Delaware. Each of the parties hereby irrevocably submits to the jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 6.9 Assignment; Successors. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of Law or otherwise, by any party without the prior written consent of the other parties, and any such assignment without such prior written consent shall be null and void; provided, however, that Parent may (a) assign, in its sole discretion, any or all of its or its controlled Affiliates’ rights, interests and obligations under this Agreement to (i) any of its Affiliates at any time, provided that no such assignment shall relieve Parent of its obligations hereunder, or (ii) after the Acceptance Time, to any Person, and (b) designate one or more of its controlled Affiliates to perform its or its controlled Affiliates’ respective obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
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Section 6.10 Specific Performance. The parties agree that irreparable damage would occur in the event that the parties hereto do not perform the provisions of this Agreement in accordance with its terms or otherwise breach such provisions. Accordingly, prior to any termination of this Agreement pursuant to Section 5.1, the parties acknowledge and agree that each party shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the Court of Chancery of the State of Delaware, provided, that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then in any federal or state court located in the State of Delaware, this being in addition to any other remedy to which such party is entitled at Law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at Law would be adequate and (b) any requirement under any Law to post security as a prerequisite to obtaining equitable relief. Any party’s pursuit of any injunction or specific performance at any time will not be deemed an election of remedies or waiver of the right to pursue any other right or remedy to which such party may be entitled, including the right to pursue remedies for liabilities or damages incurred or suffered by a party in the case of a breach of this Agreement involving a Willful Breach or fraud.
Section 6.11 Currency. All references to “dollars” or “$” or “US$” in this Agreement refer to United States dollars, and all references to “CHF” in this Agreement are to the lawful currency of Switzerland.
Section 6.12 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
Section 6.13 Waiver of Jury Trial. EACH OF PARENT AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF PARENT OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF. 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 LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATION OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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Section 6.14 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.
Section 6.15 .pdf Signature. This Agreement may be executed by .pdf signature and a .pdf signature shall constitute an original for all purposes.
Section 6.16 No Presumption Against Drafting Party. Each of Parent and the Company acknowledges that each party to this Agreement has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of Law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| IRONWOOD PHARMACEUTICALS, INC. | ||
| By: | /s/ Tom McCourt | |
| Name: Tom McCourt | ||
| Title: Chief Executive Officer | ||
| VECTIVBIO HOLDING AG | ||
| By: | /s/ Luca Santarelli | |
| Name: Luca Santarelli | ||
| Title: Chief Executive Officer | ||
| By: | /s/ Claudia D’Augusta | |
| Name: Claudia D’Augusta | ||
| Title: Chief Financial Officer | ||
Signature Page to Transaction Agreement
Exhibit A
CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer or the Agreement (as defined below), Parent shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to Parent’s obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer), to pay for any Shares tendered and not validly withdrawn pursuant to the Offer and, subject to the terms of the Agreement, may delay or extend the acceptance for payment of or payment for Shares or may terminate or amend the Offer, if:
(a) prior to the Expiration Date, there shall not have been validly tendered (not counting as validly tendered any Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) and not withdrawn a number of Shares that, together with the Shares, if any, then owned by Parent or any of its Subsidiaries, would represent at least one Share more than 80% of the number of Shares issued and outstanding at the Expiration Date (excluding any Shares held by the Company or any of its Subsidiaries) (the “Minimum Condition”);
(b) prior to the Expiration Date, (i) the applicable waiting period (and any extension thereof) under the HSR Act in respect of the transactions contemplated by this Agreement shall not have expired or been terminated and (ii) any other waivers, approvals and waiting periods under the Antitrust Laws specified in Section 4.5(b) of the Company Disclosure Letter with respect to the Transactions shall not have been obtained, terminated or expired (collectively, the “Antitrust Condition”);
(c) prior to the Expiration Date, the Company shareholders have not effected the Articles Amendment or the Board Modification;
(d) any of the following conditions shall exist or shall have occurred and be continuing at the Expiration Date:
(i) any order, injunction, decision, directive or decree shall have been issued (and still be in effect) by any Governmental Entity of competent jurisdiction preventing the consummation of the Offer, or any Law shall have been enacted or deemed applicable to the Offer (and still be in effect) by any Governmental Entity that prohibits or makes illegal the consummation of the Offer;
(ii) there shall be instituted and pending litigation by any Governmental Entity seeking any Non-Required Remedy;
(iii) since the date of the Agreement, there shall have occurred a Material Adverse Effect;
A-1
(iv) the Company shall have breached or failed to comply in any material respect with any of its obligations, covenants or agreements under the Agreement,
(v) (A) any representation or warranty of the Company contained in Section 2.9(b) shall fail to be true and correct in all respects, as of the date of the Agreement and as of the Acceptance Time with the same force and effect as if made on and as of such date; (B) the representations and warranties set forth in the first and second sentences of Section 2.2(a) and the first sentence of Section 2.2(b) shall not be true and correct in all but de minimis respects, as of the date of the Agreement and as of the Acceptance Time, as though made as of the Acceptance Time (except representations and warranties that by their terms speak specifically as of another date or time, in which case as of such other date or time); (C) any of the representations and warranties set forth in Section 2.1, Section 2.2 (other than the first and second sentences of Section 2.2(a) and the first sentence of Section 2.2(b)), Section 2.4, Section 2.20, and Section 2.24 shall not be true and correct in all material respects (disregarding any “materiality,” “Company Material Adverse Effect” or other similar qualifications set forth in all such representations or warranties) as of the date of the Agreement and as of the Acceptance Time as though made as of the Acceptance Time (except representations and warranties that by their terms speak specifically as of another date or time, in which case as of such other date or time); and (D) any of the representations and warranties of the Company set forth in this Agreement (other than the representations set forth in clauses (A)-(C) above) disregarding any “materiality,” “Company Material Adverse Effect” or other similar qualifications set forth in all such representations or warranties, shall not be true and correct in all respects as of the date of the Agreement and as of the Acceptance Time as though made as of the Acceptance Time (except representations and warranties that by their terms speak specifically as of another date or time, in which case as of such other date or time), except in the case of this clause (D), where the failure of such representations and warranties not to be true and correct (disregarding any “materiality,” “Company Material Adverse Effect” or other similar qualifications set forth in all such representations or warranties) have not had and would not reasonably be expected have, individually or in the aggregate, a Company Material Adverse Effect;
(vi) the Company shall not have delivered to Parent a certificate, signed on behalf of the Company by its chief executive officer or chief financial officer, certifying that the conditions set forth in clauses (d)(iii), (d)(iv) and (d)(v) have been satisfied; or
(e) the Agreement shall have been terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Parent and may be asserted by Parent regardless of the circumstances giving rise to such condition, in whole or in part at any applicable time or from time to time in their sole discretion. The foregoing conditions shall be in addition to, and not a limitation of, the right of Parent to extend, terminate or modify the Offer pursuant to the terms and conditions of the Agreement. All conditions (except for the Minimum Condition) may be waived by Parent in its sole discretion in whole or in part at any applicable time or from time to time, in each case subject to the terms and conditions of the Agreement and the applicable rules and regulations of the SEC. The failure of Parent at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.
A-2
Capitalized terms used in this Exhibit A and not otherwise defined shall have the respective meanings assigned thereto in the Agreement to which this Exhibit A is attached.
A-3
Exhibit B
FORM OF SUPPORT AGREEMENT
[See attached]
B-1
Exhibit 10.1
Execution Version
CREDIT AGREEMENT
dated as of May 21, 2023
by and among
IRONWOOD PHARMACEUTICALS, INC.,
as Borrower
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
and
as Collateral Agent
CITIZENS BANK, N.A.,
as Co-Administrative Agent
and
THE LENDERS PARTY HERETO
CITIBANK, N.A.,
CITIZENS BANK, N.A.,
JPMORGAN CHASE BANK, N.A.,
RBC CAPITAL MARKETS, LLC1,
and
WELLS FARGO SECURITIES, LLC
as Joint Lead Arrangers and Joint Bookrunners
1 RBC Capital Markets, LLC is a brand name for the capital markets activities of Royal Bank of Canada and its affiliates
TABLE OF CONTENTS
Page
| Article I. | ||
| Definitions and Accounting Terms | ||
| Section 1.01 | Defined Terms | 1 |
| Section 1.02 | Other Interpretive Provisions | 68 |
| Section 1.03 | Accounting and Finance Terms; Accounting Periods; Determination of Fair Market Value | 69 |
| Section 1.04 | Rounding | 70 |
| Section 1.05 | References to Agreements, Laws, Etc. | 70 |
| Section 1.06 | Times of Day | 70 |
| Section 1.07 | Available Amount Transactions | 70 |
| Section 1.08 | Pro Forma Calculations; GAAP; Limited Condition Transactions; Basket and Ratio Compliance | 70 |
| Section 1.09 | Currency Equivalents Generally | 74 |
| Section 1.10 | [Reserved] | 75 |
| Section 1.11 | Cashless Rollovers; Permitted Debt Exchanges | 75 |
| Article II. The Commitments and Borrowings | ||
| Section 2.01 | [Reserved] | 75 |
| Section 2.02 | Revolving Loans | 76 |
| Section 2.03 | [Reserved] | 77 |
| Section 2.04 | Issuance of Letters of Credit and Purchase of Participations Therein | 77 |
| Section 2.05 | Conversion/Continuation | 84 |
| Section 2.06 | Availability | 85 |
| Section 2.07 | Prepayments | 86 |
| Section 2.08 | Termination or Reduction of Commitments | 87 |
| Section 2.09 | Repayment of Loans | 88 |
| Section 2.10 | Interest | 88 |
| Section 2.11 | Fees | 89 |
| Section 2.12 | Computation of Interest and Fees | 90 |
| Section 2.13 | Evidence of Indebtedness | 90 |
| Section 2.14 | Payments Generally | 91 |
| Section 2.15 | Sharing of Payments, Etc. | 92 |
| Section 2.16 | Incremental Borrowings | 93 |
| Section 2.17 | Refinancing Amendments | 96 |
| Section 2.18 | Extensions of Loans | 97 |
| Section 2.19 | Defaulting Lenders | 99 |
| Article III. | ||
| Taxes, Increased Costs Protection and Illegality | ||
| Section 3.01 | Taxes | 101 |
| Section 3.02 | Illegality | 105 |
| Section 3.03 | Inability to Determine Rates | 105 |
| Section 3.04 | Increased Cost and Reduced Return; Capital Adequacy; Reserves on Benchmark Rate Loans | 106 |
| Section 3.05 | Funding Losses | 107 |
| Section 3.06 | Matters Applicable to All Requests for Compensation | 107 |
| Section 3.07 | Replacement of Lenders Under Certain Circumstances | 108 |
| Section 3.08 | Survival | 109 |
| Article IV. | ||
| Conditions Precedent to Borrowings | ||
| Section 4.01 | Conditions to Initial Borrowing | 109 |
| Section 4.02 | Conditions to All Borrowings After the Closing Date | 111 |
| Article V. | ||
| Representations and Warranties | ||
| Section 5.01 | Existence, Qualification and Power; Compliance with Laws | 111 |
| Section 5.02 | Authorization; No Contravention | 112 |
| Section 5.03 | Governmental Authorization | 112 |
| Section 5.04 | Binding Effect | 113 |
| Section 5.05 | Financial Statements; No Material Adverse Effect | 113 |
| Section 5.06 | Litigation | 113 |
| Section 5.07 | Labor Matters | 113 |
| Section 5.08 | Ownership of Property; Liens | 113 |
| Section 5.09 | Environmental Matters | 114 |
| Section 5.10 | Taxes | 114 |
| Section 5.11 | ERISA Compliance | 114 |
| Section 5.12 | Subsidiaries | 115 |
| Section 5.13 | Margin Regulations; Investment Company Act | 115 |
| Section 5.14 | Disclosure | 115 |
| Section 5.15 | Intellectual Property; Licenses, Etc. | 115 |
| Section 5.16 | Solvency | 115 |
| Section 5.17 | USA PATRIOT Act, FCPA and OFAC | 116 |
| Section 5.18 | Collateral Documents | 116 |
| Section 5.19 | Use of Proceeds | 116 |
| Article VI. | ||
| Affirmative Covenants | ||
| Section 6.01 | Financial Statements | 117 |
| Section 6.02 | Certificates; Other Information | 118 |
| Section 6.03 | Notices | 120 |
| Section 6.04 | Payment of Certain Taxes | 121 |
| Section 6.05 | Preservation of Existence, Etc. | 121 |
| Section 6.06 | Maintenance of Properties | 121 |
| Section 6.07 | Maintenance of Insurance | 121 |
| Section 6.08 | Compliance with Laws | 122 |
| Section 6.09 | Books and Records | 122 |
| Section 6.10 | Inspection Rights | 122 |
| Section 6.11 | Covenant to Guarantee Obligations and Give Security | 123 |
| Section 6.12 | Further Assurances | 124 |
ii
| Section 6.13 | Designation of Subsidiaries | 125 |
| Section 6.14 | [Reserved] | 126 |
| Section 6.15 | Post-Closing Matters | 126 |
| Section 6.16 | Use of Proceeds | 126 |
| Article VII. | ||
| Negative Covenants | ||
| Section 7.01 | Liens | 126 |
| Section 7.02 | Investments | 131 |
| Section 7.03 | Indebtedness | 135 |
| Section 7.04 | Fundamental Changes | 139 |
| Section 7.05 | Dispositions | 140 |
| Section 7.06 | Restricted Payments | 143 |
| Section 7.07 | Transactions with Affiliates | 146 |
| Section 7.08 | Negative Pledge | 147 |
| Section 7.09 | Junior Debt Prepayments; Amendments to Junior Financing Documents | 149 |
| Section 7.10 | Change in Nature of Business | 151 |
| Article VIII. | ||
| Financial Covenant | ||
| Section 8.01 | Financial Covenant | 151 |
| Article IX. | ||
| Events of Default and Remedies | ||
| Section 9.01 | Events of Default | 152 |
| Section 9.02 | Remedies upon Event of Default | 154 |
| Section 9.03 | Application of Funds | 155 |
| Article X. | ||
| Administrative Agent and Other Agents | ||
| Section 10.01 | Appointment and Authority of the Administrative Agent | 156 |
| Section 10.02 | Rights as a Lender | 156 |
| Section 10.03 | Exculpatory Provisions | 157 |
| Section 10.04 | Reliance by the Agents | 158 |
| Section 10.05 | Delegation of Duties | 159 |
| Section 10.06 | Non-Reliance on Agents and Other Lenders; Disclosure of Information by Agents | 159 |
| Section 10.07 | Indemnification of Agents | 160 |
| Section 10.08 | No Other Duties; Other Agents, Lead Arrangers, Managers, Etc. | 161 |
| Section 10.09 | Resignation of Administrative Agent or Collateral Agent | 161 |
| Section 10.10 | Administrative Agent May File Proofs of Claim; Credit Bidding | 162 |
| Section 10.11 | Collateral and Guaranty Matters; Exercise of Remedies | 164 |
| Section 10.12 | Appointment of Supplemental Administrative Agents | 167 |
| Section 10.13 | Intercreditor Agreements | 167 |
| Section 10.14 | Cash Management Agreements and Secured Hedge Agreements | 168 |
| Section 10.15 | Certain ERISA Matters | 168 |
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| Article XI. | ||
| Miscellaneous | ||
| Section 11.01 | Amendments, Waivers, Etc. | 171 |
| Section 11.02 | Notices and Other Communications; Facsimile Copies | 178 |
| Section 11.03 | No Waiver; Cumulative Remedies | 180 |
| Section 11.04 | Attorney Costs and Expenses | 180 |
| Section 11.05 | Indemnification by the Borrower | 181 |
| Section 11.06 | Marshaling; Payments Set Aside | 182 |
| Section 11.07 | Successors and Assigns | 183 |
| Section 11.08 | Confidentiality | 189 |
| Section 11.09 | Set-off | 191 |
| Section 11.10 | Interest Rate Limitation | 191 |
| Section 11.11 | Counterparts; Integration; Effectiveness; Entire Agreement | 192 |
| Section 11.12 | Electronic Execution of Assignments and Certain Other Documents | 192 |
| Section 11.13 | Survival | 192 |
| Section 11.14 | Severability | 192 |
| Section 11.15 | GOVERNING LAW | 193 |
| Section 11.16 | WAIVER OF RIGHT TO TRIAL BY JURY | 194 |
| Section 11.17 | Limitation of Liability | 194 |
| Section 11.18 | Use of Name, Logo, Etc. | 194 |
| Section 11.19 | USA PATRIOT Act Notice | 195 |
| Section 11.20 | Service of Process | 195 |
| Section 11.21 | No Advisory or Fiduciary Responsibility | 195 |
| Section 11.22 | Binding Effect | 196 |
| Section 11.23 | Obligations Several; Independent Nature of Lender’s Rights | 196 |
| Section 11.24 | Headings | 196 |
| Section 11.25 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 196 |
| Section 11.26 | Acknowledgment Regarding Any Supported QFCs | 196 |
| Section 11.27 | Disqualified Lenders | 197 |
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SCHEDULES
| Schedule 1.01(b) | Existing Letters of Credit |
| Schedule 1.01(c) | Hedge Banks |
| Schedule 2.01 | Commitments |
| Schedule 5.06 | Litigation |
| Schedule 5.07 | Labor Matters |
| Schedule 5.11(a) | ERISA Compliance |
| Schedule 5.12 | Subsidiaries |
| Schedule 6.15 | Post-Closing Matters |
| Schedule 7.01(c) | Existing Liens |
| Schedule 7.02(b) | Existing Investments |
| Schedule 7.03(c) | Existing Indebtedness |
| Schedule 11.02 | Administrative Agent’s Office, Certain Addresses for Notices |
EXHIBITS
Form of
| A-1 | Committed Loan Notice |
| A-2 | Conversion/Continuation Notice |
| A-3 | Issuance Notice |
| B | Revolving Loan Note |
| C | Compliance Certificate |
| D-1 | Assignment and Assumption |
| D-2 | Affiliate Assignment Notice |
| E | Guaranty |
| F | Security Agreement |
| G-1 | Non-Bank Certificate (For Foreign Lenders That Are Not Partnerships or Pass-Thru Entities For U.S. Federal Income Tax Purposes) |
| G-2 | Non-Bank Certificate (For Foreign Lenders That Are Partnerships or Pass-Thru Entities For U.S. Federal Income Tax Purposes) |
| G-3 | Non-Bank Certificate (For Foreign Participants That Are Not Partnerships or Pass-Thru Entities For U.S. Federal Income Tax Purposes) |
| G-4 | Non-Bank Certificate (For Foreign Participants That Are Partnerships or Pass-Thru Entities For U.S. Federal Income Tax Purposes) |
| H | Global Intercompany Note |
| I | Solvency Certificate |
| J | Prepayment Notice |
| K-1 | Junior Lien Intercreditor Agreement |
| K-2 | Equal Priority Intercreditor Agreement |
| L | Auction Procedures |
| M | Form of Secured Party Joinder |
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of May 21, 2023, by and among Ironwood Pharmaceuticals, Inc., a Delaware corporation (the “Borrower”), Wells Fargo Bank, National Association, as administrative agent under the Loan Documents (in such capacity, including any successor thereto, the “Administrative Agent”) and as collateral agent under the Loan Documents (in such capacity, including any successor thereto, the “Collateral Agent”), each Issuing Bank from time to time party hereto, and each lender from time to time party hereto (collectively, the “Lenders” and, individually, a “Lender”). Capitalized terms used herein are defined as set forth in Section 1.01.
PRELIMINARY STATEMENTS
The Borrower has requested that upon satisfaction (or waiver) of the conditions precedent set forth in Article IV, the Lenders extend credit to the Borrower in the form of $500,000,000 of Revolving Commitments on the Closing Date as a first lien secured credit facility and from time to time, the Revolving Lenders make Revolving Loans and the Issuing Banks issue Letters of Credit, pursuant to the terms of this Agreement.
The proceeds of the Loans will be used for working capital purposes, general corporate purposes and to finance transactions not prohibited by this Agreement, including Permitted Acquisitions. The applicable Lenders have indicated their willingness to make Loans, and each Issuing Bank has indicated its willingness to issue Letters of Credit, in each case, on the terms and subject only to the conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
Article I.
Definitions and Accounting Terms
Section 1.01 Defined Terms. As used in this Agreement, the following terms have the meanings set forth below:
“Accounting Change” means any change in GAAP, any change in the application of GAAP or the adoption of another internationally recognized accounting standard, including the adoption of IFRS.
“Acquisition Transaction” means the purchase or other acquisition (in one transaction or a series of transactions, including by merger or otherwise) by the Borrower or any Restricted Subsidiary of all or substantially all the property, assets or business of another Person, or assets constituting a business unit, line of business or division of, any Person, or of a majority of the outstanding Equity Interests of any Person, including any Investment which serves to increase the Borrower’s or any Restricted Subsidiary’s equity ownership in any Joint Venture or other Person to an amount in excess (or further in excess) of the majority of the outstanding Equity Interests of such Joint Venture or other Person.
“Additional Lender” means, at any time, any bank, other financial institution or institutional investor that, in any case, is not an existing Lender and that agrees to provide any portion of any,
(a) Incremental Loan in accordance with Section 2.16; or
(b) Credit Agreement Refinancing Indebtedness pursuant to a Refinancing Amendment in accordance with Section 2.17;
provided that each Additional Lender (other than any Person that is an Affiliate of a Lender or an Approved Fund of a Lender at such time) shall be subject to the approval of the Administrative Agent and/or the Issuing Banks (such approval not to be unreasonably withheld, conditioned or delayed), in each case to the extent any such consent would be required from the Administrative Agent under Section 11.07(b)(iii)(B) and/or the Issuing Banks under Section 11.07(b)(iii)(D), respectively, for an assignment of Loans to such Additional Lender.
“Adjusted Term SOFR” means, for the purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the Term SOFR Adjustment; provided that, notwithstanding the foregoing, the “Adjusted Term SOFR” shall in no event be less than 0% per annum with respect to all Revolving Loans.
“Administrative Agent” has the meaning specified in the introductory paragraph to this Agreement. For the avoidance of doubt, Citizens Bank, N.A. shall not have any administrative duties under the Credit Agreement.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Section 11.02, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlled” has the meaning correlative thereto. For the avoidance of doubt, none of the Lead Arrangers, the Agents, or their respective lending affiliates shall be deemed to be an Affiliate of the Loan Parties or any of the Restricted Subsidiaries.
“Agent Parties” has the meaning specified in Section 11.02(e).
“Agent-Related Persons” means the Agents, together with their respective Affiliates, and the officers, directors, shareholders, employees, agents, attorney-in-fact, partners, trustees, advisors and other representatives of such Persons and of such Persons’ Affiliates.
“Agents” means, collectively, the Administrative Agent, the Collateral Agent, the Supplemental Administrative Agents (if any), the Joint Bookrunners and the Lead Arrangers.
“Aggregate Commitments” means the Commitments of all the Lenders.
“Agreement” means this Credit Agreement, as amended, restated, amended and restated, modified or supplemented from time to time in accordance with the terms hereof.
“AHYDO Catch Up Payment” has the meaning specified in Section 7.09(a)(viii).
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“Annual Financial Statements” means the audited consolidated balance sheet of the Borrower and its Restricted Subsidiaries as of December 31, 2021 and December 31, 2022, and the related consolidated statements of income and comprehensive income, stockholders’ equity (deficit), and cash flows for the fiscal year then ended.
“Applicable Benchmark” means,
(a) with respect to the Revolving Facility with respect to which commitments are provided on the Closing Date, Adjusted Term SOFR; and
(b) with respect any Term Loans or any Incremental Facility, as specified in the applicable Incremental Amendment, Extension Amendment or Refinancing Amendment;
provided that if a Benchmark Transition Event has occurred with respect to an Applicable Benchmark for a Facility, then the “Applicable Benchmark” for such Facility means the applicable Benchmark Replacement if such Benchmark Replacement has replaced the Applicable Benchmark for such Facility pursuant to Section 11.01(f).
“Applicable Commitment Fee” means a percentage per annum that shall be equal to,
(a) from the Closing Date until the date the Borrower delivers an Initial Rate Certificate (as defined in the definition of Applicable Rate) to the Administrative Agent, 0.375% per annum, and
(b) thereafter, the applicable rate per annum set forth below under the caption “Applicable Commitment Fee” based upon the Secured Net Leverage Ratio as of the last day of the most recent Test Period as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a):
| Secured Net Leverage Ratio | Applicable Commitment Fee | |||
| Equal to or below 0.50 to 1.00 | 0.30 | % | ||
| Equal to or below 1.00 to 1.00, but above 0.50 to 1.00 | 0.325 | % | ||
| Equal to or below 1.50 to 1.00, but above 1.00 to 1.00 | 0.35 | % | ||
| Equal to or below 2.00 to 1.00, but above 1.50 to 1.00 | 0.375 | % | ||
| Equal to or below 3.00 to 1.00, but above 2.00 to 1.00 | 0.40 | % | ||
| Above 3.00 to 1.00 | 0.425 | % | ||
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No change in the Applicable Commitment Fee shall be effective until three Business Days after the date on which the Administrative Agent shall have received the Initial Rate Certificate or the applicable financial statements and a Compliance Certificate pursuant to Section 6.02(a) calculating the Secured Net Leverage Ratio. At any time the Borrower has not submitted to the Administrative Agent the applicable information as and when required under Section 6.02(a), the Applicable Commitment Fee shall be determined as if the Secured Net Leverage Ratio were in excess of 3.00 to 1.00. Within one Business Day of receipt of the Initial Rate Certificate or the applicable information under Section 6.02(a), the Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable Commitment Fee in effect from such date. In the event that the Initial Rate Certificate or any financial statement or certificate delivered pursuant to Section 6.02(a) is determined to be inaccurate (at a time prior to the satisfaction of the Termination Conditions), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Commitment Fee for any period (an “Applicable Commitment Fee Period”) than the Applicable Commitment Fee applied for such Applicable Commitment Fee Period, then (a) the Borrower shall promptly (and in any event within five Business Days) following such determination deliver to the Administrative Agent a corrected Initial Rate Certificate or correct financial statements and certificate required by Section 6.02(a) for such Applicable Commitment Fee Period, (b) the Applicable Commitment Fee for such Applicable Commitment Fee Period shall be determined as if the Secured Net Leverage Ratio were determined based on the amounts set forth in such correct financial statements and certificates and (c) the Borrower shall promptly (and in any event within ten Business Days) following delivery of such corrected financial statements and certificate pay to the Administrative Agent the accrued additional amounts owing as a result of such increased Applicable Commitment Fee for such Applicable Commitment Fee Period. Notwithstanding anything to the contrary set forth herein, the provisions of this final paragraph (but not any of the other provisions of this definition preceding this final paragraph) may be amended or waived as provided in Section 11.01(a)(i).
“Applicable Commitment Fee Period” has the meaning specified in the definition of “Applicable Commitment Fee.”
“Applicable Decimal Place” has the meaning specified in Section 1.04.
“Applicable Law” means, as to any Person, all applicable Laws binding upon such Person or to which such a Person is subject.
“Applicable Rate” means:
(a) Initially, with respect to Revolving Loans a percentage per annum equal to, (i) for Benchmark Rate Loans, 2.50% and (ii) for Base Rate Loans, 1.50%; provided that within five Business Days of the Initial Extension Date, the Borrower shall deliver a calculation of the Secured Net Leverage Ratio as of the Initial Extension Date (the “Initial Rate Certificate”) to the Administrative Agent and the “Applicable Rate” for Revolving Loans shall be the applicable rate per annum set forth below under the caption “Alternate Base Rate Spread” or “Benchmark Rate Spread,” respectively, based upon the Secured Net Leverage Ratio received by the Administrative Agent pursuant to this proviso:
| Secured Net Leverage Ratio | Alternate Base Rate Spread | Benchmark Rate Spread | ||||||
| Equal to or below 0.50 to 1.00 | 0.75 | % | 1.75 | % | ||||
| Equal to or below 1.00 to 1.00, but above 0.50 to 1.00 | 1.00 | % | 2.00 | % | ||||
| Equal to or below 1.50 to 1.00, but above 1.00 to 1.00 | 1.25 | % | 2.25 | % | ||||
| Equal to or below 2.00 to 1.00, but above 1.50 to 1.00 | 1.50 | % | 2.50 | % | ||||
| Equal to or below 3.00 to 1.00, but above 2.00 to 1.00 | 1.75 | % | 2.75 | % | ||||
| Above 3.00 to 1.00 | 2.00 | % | 3.00 | % | ||||
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(b) thereafter, with respect to the Revolving Loans, the “Alternative Base Rate Spread” or “Benchmark Rate Spread”, respectively, set forth above based upon the Secured Net Leverage Ratio as of the last day of the most recent Test Period as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a);
No change in the Applicable Rate set forth above resulting from a change in the Secured Net Leverage Ratio, shall be effective until three Business Days after the date on which the Administrative Agent shall have received the Initial Rate Certificate or the applicable financial statements and a Compliance Certificate pursuant to Section 6.02(a) calculating the Secured Net Leverage Ratio. At any time the Borrower has not submitted to the Administrative Agent the applicable information as and when required under Section 6.02(a), the Applicable Rate for Revolving Loans shall be determined as if the Secured Net Leverage Ratio were in excess of 3.00 to 1.00. Within one Business Day of receipt of the Initial Rate Certificate or the applicable information under Section 6.02(a), the Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable Rate in effect from such date. In the event that the Initial Rate Certificate or any financial statement or certificate delivered pursuant to Section 6.02(a) is determined to be inaccurate (at a time prior to the satisfaction of the Termination Conditions), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Rate for any period than the Applicable Rate applied for such period, then (a) the Borrower shall promptly (and in any event within five Business Days) following such determination deliver to the Administrative Agent a corrected Initial Rate Certificate or correct financial statements and certificate required by Section 6.02(a) for such period, (b) the Applicable Rate for such period shall be determined as if the Secured Net Leverage Ratio were determined based on the amounts set forth in such correct financial statements and certificates and (c) the Borrower shall promptly (and in any event within ten Business Days) following delivery of such corrected financial statements and certificates pay to the Administrative Agent the accrued additional interest owing as a result of such increased Applicable Rate for such period. Notwithstanding anything to the contrary set forth herein, the provisions of this final paragraph (but not any of the other provisions of this clause of this definition preceding this final paragraph) may be amended or waived as provided in Section 11.01(a)(i); and
(c) with respect any Incremental Facility, as specified in the applicable Incremental Amendment, Extension Amendment or Refinancing Amendment.
“Appropriate Lender” means, at any time, with respect to Loans of any Class, the Lenders of such Class.
“Approved Bank” has the meaning given to such term in the definition of “Cash Equivalents”.
“Approved Fund” means, with respect to any Lender, any Fund that is administered, advised or managed by (a) such Lender, (b) an Affiliate of such Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages such Lender.
“Assignment and Assumption” means an Assignment and Assumption substantially in the form of Exhibit D-1 or any other form approved by the Administrative Agent.
“Attorney Costs” means all reasonable and documented in reasonable detail fees, expenses, charges and disbursements of any law firm or other external legal counsel.
“Attributable Indebtedness” means, on any date, in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.
“Auto-Renewal Letter of Credit” has the meaning specified in Section 2.04(b)(iii).
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“Available Amount” means, as of any date of determination (such date, the “Reference Date”), with respect to the applicable Available Amount Reference Period, a cumulative amount equal to the sum of, without duplication:
(a) the greater of (i) $100,000,000 and (ii) 50% of TTM Consolidated Adjusted EBITDA as of the applicable date of determination; plus
(b) an amount equal to 50% of cumulative Consolidated Net Income for such Available Amount Reference Period; provided that when measuring such amount (i) Consolidated Net Income will be deemed not to be less than zero in any fiscal year and (ii) Consolidated Net Income for any fiscal year will be deemed to be zero until the financial statements required to be delivered pursuant to Section 6.01(a) for such fiscal year, and the related Compliance Certificate required to be delivered pursuant to Section 6.02(a) for such fiscal year, have been received by the Administrative Agent; plus
(c) the aggregate amount of all Permitted Equity Issuances during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date to the extent Not Otherwise Applied; plus
(d) to the extent not reflected as a return of capital with respect to such Investment for purposes of determining the amount of such Investment pursuant to Section 7.02, the aggregate amount of all cash dividends and other cash distributions received by the Borrower or any Restricted Subsidiary from any Minority Investments or Unrestricted Subsidiaries during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date; plus
(e) to the extent not reflected as a return of capital with respect to such Investment for purposes of determining the amount of such Investment pursuant to Section 7.02, the aggregate amount of all Investments of the Borrower and its Restricted Subsidiaries in any Unrestricted Subsidiary that has been re-designated as a Restricted Subsidiary or that has been merged or consolidated with or into the Borrower or any of its Restricted Subsidiaries (up to the lesser of (i) the fair market value of such Investments of the Borrower and its Restricted Subsidiaries in such Unrestricted Subsidiary at the time of such re-designation or merger or consolidation and (ii) the fair market value of such Investments by the Borrower and its Restricted Subsidiaries in such Unrestricted Subsidiary at the time they were made); plus
(f) to the extent not reflected as a return of capital with respect to such Investment for purposes of determining the amount of such Investment pursuant to Section 7.02, the aggregate amount of all net cash proceeds received by the Borrower or any Restricted Subsidiary in connection with the Disposition of its ownership interest in any Minority Investment or Unrestricted Subsidiary during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date; plus
(g) to the extent (i) not reflected as a return of capital with respect to such Investment for purposes of determining the amount of such Investment pursuant to Section 7.02 and (ii) not in excess of the fair market value of such Investment at the time it was made, the aggregate amount of all returns (including repayments of principal and payments of interest), profits, distributions and similar amounts received in cash or Cash Equivalents by the Borrower and its Restricted Subsidiaries on Investments made by the Borrower or any Restricted Subsidiary in reliance on the Available Amount; plus
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(h) any amount of mandatory prepayments of Pari Passu Lien Debt of the Borrower (and any Permitted Refinancing of the foregoing), to the extent such amount was required to be applied to offer to repurchase or otherwise prepay such Indebtedness and the holders of such Pari Passu Lien Debt declined such repurchase or prepayment; plus
(i) [reserved]; minus
(j) the aggregate amount of any Investments made pursuant to Section 7.02(gg)(i), during the period commencing on the Closing Date and ending on the applicable date of determination (for purposes of this clause, without taking account of the intended usage of the Available Amount on such applicable date of determination in the contemplated transaction).
“Available Amount Reference Period” means, with respect to any applicable date of measurement of the Available Amount, the day after the Closing Date through and including such date of measurement.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Base Rate” means for any day for any Loan or other Obligation a fluctuating rate per annum equal to the highest of,
(a) the Federal Funds Rate plus 0.50%,
(b) the Prime Rate, and
(c) the Applicable Benchmark for such Loan on such day (or, if such day is not a Business Day, the immediately preceding Business Day) for an Interest Period of one month plus 1.00%;
provided that, notwithstanding the foregoing, the “Base Rate” with respect to any Revolving Loans shall in no event be less than 0% per annum.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate.
“Benchmark” means, with respect to any Facility, the rate (other than Base Rate) to which the Applicable Rate is added when computing interest on the principal amount outstanding such Facility.
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“Benchmark Available Tenor” means, as of any date of determination, with respect to any Facility, and with respect to the then-current Applicable Benchmark for such Facility, as applicable,
(a) if such Applicable Benchmark is a term rate, any tenor for such Applicable Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement, or
(b) otherwise, any payment period for interest calculated with reference to such Applicable Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Applicable Benchmark pursuant to this Agreement,
in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Applicable Benchmark that is then-removed from the definition of “Interest Period” pursuant Section 11.01(f).
“Benchmark Government Authority” means,
(a) with respect to a Benchmark Replacement in respect of Loans denominated in Dollars, the FRB and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the FRB and/or the Federal Reserve Bank of New York of any successor thereto;
(b) with respect to a Benchmark Replacement in respect of Loans denominated in Pounds Sterling, the Bank of England, or a committee officially endorsed or convened by the Bank of England or, in each case, any successor thereto;
(c) with respect to a Benchmark Replacement in respect of Loans denominated in Euros, the European Central Bank, or a committee officially endorsed or convened by the European Central Bank or, in each case, any successor thereto; and
(d) with respect to a Benchmark Replacement in respect of Loans denominated in any other currency, (i) the central bank for the currency in which such Benchmark Replacement is denominated or any central bank or other supervisor which is responsible for supervising either (A) such Benchmark Replacement or (B) the administrator of such Benchmark Replacement or (ii) any working group or committee officially endorsed or convened by (A) the central bank for the currency in which such Benchmark Replacement is denominated, (B) any central bank or other supervisor that is responsible for supervising either (I) such Benchmark Replacement or (II) the administrator of such Benchmark Replacement, or (C) a group of those central banks or other supervisors.
“Benchmark Rate Loan” means a Loan that bears interest at an Applicable Benchmark.
“Benchmark Replacement” means,
(a) with respect to any Benchmark Transition Event described in clauses (a) or (b) of the definition of “Benchmark Transition Event” for a Facility denominated in Dollars the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(i) in the case of Loans denominated in Dollars:
(A) if Applicable Benchmark subject to the Benchmark Transition Event is Adjusted Term SOFR, the sum of: (1) Daily Simple SOFR and (2) related Benchmark Replacement Adjustment; and
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(B) otherwise, the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due consideration to (1) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Benchmark Government Authority or (2) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities,
(b) with respect to any Benchmark Transition Event not described in clause (a) above, the sum of (i) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Benchmark Government Authority or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for syndicated credit facilities in the currency of the applicable Facility, and (ii) the related Benchmark Replacement Adjustment.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Applicable Benchmark for any Facility with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Applicable Benchmark with the applicable Unadjusted Benchmark Replacement by the Benchmark Government Authority or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Applicable Benchmark with the applicable Unadjusted Benchmark Replacement for syndicated credit facilities denominated in the currency of the applicable Facility at such time.
“Benchmark Replacement Conforming Changes” means, with respect to either the use or administration of an Applicable Benchmark or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 11.01(f) and other technical, administrative or operational matters) that the Administrative Agent (in consultation with the Borrower) decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent (in consultation with the Borrower) decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
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“Benchmark Replacement Date” means, with respect to any Facility, the earliest to occur of the following events with respect to the then-current Applicable Benchmark for such Facility:
(a) in the case of clause (a) of the definition of “Benchmark Transition Event,” the later of, (i) the date of the public statement or publication of information referenced therein, (ii) the date on which the administrator of such Applicable Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Benchmark Available Tenors of such Applicable Benchmark (or such component thereof), and (iii) the date the Borrower receives written notice from the Administrative Agent that is reasonably determined that the circumstances described in Section 3.03 have arisen with respect to such Applicable Benchmark and that such circumstances are unlikely to be temporary; or
(b) in the case of clause (b) of the definition of “Benchmark Transition Event,” the first date on which such Applicable Benchmark (or the published component used in the calculation thereof) has been determined and announced by the Benchmark Administrator of such Applicable Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (b) and even if any Benchmark Available Tenor of such Applicable Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Applicable Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Benchmark Available Tenors of such Applicable Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, with respect to any Facility, the occurrence of one or more of the following events with respect to the then-current Applicable Benchmark for such Facility:
(a) either (i) a public statement or publication of information by or on behalf of the administrator of such Applicable Benchmark (or the published component used in the calculation thereof), the regulatory supervisor for the administrator of such Applicable Benchmark (or the published component used in the calculation thereof), an insolvency official with jurisdiction over the administrator for such Applicable Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Applicable Benchmark (or such component), or a court or an entity with similar insolvency or resolution authority over the administrator for such Applicable Benchmark (or such component) (each of the foregoing, a “Benchmark Administrator”), stating or announcing that the administrator of such Applicable Benchmark (or such component) has ceased or will cease, to provide all Benchmark Available Tenors of such Applicable Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Benchmark Available Tenor of such Applicable Benchmark (or such component thereof) or (ii) the Administrative Agent reasonably determines that the circumstances described in Section 3.03 have arisen with respect to such Applicable Benchmark and such circumstances are unlikely to be temporary;
(b) a public statement or publication of information by or on behalf of a Benchmark Administrator for such Applicable Benchmark that such Applicable Benchmark (or the published component used in the calculation thereof) is no longer representative; or
(c) an event has occurred that would require such Applicable Benchmark set forth in any non speculative interest rate Hedge Agreement related to such Facility to be amended by adherence to a final protocol published by, or other amendment promulgated by, the International Swaps and Derivatives Association, Inc. (“ISDA”) to facilitate the replacement of such Applicable Benchmark or if any non speculative interest rate Hedge Agreement related to such Facility is entered into after the Closing Date and is subject to ISDA definitions amended after the Closing Date that reflect a replacement of such Applicable Benchmark used in this Agreement on the Closing Date.
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“Benchmark Unavailability Period” means, for any Facility, the period (if any) (a) beginning at the time that a Benchmark Replacement Date for such Facility has occurred if, at such time, no Benchmark Replacement has replaced the then-current Applicable Benchmark for such Facility in accordance with Section 11.01(f) and (b) ending at the time that a Benchmark Replacement for such Facility has replaced the then-current Applicable Benchmark for such Facility in accordance with Section 11.01(f).
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation, it being agreed delivery of a signed LSTA Beneficial Ownership Form shall qualify as such a certification.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board of Directors” means, as to any Person, the board of directors, board of managers or other governing body of such Person, or if such Person is owned or managed by a single entity, the board of directors, board of managers or other governing body of such entity, and the term “directors” means members of the Board of Directors.
“Borrower” has the meaning specified in the introductory paragraph to this Agreement.
“Borrower Materials” has the meaning specified in Section 6.02.
“Borrowing” means a borrowing consisting of Loans of the same Class and Type made, converted or continued on the same date and, in the case of Benchmark Rate Loans, having the same Interest Period.
“Business Day” means any day,
(a) other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed;
(b) solely if such day relates to any interest rate settings as to a Benchmark Rate Loan priced with reference to SOFR any day described in clause (a) above other than a day that the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities (a “U.S. Government Securities Business Day”);
“Capital Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including in all events all amounts expended or capitalized under Capitalized Leases) by the Borrower and the Restricted Subsidiaries during such period that, in conformity with GAAP, are or are required to be included as capital expenditures on the consolidated statement of cash flows of the Borrower and the Restricted Subsidiaries.
“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a Capitalized Lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) prepared in accordance with GAAP.
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“Capitalized Leases” means all capital leases that have been or are required to be, in accordance with GAAP recorded as capitalized leases; provided that unless the Borrower elects otherwise, all obligations of any Person that are or would have been treated as operating leases for purposes of GAAP prior to the issuance by the Financial Accounting Standards Board on February 25, 2016 of an Accounting Standards Update (the “ASU”) shall continue to be accounted for as operating leases for purposes of all financial definitions (including the definition of Indebtedness), calculations and deliverables under this Agreement or any other Loan Document (whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that such obligations are required in accordance with the ASU or otherwise (on a prospective or retroactive basis or otherwise) to be treated as or to be recharacterized as capital lease obligations or otherwise accounted for as liabilities in financial statements.
“Cash Collateral Account” means an account held at, and subject to the sole dominion and control of, the Collateral Agent.
“Cash Collateralize” means, in respect of an Obligation, to provide and pledge (as a first priority perfected security interest) cash collateral in Dollars, at a location and pursuant to documentation in form and substance satisfactory to the Administrative Agent or the applicable Issuing Bank, as applicable (and “Cash Collateralization” has a corresponding meaning). “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“Cash Equivalents” means any of the following types of Investments (including for the avoidance of doubt, cash), to the extent owned by the Borrower or any Restricted Subsidiary:
(a) Dollars, Euros, Pounds Sterling, Swiss Francs and Canadian dollars;
(b) such other currencies held by the Borrower or any Restricted Subsidiary from time to time in the ordinary course of business;
(c) (i) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of (A) the United States, (B) the United Kingdom or (C) any member nation of the European Union, in each case, rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, having average maturities of not more than 24 months from the date of acquisition thereof and (ii) securities with average maturities of 24 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, or by any political subdivision or taxing authority of any such state, commonwealth or territory having an investment grade rating from either S&P or Moody’s (or the equivalent thereof);
(d) (i) time deposits or demand deposits with, or certificates of deposit or bankers’ acceptances of, any commercial bank or credit union (A) that is a Lender or (B) that has combined capital and surplus of at least (1) $250,000,000 in the case of U.S. banks or credit unions and (2) $100,000,000 (or the Dollar Equivalent as of the date of determination) in the case of non-U.S. banks or credit unions, or (C) that is otherwise in compliance with all applicable statutorily mandated capital requirements applicable to it (any such bank or credit union meeting the requirements of clause (A), (B) or (C) above being an “Approved Bank”), or (D) to the extent entitled to the benefit of deposit insurance, including deposit insurance provided by the Federal Deposit Insurance Corporation, in each case with average maturities of not more than 12 months from the date of acquisition thereof and (ii) any securities entitlements in respect of any of the foregoing;
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(e) repurchase agreements and repurchase obligations for underlying securities of the types described in clauses (c) and (d) above entered into with any financial institution meeting the qualifications specified in clause (d) above for an Approved Bank;
(f) (i) commercial paper and variable or fixed rate notes issued by a Lender or an Approved Bank, or in each case, by a parent company thereof, or (ii) any variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case (i) and (ii), with average maturities of not more than 24 months from the date of acquisition thereof;
(g) marketable short-term money market and similar highly liquid funds either (i) having assets in excess of (A) $250,000,000 in the case of U.S. banks or other U.S. financial institutions or (B) $100,000,000 (or the Dollar Equivalent as of the date of determination) in the case of non-U.S. banks or other non-U.S. financial institutions or (ii) having a rating of at least P-2 or A-2 from Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency) or (ii) with a Lender or Approved Bank;
(h) investments with average maturities of 24 months or less from the date of acquisition in mutual funds rated A (or the equivalent thereof) or better by S&P or A2 (or the equivalent thereof) or better by Moody’s;
(i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in Euro or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized in such jurisdiction; and
(j) investment funds (including money market funds) investing substantially all of their assets in securities of the types described in clauses (a) through (h) above, or that are entitled to the benefit of (and to the extent covered by) deposit insurance provided by the Federal Deposit Insurance Corporation or otherwise.
In the case of Investments by any Foreign Subsidiary that is a Restricted Subsidiary or Investments made in a jurisdiction outside the United States of America, Cash Equivalents shall also include (i) investments of the type and maturity described in clauses (a) through (k) above in foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (ii) other short-term investments in accordance with normal investment practices for cash management in investments analogous to the foregoing investments in clauses (a) through (k) above and in this paragraph. Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clause (a) or (b) above; provided that such amounts, except amounts used to pay obligations of the Borrower or any Restricted Subsidiary denominated in any currency other than Dollars in the ordinary course of business, are converted into Dollars as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.
“Cash Management Bank” means, any Person that is (or becomes) an Agent, a Lender or a Lead Arranger or an Affiliate of any of the foregoing, either (i) on the Closing Date, (ii) at the time it initially provides any Cash Management Services or (iii) within 45 days after the date it initially provides any Cash Management Services, in each case, whether or not such Person subsequently ceases to be an Agent, a Lender or a Lead Arranger or an Affiliate of any of the foregoing.
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“Cash Management Obligations” means obligations owed by the Borrower or any Restricted Subsidiary to any Cash Management Bank in respect of or in connection with any Cash Management Services and designated by the Cash Management Bank and the Borrower in writing to the Administrative Agent as “Cash Management Obligations”.
“Cash Management Services” means any agreement or arrangement to provide cash management services, including treasury, depository, overdraft, credit card processing, credit or debit card, purchase card, electronic funds transfer and other similar cash management arrangements.
“Casualty Event” means any event that gives rise to the receipt by a Loan Party or any Restricted Subsidiary thereof of any property or casualty insurance proceeds or any condemnation awards, in each case, in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
“Causes of Action” means any and all claims, actions, causes of action, choses in action, suits, debts, damages, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, judgments, remedies, rights of set-off, third party claims, subrogation claims, contribution claims, reimbursement claims, indemnity claims, counterclaims, cross-claims, whether known or unknown, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, whether direct, indirect, derivative, or otherwise, whether arising before, on, or after the Closing Date, in contract or in tort, in law (whether local, state, or federal U.S. or non-U.S. law) or in equity, or pursuant to any other theory of local, state, or federal U.S. or non-U.S. law. For the avoidance of doubt, “Cause of Action” includes: (a) any right of setoff, counterclaim, or recoupment and any claim for breach of contract or for breach of duties imposed by law or in equity; (b) any claim based on or relating to, or in any manner arising from, in whole or in part, tort, breach of contract, breach of fiduciary duty, fraudulent transfer or fraudulent conveyance or voidable transaction law, violation of local. state, or federal or non-U.S. law or breach of any duty imposed by law or in equity, including securities laws, negligence, and gross negligence; (c) any claim pursuant to section 362 or chapter 5 of the title 11 of the United States Code or similar local, state, or federal U.S. or non-U.S. law; (d) any claim or defense including fraud, mistake, duress, and usury, and any other defenses set forth in section 558 of title 11 of the United States Code; (e) any state or foreign law pertaining to actual or constructive fraudulent transfer, fraudulent conveyance, or similar claim; and (f) any “lender liability” or equitable subordination claims or defenses.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following:
(a) the adoption or taking effect of any law, rule, regulation or treaty (excluding the taking effect after the date of this Agreement of a law, rule, regulation or treaty adopted prior to the date of this Agreement);
(b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or
(c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.
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It is understood and agreed that (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173), all Laws relating thereto, all interpretations and applications thereof and any compliance by a Lender with any and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof or relating thereto and (ii) all requests, rules, guidelines, requirements or directives issued by any United States or foreign regulatory authority in connection with the implementation of the recommendations of the Bank for International Settlements or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) in each case pursuant to Basel III, shall, for the purposes of this Agreement, be deemed to be adopted subsequent to the date hereof and a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented.
“Change of Control” means (a) any Person or Persons constituting a “group” (as such term is used in Section 13(d) and Section 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person and its Subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), becoming the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act), directly or indirectly, of Equity Interests representing more than forty percent of the aggregate ordinary voting power represented by the then issued and outstanding Equity Interests of the Borrower, (b) the occurrence of any “Change of Control” (or term of similar import) as defined and used in any Material Indebtedness loan documents or (c) occupation at any time of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were not (i) directors of the Borrower on the Closing Date, (ii) nominated or approved by the board of directors of the Borrower or (iii) appointed by directors so nominated or approved.
“Class” when used in reference to,
(a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are an issuance of Revolving Loans, an issuance of Incremental Term Loans, Incremental Revolving Loans, an issuance of Refinancing Term Loans, Refinancing Revolving Loans, Extended Revolving Loans or an issuance of Extended Term Loans;
(b) any Commitment, refers to whether such Commitment is (i) a Commitment in respect of Revolving Loans, (ii) a Refinancing Term Commitment (and, in the case of a Refinancing Term Commitment, the Class of Loans to which such commitment relates), (iii) a Commitment in respect of a Class of Loans to be made pursuant to an Incremental Amendment or an Extension Amendment, or (iv) a Refinancing Revolving Commitment (and, in the case of a Refinancing Revolving Commitment, the Class of Loans to which such commitment relates); and
(c) any Lender, refers to whether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments.
Refinancing Term Commitments, Refinancing Revolving Commitments, Refinancing Term Loans, Refinancing Revolving Loans, Incremental Term Loans, Extended Revolving Loans, Extended Term Loans and any other Loans that have different terms and conditions shall be construed to be in different Classes.
“Closing Date” means the first date on which all of the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 11.01.
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means all the “Collateral” (or equivalent term) as defined in any Collateral Document and all other property that is subject or purported to be subject to any Lien in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to any Collateral Document, but in any event excluding all Excluded Assets.
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“Collateral Agent” has the meaning specified in the introductory paragraph to this Agreement.
“Collateral Documents” means, collectively, the Security Agreement, the Intellectual Property Security Agreements, Security Agreement Supplements, or other similar agreements delivered to the Agents and the Lenders pursuant to Section 4.01(a), 6.11, 6.12 or 6.15, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Collateral Agent for the benefit of the Secured Parties.
“Commitments” means the Revolving Commitments and the Term Loan Commitments (if any).
“Committed Loan Notice” means a notice of a Borrowing pursuant to Article II which, if in writing, shall be substantially in the form of Exhibit A-1.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Company Person” means any future, current or former officer, director, manager, member, member of management, employee, consultant or independent contractor of the Borrower or any Subsidiary.
“Compliance Certificate” means a certificate substantially in the form of Exhibit C.
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Adjusted EBITDA” means, with respect to any Person for any Test Period, the Consolidated Net Income of such Person for such Test Period:
(a) increased, without duplication (solely to the extent deducted (and not excluded) in calculating Consolidated Net Income, other than in respect of clauses (xvi) and (xxx) below), by the following items of such Person and its Restricted Subsidiaries for such Test Period determined on a consolidated basis in accordance with GAAP:
(i) interest expense, including (A) imputed interest on Capitalized Lease Obligations and Attributable Indebtedness (which, in each case, will be deemed to accrue at the interest rate reasonably determined by a Responsible Officer of the Borrower to be the rate of interest implicit in such Capitalized Lease Obligations or Attributable Indebtedness), (B) commissions, discounts and other fees, charges and expenses owed with respect to letters of credit, bankers’ acceptance financing, surety and performance bonds and receivables financings, (C) amortization and write-offs of deferred financing fees, debt issuance costs, debt discounts, commissions, fees, premium and other expenses, as well as expensing of bridge, commitment or financing fees, (D) payments made in respect of hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, (E) cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than such Person or a wholly owned Restricted Subsidiary) in connection with Indebtedness incurred by such plan or trust, (F) all interest paid or payable with respect to discontinued operations, (G) the interest portion of any deferred payment obligations, (H) all interest on any Indebtedness that is (1) Indebtedness of others secured by any Lien on property owned or acquired by such Person or its Restricted Subsidiaries, whether or not the obligations secured thereby have been assumed, but limited to the fair market value of such property or (2) contingent obligations in respect of Indebtedness; provided that any such interest expense shall be calculated after giving effect to Hedge Agreements related to interest rates (including associated costs), but excluding unrealized gains and losses with respect to such Hedge Agreements and (I) fees and expenses paid to the Administrative Agent (in its capacity as such and for its own account) pursuant to the Loan Documents; plus
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(ii) taxes based on gross receipts, income, profits or revenue or capital, franchise, excise, property, commercial activity, sales, use, unitary or similar taxes, and foreign withholding taxes, including (A) penalties and interest and (B) tax distributions made to any direct or indirect holders of Equity Interests of such Person in respect of any such taxes attributable to such Person and/or its Restricted Subsidiaries or pursuant to a tax sharing arrangement or as a result of a tax distribution or repatriated funds; plus
(iii) depreciation expense and amortization expense (including amortization and similar charges related to goodwill, customer relationships, trade names, databases, technology, software, internal labor costs, deferred financing fees or costs and other intangible assets); plus
(iv) SaaS Expenditures; plus
(v) non-cash items (provided that if any such non-cash item represents an accrual or reserve for potential cash items in any future period, (A) the Borrower may determine not to add back such non-cash item in the current Test Period and (B) to the extent the Borrower decides to add back such non-cash expense or charge, the cash payment in respect thereof in such future period will be subtracted from Consolidated Adjusted EBITDA in such future period), including the following: (1) non-cash expenses in connection with, or resulting from, equity-based awards compensation, including stock option plans, employee benefit plans or agreements or post-employment benefit plans or agreements, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other similar rights, (2) non-cash currency translation losses related to changes in currency exchange rates (including re-measurements of Indebtedness (including intercompany Indebtedness) and any net non-cash loss resulting from hedge agreements for currency exchange risk), (3) [reserved], (4) non-cash charges for deferred tax asset valuation allowances, (5) non-cash impairment charge or asset write-off or write-down related to intangible assets (including goodwill), long-lived assets, and Investments in debt and equity securities, (6) non-cash charges or losses resulting from any business combination accounting adjustment or any step-ups with respect to re-valuing assets and liabilities in connection with the Transactions or any Investments either existing or arising after the Closing Date, (7) non-cash losses from Investments either existing or arising after the Closing Date recorded using the equity method, (8) the excess of GAAP rent expense over actual cash rent paid during such period due to the use of straight line rent for GAAP purposes and (9) any non-cash interest expense; plus
(vi) unusual, extraordinary, or non-recurring items, whether or not classified as such under GAAP; plus
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(vii) charges, costs, losses, expenses or reserves related to or incurred in connection with the following: (A) restructuring (including restructuring charges or reserves, whether or not classified as such under GAAP), severance, relocation, consolidation, integration or other similar items, (B) strategic and/or business initiatives; business optimization initiatives (including costs and expenses relating to reporting systems and technology initiatives); strategic initiatives; retention, severance, and similar items; systems establishment costs; systems conversion and integration costs; contract termination costs; recruiting and relocation costs and expenses; costs, expenses and charges incurred in connection with curtailments or modifications to pension and post-retirement employee benefits plans; costs associated with start-up, pre-opening, opening, closure, transition and/or consolidation of distribution centers, operations, offices and facilities, including in connection with the Transactions and any Permitted Investment, any acquisition or other Investment; new systems design and implementation; and consulting fees and expenses relating to enhancing accounting functions, (C) business or facilities (including greenfield facilities) start-up, opening, transition, consolidation, shut-down and closing, (D) signing, retention and completion bonuses, (E) severance, relocation or recruiting, (F) a public company registration, listing, compliance, reporting or related activity, (G) litigation (including threatened litigation), settlements, investigations (including internal investigations) and proceedings (or any threatened investigations or proceedings), including by any regulatory, governmental, law enforcement body, or attorney general, and (H) casualty events or asset sales outside the ordinary course of business; plus
(viii) all (A) costs, fees and expenses relating to the Transactions, (B) costs, fees and expenses (including diligence and integration costs and severance costs) incurred in connection with (i) Investments in any Person, acquisitions of the Equity Interests of any Person, Acquisition Transactions, including acquisitions of all or a material portion of the assets of any Person or constituting a line of business of any Person, and financings related to any of the foregoing or to the capitalization of any Loan Party or any Restricted Subsidiary or (ii) other transactions that are out of the ordinary course of business of such Person and its Restricted Subsidiaries (in each case of clause (i) and (ii), including transactions considered or proposed but not consummated), including Permitted Equity Issuances, Investments, acquisitions, dispositions, recapitalizations, mergers, option buyouts and the incurrence, modification or repayment of Indebtedness (including all consent fees, premium and other amounts payable in connection therewith) and (C) non-operating professional fees, costs and expenses; plus
(ix) items reducing Consolidated Net Income to the extent (A) covered by a binding indemnification or refunding obligation or insurance to the extent actually paid or reasonably expected to be paid within four quarters (and if not paid such amounts added back shall be reduced for Consolidated Adjusted EBITDA in such future period), (B) paid or payable (directly or indirectly) by a third party that is not a Loan Party or a Restricted Subsidiary (except to the extent such payment gives rise to reimbursement obligations) or with the proceeds of a contribution to equity capital of such Person by a third party that is not a Loan Party or a Restricted Subsidiary or (C) such Person is, directly or indirectly, reimbursed for such item by a third party; plus
(x) [reserved]; plus
(xi) the effects of business combination accounting, fair value accounting or recapitalization accounting (including the effects of adjustments pushed down to such Person and its Subsidiaries) and the amortization, write-down or write-off of any such amount; plus
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(xii) proceeds of business interruption insurance actually received; plus
(xiii) non-controlling interest expense, including consisting of income attributable to Equity Interests held by third parties in any non-wholly owned Restricted Subsidiary; plus
(xiv) all charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of Equity Interests held by officers or employees and all losses, charges and expenses related to payments made to holders of options or other derivative Equity Interests of such Person or any direct or indirect parent thereof in connection with, or as a result of, any distribution being made to equity holders of such Person or any direct or indirect parent thereof, including (A) payments made to compensate such holders as though they were equity holders at the time of, and entitled to share in, such distribution, and (B) all dividend equivalent rights owed pursuant to any compensation or equity arrangement; plus
(xv) expenses, charges and losses resulting from the payment or accrual of indemnification or refunding provisions, earn-outs and contingent consideration obligations; bonuses and other compensation paid to employees, directors or consultants; and payments in respect of dissenting shares and purchase price adjustments; in each case, made in connection with a Permitted Investment or other acquisition; plus
(xvi) any losses from disposed or discontinued operations; plus
(xvii) (A) any costs or expenses (including any payroll taxes) incurred by the Borrower or any Restricted Subsidiary in such Test Period as a result of, in connection with or pursuant to any management or employee equity plan, profits interest or stock option plan, any long-term incentive plan (including any related cash payments) or any other management or employee benefit plan or agreement, any pension plan (including (1) any post-employment benefit scheme to which the relevant pension trustee has agreed, (2) as a result of curtailments or modifications to pension and post-retirement employee benefit plans and (3) without limitation, compensation arrangements with holders of unvested options entered into in connection with a permitted Restricted Payment), any stock subscription, stockholders or partnership agreement, any payments in the nature of compensation or expense reimbursement made to independent board members, any employee benefit trust, any employee benefit scheme or any similar equity plan or agreement (including any deferred compensation arrangement), including any payment made to option holders in connection with, or as a result of, any distribution being made to, or share repurchase from, a shareholder, which payments are being made to compensate option holders as though they were shareholders at the time of, and entitled to share in, such distribution or share repurchase and any bonuses and other compensation (including deferred compensation) paid to employees, directors or consultants, (B) any costs or expenses incurred in connection with the rollover, acceleration or payout of Equity Interests held by management or other employees of the Borrower and/or any Restricted Subsidiary and (c) any costs or expenses incurred in connection with the hiring of any executives or management of the Borrower or its Restricted Subsidiaries; plus
(xviii) [reserved]; plus
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(xix) the cumulative effect of a change in accounting principles; plus
(xx) [reserved]; plus
(xxi) the amount of any contingent or milestone payments in connection with the licensing of intellectual property or other assets; plus
(xxii) [reserved]; plus
(xxiii) the amount of fees, expense reimbursements and indemnities paid to directors and/or members of advisory boards; plus
(xxiv) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization or such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of FASB Accounting Standards Codification 715, and any other items of a similar nature; plus
(xxv) cash expenses and other charges directly related to global enterprise resource planning implemental cost for such period, not to exceed $5,000,000 in the aggregate during the term of this Agreement; plus
(xxvi) payments made pursuant to Earnouts; plus
(xxvii) the excess, if any, of the difference between (to the extent the amount in the following clause (i) exceeds the amount in the following clause (ii)): (i) the deferred revenue of such Person and its Restricted Subsidiaries as of the last day of the applicable Test Period, over (ii) the deferred revenue of such Person and its Restricted Subsidiaries as of the date that is twelve months prior to the last day of such Test Period (in each case without giving effect to business combination accounting); plus
(xxviii) losses, expenses, charges or negative adjustments attributable to the movement in the mark-to-market valuation of hedge agreements or other derivative instruments, including the effect of FASB Accounting Standards Codification 815 and International Accounting Standard No. 9 and their respective related pronouncements and interpretations; plus
(xxix) addbacks reflected in any quality of earnings report prepared by a nationally recognized accounting firm and furnished to the Administrative Agent in connection with a Permitted Acquisition consummated after the Closing Date; plus
(xxx) [reserved]; plus
(xxxi) the amount of “run rate” cost savings, operating expense reductions and other cost synergies (“Run Rate Savings”) that are projected by the Borrower in good faith to result from actions taken, committed to be taken or expected to be taken no later than 18 months after the end of such Test Period (which amounts will be determined by the Borrower in good faith and calculated on a pro forma basis as though such amounts had been realized on the first day of the Test Period for which Consolidated Adjusted EBITDA is being determined), net of the amount of actual benefits realized during such Test Period from such actions; provided that, in the good faith judgment of the Borrower such Run Rate Savings are reasonably identifiable, reasonably anticipated to be realized and factually supportable (it being agreed such determinations need not be made in compliance with Regulation S-X or other applicable securities law); plus
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(xxxii) losses, expenses, and other changes in connection with compliance with the EU Medical Device Regulation; and
(b) decreased, without duplication, by the following items of such Person and its Restricted Subsidiaries for such Test Period determined on a consolidated basis in accordance with GAAP (solely to the extent increasing Consolidated Net Income):
(i) any amount which, in the determination of Consolidated Net Income for such period, has been included for any non-cash income or non-cash gain, all as determined in accordance with GAAP (provided that if any non-cash income or non-cash gain represents an accrual or deferred income in respect of potential cash items in any future period, such Person may determine not to deduct the relevant non-cash gain or income in the then-current period); plus
(ii) the amount of any cash payment made during such period in respect of any non-cash accrual, reserve or other non-cash charge that is accounted for in a prior period and that was added to Consolidated Net Income to determine Consolidated Adjusted EBITDA for such prior period and that does not otherwise reduce Consolidated Net Income for the current period; plus
(iii) the amount of any income or gains associated with any non-wholly owned Restricted Subsidiary that is attributable to any non-controlling interest; plus
(iv) any unusual, extraordinary or non-recurring gains.
Notwithstanding the foregoing, the aggregate amount added back pursuant to clause (a)(iv), clause (a)(vi) (solely to the extent any such amount is not classified as an unusual, extraordinary or non-recurring item under GAAP), clause (a)(vii) hereof and the amount of Run Rate Savings increasing Consolidated Adjusted EBITDA for any Test Period shall not in the aggregate exceed 25% of the Consolidated Adjusted EBITDA for such Test Period (measured after giving effect to such items).
“Consolidated Current Assets” means, as of any date of determination, the total assets of the Borrower and the Restricted Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding cash and Cash Equivalents, amounts related to current or deferred taxes based on income or profits, assets held for sale, loans (permitted) to third parties, pension assets, deferred bank fees and derivative financial instruments, and excluding the effects of adjustments pursuant to GAAP resulting from the application of recapitalization accounting or business combination accounting, as the case may be, in relation to the Transactions or any consummated acquisition.
“Consolidated Current Liabilities” means, as at any date of determination, the total liabilities of the Borrower and the Restricted Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding (a) the current portion of any Funded Debt, (b) the current portion of interest, (c) accruals for current or deferred taxes based on income or profits, (d) accruals of any costs or expenses related to restructuring reserves, (e) Revolving Loans, Letter of Credit Obligations or any other revolving facility, (f) the current portion of any Capitalized Lease Obligation, (g) deferred revenue arising from cash receipts that are earmarked for specific projects, (h) liabilities in respect of unpaid earn-outs and (i) the current portion of any other long-term liabilities, and, furthermore, excluding the effects of adjustments pursuant to GAAP resulting from the application of recapitalization accounting or business combination accounting, as the case may be, in relation to the Transaction or any consummated acquisition.
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“Consolidated Interest Expense” means, for any Test Period, the sum of:
(a) cash interest expense (including that attributable to Capitalized Leases), net of cash interest income, of the Borrower and the Restricted Subsidiaries with respect to all outstanding Indebtedness of the Borrower and the Restricted Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under hedging agreements, plus
(b) non-cash interest expense resulting solely from the amortization of OID from the issuance of Indebtedness of the Borrower and the Restricted Subsidiaries (excluding Indebtedness borrowed under this Agreement in connection with and to finance the Transactions) at less than par, plus
(c) pay-in-kind interest expense of the Borrower and the Restricted Subsidiaries payable pursuant to the terms of the agreements governing such debt for borrowed money;
but excluding, for the avoidance of doubt, (i) amortization of deferred financing costs, debt issuance costs, commissions, fees and expenses and any other amounts of non-cash interest other than referred to in clause (b) above (including as a result of the effects of acquisition method accounting or pushdown accounting), (ii) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under hedging agreements or other derivative instruments pursuant to FASB Accounting Standards Codification No. 815-Derivatives and Hedging, (iii) any one-time cash costs associated with breakage in respect of hedging agreements for interest rates, (iv) [reserved], (v) any “additional interest” owing pursuant to a registration rights agreement with respect to any securities, (vi) any payments with respect to make-whole premiums or other breakage costs of any Indebtedness, including any Indebtedness issued in connection with the Transactions, (vii) penalties and interest relating to taxes, (viii) accretion or accrual of discounted liabilities not constituting Indebtedness, (ix) any expense resulting from the discounting of Indebtedness in connection with the application of recapitalization or business combination accounting and (x) any interest expense attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto and with respect to any Acquisition Transaction or other Investment, all as calculated on a consolidated basis in accordance with GAAP. For the avoidance of doubt, interest expense shall be determined after giving effect to any net payments made or received by the Borrower and its Restricted Subsidiaries in respect of Hedge Agreements relating to interest rate protection.
“Consolidated Net Debt” means, as of any date of determination, (a) Consolidated Total Debt minus (b) the aggregate amount of cash and Cash Equivalents of the Borrower and the Restricted Subsidiaries as of such date that is not Restricted. Notwithstanding the foregoing, (i) the aggregate amount of cash and Cash Equivalents deducted from Consolidated Net Debt pursuant to the preceding clause (b) may not exceed $100,000,000 and (ii) proceeds of Indebtedness incurred on such date of determination shall be excluded from determining clause (a).
“Consolidated Net Income” means, with respect to any Person for any Test Period, the Net Income of such Person and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such consolidated net income (to the extent otherwise included therein), without duplication:
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(a) the Net Income for such Test Period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting; provided that the Borrower’s or any Restricted Subsidiary’s equity in the Net Income of such Person shall be included in the Consolidated Net Income of the Borrower for such Test Period up to the aggregate amount of dividends or distributions or other payments in respect of such equity that are actually paid in cash (or to the extent converted into cash) by such Person to the Borrower or a Restricted Subsidiary, in each case, in such Test Period, to the extent not already included therein (subject in the case of dividends, distributions or other payments in respect of such equity made to a Restricted Subsidiary to the limitations contained in clause (b) below);
(b) the Net Income of any Restricted Subsidiary of such Person during such Test Period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its Organization Documents or any agreement, instrument or requirement of Law applicable to such Restricted Subsidiary during such Test Period; provided that Consolidated Net Income of such Person shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash to such Person or its Restricted Subsidiaries in respect of such Test Period;
(c) any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized by such Person or any of its Restricted Subsidiaries during such Test Period upon any asset sale or other disposition of any Equity Interests of any Person (other than any dispositions in the ordinary course of business) by such Person or any of its Restricted Subsidiaries;
(d) gains and losses due solely to fluctuations in currency values and the related tax effects determined in accordance with GAAP for such Test Period;
(e) earnings (or losses), including any impairment charge, resulting from any reappraisal, revaluation or write-up (or write-down) of assets during such Test Period;
(f) (i) unrealized gains and losses with respect to Hedge Agreements for such Test Period and the application of Accounting Standards Codification 815 (Derivatives and Hedging) and (ii) any after-tax effect of income (or losses) for such Test Period that result from the early extinguishment of (A) Indebtedness, (B) obligations under any Hedge Agreements or (C) other derivative instruments;
(g) any extraordinary, non-recurring or unusual gain (or extraordinary, non-recurring or unusual loss), together with any related provision for taxes on any such gain (or the tax effect of any such loss), recorded or recognized by such Person or any of its Restricted Subsidiaries during such Test Period;
(h) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies during such Test Period;
(i) after-tax gains (or losses) on disposal of disposed, abandoned or discontinued operations for such Test Period;
(j) effects of adjustments (including the effects of such adjustments pushed down to such Person and its Restricted Subsidiaries) in the inventory, property and equipment, software, goodwill, other intangible assets, in-process research and development, deferred revenue, debt and unfavorable or favorable lease line items in such Person’s consolidated financial statements pursuant to GAAP for such Test Period resulting from the application of business combination accounting in relation to the Transactions or any acquisition consummated prior to the Closing Date and any Permitted Acquisition or other Investment or the amortization or write-off of any amounts thereof, net of taxes, for such Test Period;
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(k) any non-cash compensation charge or expense for such Test Period, including any such charge or expense arising from the grants of stock appreciation or similar rights, stock options, restricted stock or other rights and any cash charges or expenses associated with the rollover, acceleration or payout of Equity Interests by, or to, employee of such Person or any of its Restricted Subsidiaries in connection with the Transactions;
(l) (i) Transaction Expenses incurred during such Test Period and (ii) any fees and expenses incurred during such Test Period, or any amortization thereof for such Test Period, in connection with any acquisition (other than the Transactions), Investment, disposition, issuance or repayment of Indebtedness, issuance of Equity Interests, refinancing transaction or amendment or modification of any debt or equity instrument (in each case, including any such transaction whether consummated on, after or prior to the Closing Date and any such transaction undertaken but not completed) and any charges or non-recurring costs incurred during such Test Period as a result of any such transaction;
(m) any expenses, charges or losses for such Test Period that are covered by indemnification or other reimbursement provisions in connection with any Investment, Permitted Acquisition or any sale, conveyance, transfer or other disposition of assets permitted under this Agreement, to the extent actually reimbursed, or, so long as the Borrower has made a determination that a reasonable basis exists for indemnification or reimbursement and only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days); and
(n) to the extent covered by insurance and actually reimbursed, or, so long as the Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed within 365 days of the date of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so reimbursed within such 365 days), expenses, charges or losses for such Test Period with respect to liability or casualty events or business interruption.
“Consolidated Secured Net Debt” means, as of any date of determination, Consolidated Net Debt outstanding under the Facilities and any other debt that is secured by a Lien on the property of the Borrower and/or its Restricted Subsidiaries outstanding as of such date.
“Consolidated Total Debt” means, as of any date of determination, the aggregate principal amount of third party Indebtedness of the Borrower and the Restricted Subsidiaries outstanding on such date, determined on a consolidated basis and as reflected on the face of a balance sheet prepared in accordance with GAAP (but excluding the effects of the application of business combination accounting in connection with the Transactions, any Permitted Acquisition or any other Investment permitted hereunder), consisting of Indebtedness for borrowed money, unreimbursed obligations in respect of drawn letters of credit (to the extent not cash collateralized), and obligations in respect of Capitalized Leases, purchase money obligations and debt obligations evidenced by promissory notes or debentures; provided that Consolidated Total Debt will not include Indebtedness in respect of (a) [reserved], (b) any letter of credit, except to the extent of unreimbursed obligations in respect of drawn letters of credit (provided that any unreimbursed amount under commercial letters of credit will not be counted as Consolidated Total Debt until three Business Days after such amount is drawn (it being understood that any borrowing, whether automatic or otherwise, to fund such reimbursement will be counted)), (c) obligations under Hedge Agreements, (d) obligations in respect of cash management obligations, (e) purchase money obligations incurred in the ordinary course, trade payable and similar obligations, (f) Indebtedness to the extent it has been cash collateralized or with respect to which the Borrower or a Restricted Subsidiary is obligated only as a surety or guarantor, and (g) any lease obligations other than in respect of Capitalized Leases; provided that, for the purposes of the definition of “Consolidated Total Debt”, the Indebtedness in respect of convertible debt securities (including the Convertible Indebtedness) shall be deemed to be the aggregate principal amount thereof outstanding as of such date of determination provided further that earnouts and similar deferred purchase price obligations shall not constitute Consolidated Total Debt until they are due and payable. Notwithstanding anything to the contrary herein, Consolidated Total Debt will exclude any Refinanced Debt outstanding on any determination date (and any amounts to be used to effect the refinancing, repurchase, purchase, redemption or repayment in connection with such Refinanced Debt shall not be included as Restricted for purposes of this Agreement) so long as a notice of redemption of, or an offer to purchase, such Refinanced Debt has been given or made (and, in the case of an offer to purchase, not withdrawn) on or prior to such date (any such Refinanced Debt, “Defeased Debt”).
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“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Control” has the meaning specified in the definition of “Affiliate.”
“Conversion/Continuation Notice” means a notice of (a) a conversion of Loans from one Type to another or (b) a continuation of Benchmark Rate Loans, pursuant to Article II, which, if in writing, shall be substantially in the form of Exhibit A-2.
“Convertible Indebtedness” means any Indebtedness of any Loan Party (which may be guaranteed by any other Loan Party) permitted to be incurred that (i) contains customary conversion rights for similar forms of Indebtedness as of the date of issuance in the reasonable determination of the Borrower and (ii) is either (x) convertible into common stock of the Borrower (and cash in lieu of fractional shares) and/or cash (in an amount determined by reference to the price of such common stock) or (y) sold as units with call options, warrants or rights to purchase (or substantially equivalent derivative transactions) that are exercisable for common stock of the Borrower and/or cash (in an amount determined by reference to the price of such common stock); provided, that any such Indebtedness shall not be convertible at the option of the issuer of such Indebtedness.
“Covered Entity” means any of the following:
(a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R § 47.3(b); or
(c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” has the meaning specified in Section 11.26(b).
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“Credit Agreement Refinancing Indebtedness” means Indebtedness of the Borrower or any Restricted Subsidiary in the form of term loans or notes or revolving commitments; provided that, except as may be agreed by the Required Lenders:
(a) such Indebtedness is incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) in exchange for, or to extend, renew, replace, or refinance, in whole or part, Indebtedness that is either Term Loans, Revolving Commitments or other Credit Agreement Refinancing Indebtedness (together, “Refinanced Debt”);
(b) the aggregate principal amount of such Indebtedness on any date such Indebtedness is incurred (or commitments with respect thereto are made) shall not exceed the aggregate principal amount of the Refinanced Debt being exchanged, extended, renewed, replaced or refinanced (plus (i) the amount of all unpaid, accrued, or capitalized interest, penalties, premiums (including tender premiums) and other amounts payable with respect to the Refinanced Debt and (ii) underwriting discounts, fees, commissions, costs, expenses and other amounts payable with respect to such Credit Agreement Refinancing Indebtedness);
(c) (i) the scheduled final maturity date of such Indebtedness will be no earlier than the scheduled final maturity date of the Refinanced Debt and (ii) the weighted average life to maturity of any such Indebtedness (other than a revolving facility) will be no shorter than the remaining weighted average life to maturity of the Refinanced Debt;
(d) any mandatory prepayment of such Indebtedness (other a revolving facility) may participate on a pro rata basis or a less than pro rata basis (but not on a greater than pro rata basis) in any mandatory repayments required to be made on the Refinanced Debt pursuant to its terms, it being agreed (A) any repayment of such Indebtedness at maturity shall be permitted and (B) any greater than pro rata repayment of such Indebtedness shall be permitted with the proceeds of a permitted refinancing thereof;
(e) (i) to the extent secured by a Lien on property or assets of the Borrower or any of its Restricted Subsidiaries, any such Indebtedness shall not be secured by any Lien on any property or asset of such Person that does not also secure the Revolving Loans (except (1) customary cash collateral in favor of an agent, letter of credit issuer or similar “fronting” lender, (2) Liens on property or assets applicable only to periods after the Latest Maturity Date of the Revolving Loans at the time of incurrence, (3) [reserved], and (4) any Liens on property or assets to the extent that a Lien on such property or asset is also added for the benefit of the Lenders under the Revolving Loans for so long as such Liens secure such Indebtedness); and (ii) to the extent incurred by or guaranteed by the Borrower or any of its Restricted Subsidiaries, any such Indebtedness shall not be guaranteed by any such Person that is not (or is not required to be) a Loan Party (except (1) for guarantees by other Persons that are applicable only to periods after the Latest Maturity Date of the Revolving Loans, at the time of incurrence, (2) [reserved], and (3) any such Person guaranteeing such Indebtedness or Incremental Revolving Facilities, as applicable, that also guarantees the Revolving Loans, for so long as such Person guarantees such Indebtedness); and
(f) the covenants and events of default applicable to such Indebtedness are substantially identical to, or, taken as a whole, no more favorable to the lenders or holders providing such Indebtedness than, those applicable to the Refinanced Debt, as determined in good faith by a Responsible Officer of the Borrower in its reasonable judgment (except (A) for covenants and events of default applicable only to periods after the scheduled final maturity date of the Refinanced Debt at the time of incurrence and (B) any term or condition to the extent such term or condition is also added for the benefit of the Lenders under the Refinanced Debt); provided that, this clause (f) will not apply to (1) terms addressed in the preceding clauses of this definition, (2) interest rate, rate floors, fees, funding discounts and other pricing or economic terms, (3) redemption, prepayment or other premiums, and (4) prepayment or redemption terms.
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“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to the greater of,
(a) SOFR for the day (such day “i”) that is five U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website, and
(b) the Adjusted Term SOFR floor specified in this Agreement.
If by 5:00 p.m. (New York City time) on the second U.S. Government Securities Business Day immediately following any day “i”, the SOFR in respect of such day “i” has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to the Daily Simple SOFR has not occurred, then the SOFR for such day “i” will be the SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided that any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three consecutive SOFR Rate Days. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Debt Representative” means, with respect to any series of Indebtedness secured by a Lien that is subject to an Intercreditor Agreement, or is subordinated in right of payment to all or any part of the Obligations, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means an interest rate equal to the Base Rate plus the Applicable Rate applicable to Base Rate Loans that are Revolving Loans plus 2.00% per annum; provided that with respect to the outstanding principal amount of any Loan not paid when due, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan (giving effect to Section 2.05(c)) plus 2.00% per annum, in each case, to the fullest extent permitted by applicable Laws.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means, subject to Section 2.19(b), any Lender that,
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(a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (which conditions precedent, together with the applicable default, if any, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the Issuing Banks or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due;
(b) has notified the Borrower, the Administrative Agent, the Issuing Banks or any Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with the applicable default, if any, shall be specifically identified in such writing or public statement) cannot be satisfied);
(c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower; or
(d) the Administrative Agent or the Borrower has received notification that such Lender is, or has a direct or indirect parent entity that is, (i) insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, (ii) other than via an Undisclosed Administration, the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other Federal or foreign or state regulatory authority acting in such a capacity or the like has been appointed for such Lender or its direct or indirect parent entity, or such Lender or its direct or indirect parent entity has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment or (iii) or has become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent entity thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender; or
(e) has become or any parent company thereof has become, subject to Sanctions or other Applicable Law that results in transactions under or pursuant to a Loan Document with such Lender or such parent (including payments to or by such Lender) being prohibited or restricted.
Any determination by the Administrative Agent or the Borrower that a Lender is a Defaulting Lender under clauses (a) through (e) above shall be conclusive absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.19) upon delivery of written notice of such determination to the Borrower, the Administrative Agent, the Issuing Banks and each Lender. For the avoidance of doubt a Lender meeting the description set forth in clauses (a) through (e) above shall be a Defaulting Lender, notwithstanding that such determination and such notice shall not have been made.
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“Defeased Debt” has the meaning assigned to it in the definition of “Consolidated Total Debt”.
“Designated Acquisition” means the Acquisition Transaction identified to the Lenders prior to the Closing Date as “Project Tiger”; provided that the purchase price of such Acquisition Transaction shall not exceed $17.00 per share.
“Designated Jurisdiction” means any country or territory to the extent that such country or territory is the subject of any Sanctions.
“Designated Non-Cash Consideration” means the fair market value of any non-cash consideration received by the Borrower or a Restricted Subsidiary in connection with a Disposition pursuant to the General Asset Sale Basket that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer (which amount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within one hundred eighty days following the consummation of the applicable Disposition).
“Designation Election” has the meaning ascribed to such term in the definition of “Excluded Subsidiary”)
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (excluding Liens but including any sale of Equity Interests in, or issuance of Equity Interests by, a Restricted Subsidiary) of any property by any Person.
“Disqualified Equity Interests” means any Equity Interest that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition,
(a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale, as long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event is subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments and Cash Collateralization of all Letters of Credit);
(b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part;
(c) provides for the scheduled payments of dividends that are required to be made only in cash; or
(d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests;
in each case, prior to the date that is 91 days after the Latest Maturity Date of the Loans at the time of issuance; provided that if such Equity Interests are issued pursuant to a plan for the benefit of one or more Company Persons or by any such plan to one or more Company Persons, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Borrower or the Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of a Company Person’s termination, death or disability.
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“Disqualified Lender” means,
(a) the competitors of the Borrower and its Subsidiaries identified in writing by or on behalf of the Borrower (i) to the Lead Arrangers on or prior to the Closing Date, or (ii) to the Administrative Agent, from time to time on or after the Closing Date;
(b) (i) any Persons that are engaged as principals primarily in private equity or venture capital and (ii) those particular banks, financial institutions, other institutional lenders and other Persons, in the case of each of clauses (i) and (ii), to the extent identified in writing by or on behalf of the Borrower to the Lead Arrangers on or prior to the Closing Date or after such date with the consent of the Administration Agent (not to be unreasonably withheld, conditioned or delayed); and
(c) any Affiliate of a Person described in the preceding clauses (a) or (b) that (in each case, other than any Affiliates that are banks, financial institutions, bona fide debt funds or investment vehicles that are engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course (except to the extent separately identified under clause (a) or (b) above)), in each case, is either reasonably identifiable as such on the basis of its name or is identified as such in writing by or on behalf of the Borrower (i) to the Lead Arrangers on or prior to the Closing Date, or (ii) to the Administrative Agent from time to time on or after the Closing Date; provided that any such update to the Persons that are “Disqualified Lenders” shall not apply retroactively to disqualify any party that previously acquired a Loan or Commitment (or participation thereof); provided further that any such update to the Persons that are “Disqualified Lenders” shall not become effective until three (3) Business Days after providing such updates to the Administrative Agent.
The Borrower shall, upon request of any Lender, identify whether any Person identified by such Lender as a proposed assignee or Participant is a Disqualified Lender.
“Division” has the meaning specified in Section 1.02(e).
“Dollar” and “$” mean lawful money of the United States.
“Dollar Amount” means, at any time, with respect to any amount hereunder (i) if denominated in Dollars, the amount thereof, or (ii) if denominated in any currency other than Dollars, the equivalent amount thereof in Dollars as reasonably determined by the Borrower on the basis of the Exchange Rate (determined in respect of the most recent relevant date of determination) for the purchase of Dollars with such currency.
“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of the United States, any state thereof or the District of Columbia.
“Earnouts” means all earnout payments or other contingent payments in connection with any Permitted Investment.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
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“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 11.07(b)(v); provided that the following Persons shall not be Eligible Assignees: (a) any Defaulting Lender, (b) any natural person and (c) any Person that is Disqualified Lender.
“EMU” means the Economic and Monetary Union as contemplated in the EU Treaty.
“EMU Legislation” means the legislative measures of the EMU for the introduction of, changeover to, or operation of the Euro in one or more member states.
“Environmental Claim” means any and all administrative or judicial actions, proceedings, suits, demands, demand letters, claims, liens, or notices of noncompliance or violation, with respect to any Environmental Liability or obligations under Environmental Law, including those (a) by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any Environmental Law and (b) by any Person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief pursuant to any Environmental Law.
“Environmental Laws” means any and all Laws relating to the protection of the environment or, to the extent relating to exposure to Hazardous Materials, human health.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any Loan Party or any of the Restricted Subsidiaries resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Environmental Permit” means any permit, approval, identification number, license or other authorization required under or issued pursuant to any Environmental Law.
“Equal Priority Intercreditor Agreement” means a “pari passu” intercreditor agreement substantially in the form attached hereto as Exhibit K-2 dated as of the Closing Date, or, if requested by the providers of Indebtedness permitted hereunder to be Pari Passu Lien Debt, another arrangement reasonably satisfactory to the Administrative Agent, the Required Lenders and the Borrower; provided, that a Lender shall be deemed to have consented to such other arrangement if such Lender does not respond within five Business Days of written request for its consent to such other arrangement. Upon the request of the Borrower, the Administrative Agent and the Collateral Agent will execute and deliver an Equal Priority Intercreditor Agreement with one or more Debt Representatives for Pari Passu Lien Debt permitted hereunder.
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“Equity Interests” means, with respect to any Person, all of the shares, interests, rights, participations or other equivalents (however designated) of capital stock of (or other ownership or profit interests or units in, including any limited or general partnership interest and any limited liability company membership interest) such Person and all of the warrants, options or other rights for the purchase, acquisition or exchange from such Person of any of the foregoing (including through convertible securities); provided, that Convertible Indebtedness shall not be or be deemed to be an Equity Interest until so converted.
“ERISA” means the Employee Retirement Income Security Act of 1974 and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that together with any Loan Party is treated as a single emplo