Notice is hereby given that a special meeting of stockholders of LifeLock, Inc., a Delaware corporation, referred to as LifeLock,
will be held on [●], 2017, at [●], at [●] [a/p.m.], [●] time, for the following purposes:
1. To consider and vote
on the proposal to adopt the Agreement and Plan of Merger, dated as of November 20, 2016, as it may be amended from time to time, referred to as the merger agreement, by and among LifeLock, Symantec Corporation and L1116 Merger Sub,
Inc.;
2. To consider and vote on any proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to
solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting;
3. To
consider and vote on the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by LifeLock to its named executive officers in connection with the merger contemplated by the merger agreement; and
4. To transact any other business that may properly come before the special meeting or any adjournment, postponement or other delay of the
special meeting.
Only LifeLock stockholders of record as of the close of business on [●], 2016, are entitled to notice of the
special meeting and to vote at the special meeting or any adjournment, postponement or other delay thereof.
Whether or not you plan to attend the special meeting in
person, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone. If you attend the special meeting and vote in
person by ballot, your vote will revoke any proxy that you have previously submitted. If you hold your shares in street name, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting
instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the adoption of the merger agreement, without your instructions.
If you hold your shares in street name, you should
instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals,
including the adoption of the merger agreement, without your instructions.
If you are a LifeLock stockholder of record, voting in person
by ballot at the special meeting will revoke any proxy that you previously submitted. If you hold your shares through a bank, broker or other nominee, you must obtain a legal proxy from the bank, broker or other nominee that holds your
shares giving you the right to vote your shares in person at the special meeting.
We encourage you to read this proxy statement and its annexes, including all documents incorporated by
reference into this proxy statement, carefully and in their entirety. If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares
of common stock, please contact our proxy solicitor:
(877) 825-8621 (Toll-Free From the U.S. and Canada)
This proxy
statement, which you should read carefully, contains important information about the merger, the merger agreement, the other transactions contemplated by the merger agreement and the special meeting. The enclosed materials allow you to submit a
proxy to vote your shares without attending the special meeting.
Your vote is very important. Even if you plan to attend the special
meeting, we encourage you to submit a proxy as soon as possible.
If, as of the record date, you are a beneficial owner
of shares held in street name, you may not vote your shares in person at the special meeting unless you obtain a legal proxy from your bank, broker or other nominee giving you the right to vote your shares in person at the
special meeting. Otherwise, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other
nominee cannot vote on any of the proposals, including the adoption of the merger agreement, without your instructions.
Even if you plan to
attend the special meeting in person, to ensure that your shares will be represented at the special meeting we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy
electronically over the internet or by telephone. If you attend the special meeting and vote in person by ballot, your vote will revoke any proxy previously submitted.
If you hold your shares in street
name, please refer to the voting instruction forms provided by your bank, broker or other nominee for additional information on how to vote your shares.
Under specified circumstances, LifeLock will be required to pay Symantec a termination fee upon the termination of the merger agreement, as
described in the section of this proxy statement captioned The Merger AgreementTermination Fees.
The failure of any LifeLock stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by
telephone; or (3) vote in person by ballot at the special meeting will have the same effect as a vote
AGAINST
the adoption of the merger agreement. If you hold your shares in street name, the failure to instruct
your bank, broker or other nominee how to vote your shares will have the same effect as a vote
AGAINST
the adoption of the merger agreement. Abstentions will have the same effect as a vote
AGAINST
the adoption
of the merger agreement.
The failure of any LifeLock stockholder of
record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) vote in person by ballot at the special meeting will not have any effect on the adjournment of the special meeting to a later date
or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting or the approval, by non-binding, advisory vote, of compensation that will or may
become payable by LifeLock to our named executive officers in connection with the merger. If you hold your shares in street name, the failure to instruct your bank, broker or other nominee how to vote your shares will not have any effect
on the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting and the approval, by
non-binding, advisory vote, of compensation that will or may become payable by LifeLock to our named executive officers in connection with the merger. In all cases, abstentions will have the same effect as a vote
AGAINST
the
adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting and the approval, by
non-binding, advisory vote, of compensation that will or may become payable by LifeLock to our named executive officers in connection with the merger.
If your shares are held through a bank, broker or other nominee, you are considered the beneficial owner of shares of common stock
held in street name. If you are a beneficial owner of shares of common stock held in street name, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to
those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the special
meeting. However, because you are not the stockholder of record, you may not vote your shares in person by ballot at the special meeting unless you obtain a legal proxy from your bank, broker or other nominee giving you the right to vote
your shares at the special meeting.
A control number, located on your proxy card, is designed to verify your identity and allow you
to vote your shares of common stock and to confirm that your voting instructions have been properly recorded when voting electronically over the internet or by telephone. Although there is no charge for voting your shares, if you vote electronically
over the internet or by telephone, you may incur costs such as internet access and telephone charges for which you will be responsible.
Even if you plan to attend the special meeting in person, you are strongly encouraged to vote your shares of common stock by proxy. If you are
a record holder or if you obtain a legal proxy to vote shares that you beneficially own, you may still vote your shares of common stock in person by ballot at the special meeting even if you have previously voted by proxy. If you are
present at the special meeting and vote in person by ballot, your previous vote by proxy will not be counted.
If your shares are held in
street name through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee, or, if such a service is
provided by your bank, broker or other nominee, electronically over the internet or by telephone. To vote over the internet or by telephone through your bank, broker or other nominee, you should follow the instructions on the voting instruction form
provided by your bank, broker or nominee. However, because you are not the stockholder of record, you may not vote your shares in person by ballot at the special meeting unless you obtain a legal proxy from your bank, broker or other
nominee giving you the right to vote your shares at the special meeting.
If you hold your shares of common stock in street name, you should contact your bank,
broker or other nominee for instructions regarding how to change your vote. You may also vote in person at the special meeting if you obtain a legal proxy from your bank, broker or other nominee giving you the right to vote your shares
at the special meeting.
If you sign and date your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by
your properly signed proxy will be voted (1)
FOR
the adoption of the merger agreement; (2)
FOR
the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3)
FOR
the approval, on a non-binding, advisory basis, of compensation that will or may become payable
by LifeLock to our named executive officers in connection with the merger.
You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy
cards or voting instruction cards, if your shares are registered differently or are held in more than one account. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction form for each
brokerage account in which you hold shares. If you are a LifeLock stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card.
Please vote all voting materials that you
receive.
A Non-U.S. Holder (as defined in the section of this proxy statement captioned The MergerMaterial U.S. Federal Income Tax
Consequences of the Merger) generally will not be subject to U.S. federal income tax with respect to the exchange of common stock for cash in the merger unless such Non-U.S. Holder has certain connections to the United States.
Because particular circumstances may differ, we recommend that you consult your own tax advisor to determine the U.S. federal income tax
consequences relating to the merger in light of your own particular
circumstances and any consequences arising under U.S. federal non-income tax laws or the laws of any state, local or foreign taxing jurisdiction. A more complete description of material U.S.
federal income tax consequences of the merger is provided in the section of this proxy statement captioned The MergerMaterial U.S. Federal Income Tax Consequences of the Merger.
At the
effective time of the merger, each unvested option and unvested RSU, that is outstanding immediately before and at the effective time of the merger and held by a LifeLock service provider other than a
non-employee
director at the effective time of the merger, will be assumed by Symantec and automatically converted into an option or restricted stock unit award, respectively, representing the right to
acquire, on the same terms and conditions applicable to such unvested option or unvested RSU immediately before the effective time of the merger, shares of Symantec common stock, except as follows. The number of shares of Symantec common stock
subject to the assumed option or assumed RSU will be determined as the number of shares of common stock that were subject to the unvested option or unvested RSU immediately before the effective time of the merger, multiplied by the exchange ratio,
with the resulting number rounded down to the nearest whole share. The per share exercise price for each assumed option will equal the per share exercise price for the unvested option immediately before the effective time of the merger, divided by
the exchange ratio and rounded up to the nearest whole cent. The assumed options and assumed RSUs also remain subject to any applicable provisions under the LifeLock Stock Plan under which the award was granted or any stock option, restricted stock
unit, employment, change of control, or other plan or agreement between the holder of the assumed option or assumed RSU, as applicable, and LifeLock.
(877) 825-8621 (Toll-Free From the U.S. and Canada)
If your broker, bank or other nominee holds your shares of common stock, you should also call your broker, bank or other
nominee for additional information.
This proxy statement, the documents to which we refer you in this proxy statement and information included in oral statements or other written
statements made or to be made by us or on our behalf contain forward-looking statements that do not directly or exclusively relate to historical facts. You can typically identify forward-looking statements by the use of forward-looking
words, such as may, should, could, project, believe, anticipate, expect, estimate, continue, potential, plan,
forecast and other words of similar import. LifeLock stockholders are cautioned that any forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may
vary materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the SEC, including in our most recent filings on Forms 10-K and 10-Q, factors and
matters described or incorporated by reference in this proxy statement, and the following factors:
Consequently, all of the forward-looking statements that we make in this proxy statement are qualified by the information contained or
incorporated by reference in this proxy statement, including (1) the information
contained under this caption; and (2) the information contained under the caption Risk Factors and information in our consolidated financial statements and notes thereto included
in our most recent filings on Forms 10-K and 10-Q. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.
Except as required by applicable law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new
information, future events or otherwise. LifeLock stockholders are advised to consult any future disclosures that we make on related subjects as may be detailed in our other filings made from time to time with the SEC.
The enclosed proxy card and this proxy statement are being furnished to LifeLock stockholders as part of the solicitation of proxies on behalf
of the LifeLock Board for use at the special meeting.
We will hold the special meeting on [●], 2017, at [●], at [●] [a/p.m.], [●] time.
LifeLock stockholders who plan to attend the special meeting will need to present proof of ownership of shares of common stock, such as a bank
or brokerage account statement, and a form of personal identification to be admitted to the special meeting. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the special meeting.
At the special meeting, we will ask LifeLock stockholders to vote on proposals to (1) adopt the merger agreement; (2) adjourn the
special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) approve, by non-binding, advisory vote, compensation that will
or may become payable by LifeLock to our named executive officers in connection with the merger.
Only LifeLock stockholders of record as of the close of business on [●], 2016, the record date of the
special meeting, are entitled to notice of, and to vote at, the special meeting. A list of LifeLock stockholders entitled to vote at the special meeting will be available at our principal executive offices located at 60 East Rio Salado Parkway,
Suite 400, Tempe, AZ 85281, during regular business hours for a period of no less than 10 days before the special meeting and at the place of the special meeting during the meeting.
As of the record date, there were [●] shares of common stock outstanding and entitled to vote at the special meeting.
The presence at the special meeting in person or by proxy of the holders of a majority of the aggregate voting power of the common stock
issued and outstanding and entitled to vote will constitute a quorum at the special meeting. In the event that a quorum is not present at the special meeting, it is expected that the meeting will be adjourned to solicit additional proxies.
The affirmative vote of the holders of at least a majority of the outstanding shares of common stock is required to adopt the merger agreement.
Approval of the adjournment of the special meeting, whether or not a quorum is present, requires the affirmative vote of a majority of the voting power of the shares of common stock present in person or represented by proxy at the special meeting
and entitled to vote on the proposal. Approval, by non-binding, advisory vote, of compensation that will or may become payable by LifeLock to our named executive officers in connection with the merger requires the affirmative vote of a majority of
the voting power of the shares of common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
If a LifeLock stockholder abstains from voting, that abstention will have the same effect as if the stockholder voted
AGAINST
the adoption of the merger agreement. For LifeLock stockholders who attend the meeting or are represented by proxy and vote to abstain, the abstention will have the same effect as if the
As of the record date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [●] shares of
common stock, representing approximately [●]% of the shares of common stock outstanding on the record date. Our directors and executive officers have informed us that they currently intend to vote all of their shares of common stock
(1)
FOR
the adoption of the merger agreement; (2)
FOR
the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes to adopt the merger agreement at the time of the special meeting; and (3)
FOR
the approval, on a non-binding, advisory basis, of compensation that will or may become payable by LifeLock to our named
executive officers in connection with the merger. Certain of our directors and executive officers have entered into a support agreement whereby they have each agreed to vote their shares in favor of the adoption of the merger agreement and the other
proposals set forth in this proxy statement. For more information, see the section of this proxy statement captioned The Support Agreement.
If your shares are registered in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you may cause your shares
to be voted by returning a signed and dated proxy card in the accompanying prepaid reply envelope, or you may vote in person by ballot at the special meeting. Additionally, you may grant a proxy electronically over the internet or by telephone by
following the instructions on your proxy card. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the internet or by telephone. Based on your proxy cards or
internet and telephone proxies, the proxy holders will vote your shares according to your directions.
If you plan to attend the special
meeting and wish to vote in person, you will be given a ballot at the special meeting. If your shares are registered in your name, you are encouraged to vote by proxy even if you plan to attend the special meeting in person. If you attend the
special meeting and vote in person by ballot, your vote will revoke any previously submitted proxy.
All shares represented by properly
signed and dated proxies received in time for the special meeting will be voted at the special meeting in accordance with the instructions of the LifeLock stockholder. Properly signed and dated proxies that do not contain voting instructions will be
voted (1)
FOR
the adoption of the merger agreement; (2)
FOR
the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes to adopt the merger agreement at the time of the special meeting; and (3)
FOR
the approval, on a non-binding, advisory basis, of compensation that will or may become payable by LifeLock to our named
executive officers in connection with the merger.
If your shares are held in street name through a bank, broker or other nominee, you
may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee or attending the special meeting and voting in person with a legal proxy from your
bank, broker or other nominee giving you the right to vote your shares in person at the special meeting. If such a service is provided, you may vote over the internet or telephone through your bank, broker or other nominee by following the
instructions on the voting instruction form provided by your bank, broker or other nominee. If you do not return your banks, brokers or other nominees voting instruction form, do not vote over the internet or by telephone through
your bank, broker or other nominee, if possible, or do not attend the special meeting and vote in person with a legal proxy from your bank, broker or other nominee, it will have the same effect as if you voted
AGAINST
the adoption of the merger agreement but will not have any effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the
special meeting or the vote to approve, by non-binding, advisory vote, compensation that will or may become payable by LifeLock to our named executive officers in connection with the merger.
In addition to the proposals to (1) adopt the merger agreement; and (2) approve, on a non-binding, advisory basis, compensation that
will or may become payable by LifeLock to our named executive officers in connection with the merger, LifeLock stockholders are also being asked to approve the adjournment of the special meeting to a later date or dates, if necessary or appropriate,
to solicit additional votes or proxies in favor of the adoption of the merger agreement if there are insufficient votes at the time of the special meeting to approve the merger agreement. If a quorum is not present or represented, the chairperson of
the special meeting or the LifeLock stockholders entitled to vote at the special meeting, present in person or represented by proxy, may adjourn the special meeting, from time to time, without notice other than announcement at the meeting, until a
quorum is present or represented. In addition, the special meeting could be postponed before it commences, subject to the terms of the merger agreement. If the special meeting is adjourned or postponed, LifeLock stockholders who have already
submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals.
If you are a LifeLock stockholder of record, you may change your vote or revoke your proxy at any time
before
it
is voted at the special meeting by:
If you have submitted a proxy,
your appearance at the special meeting, in the absence of voting in person or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.
If you hold your shares of common stock in street name, you should contact your bank, broker or other nominee for instructions
regarding how to change your vote. You may also vote in person at the special meeting if you obtain a legal proxy from your bank, broker or other nominee giving you the right to vote your shares in person at the special meeting.
Any adjournment, postponement or other delay of the special meeting, including for the purpose of soliciting additional proxies, will allow
LifeLock stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned, postponed or delayed.
The LifeLock Board, after considering various factors described in the section of this proxy statement captioned The
MergerRecommendation of the LifeLock Board and Reasons for the Merger, has unanimously (1) determined that it is in the best interests of LifeLock and its stockholders, and declared it advisable, to enter into the merger agreement and
consummate the merger upon the terms and subject to the conditions set forth in the merger agreement; (2) approved the execution and delivery of the merger agreement by LifeLock, the performance by LifeLock of its covenants and other obligations in
the merger agreement, and the consummation of the merger upon the terms and conditions set forth in the merger agreement; (3) directed that the adoption of the merger agreement be submitted to a vote at the special meeting; and (4) resolved to
recommend that the LifeLock stockholders vote in favor of the adoption of the merger agreement in accordance with the DGCL. The LifeLock Board unanimously recommends that you vote (1)
FOR
the adoption of the merger
agreement; (2)
FOR
the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the
special meeting; and (3)
FOR
the approval, on a non-binding, advisory basis, of compensation that will or may become payable by LifeLock to our named executive officers in connection with the merger.
The expense of soliciting proxies will be borne by LifeLock. We have retained Innisfree M&A Incorporated, a professional proxy solicitation
firm, to solicit proxies in connection with the special meeting at a cost of approximately $20,000 plus expenses. We will also indemnify Innisfree M&A Incorporated against losses arising out of its provisions of these services on our behalf. In
addition, we may reimburse banks, brokers and other nominees representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and
employees, personally or by telephone, email, fax or over the internet. No additional compensation will be paid for such services. In some instances, Symantec may be deemed to be a participant in the solicitation of proxies.
We currently expect to complete the merger during the first calendar quarter of 2017. The merger agreement provides that the earliest that
Symantec is required to consummate the closing is January 31, 2017, subject to satisfaction and waiver of all of the closing conditions in the merger agreement. However, the exact timing of completion of the merger cannot be predicted because the
merger is subject to the closing conditions specified in the merger agreement, many of which are outside of our control. Even if all other closing conditions are satisfied or waived, if Symantec has not received specified financial information prior
to the closing or if such specified financial information is not compliant (as such terms are defined in this section of this proxy statement captioned The Merger AgreementFinancing Cooperation), Symantec is not obligated to
consummate the closing until five business days after the date Symantec receives such specified financial information. For more information, see the section of this proxy statement captioned The Merger AgreementClosing and Effective Time
of the Merger and the section captioned The Merger AgreementFinancing Cooperation.
If the merger is consummated, LifeLock stockholders who do not vote in favor of the adoption of the merger agreement, who continuously
hold such shares through the effective time of the merger, who properly exercise and perfect appraisal of their shares and who meet certain other conditions and statutory requirements described herein will be entitled to appraisal rights in
connection with the merger under Section 262 of the DGCL. This means that holders of shares of common stock may be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the fair
value of their shares of common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest to be paid on the amount determined to be fair value, if any, as determined by the
court (subject, in the case of
interest payments, to any voluntary cash payments made by LifeLock pursuant to subsection (h) of Section 262 of the DGCL, as described in more detail below), so long as they comply with the
procedures established by Section 262 of the DGCL. Due to the complexity of the appraisal process, LifeLock stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the
exercise of appraisal rights.
To exercise your appraisal rights, you must (1) submit a written demand for appraisal to LifeLock before the vote is taken on the
adoption of the merger agreement; (2) not vote, in person or by proxy, in favor of the adoption of the merger agreement; and (3) continue to hold your shares of common stock of record through the effective time of the merger. Your failure
to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. The DGCL requirements for exercising appraisal rights are described in further detail in this proxy statement, and the relevant section of the
DGCL regarding appraisal rights is reproduced and attached as Annex C to this proxy statement. If you hold your shares of common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with
your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by such bank, brokerage firm or nominee.
Other Matters
At this time, we know of no other matters to be voted on at the special meeting. If any other matters properly come before the special meeting,
your shares of common stock will be voted in accordance with the discretion of the appointed proxy holders.
Householding of
Special Meeting Materials
We have adopted a procedure approved by the SEC called householding. Under this procedure,
LifeLock stockholders who have the same address and last name will receive only one copy of this proxy statement unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces
printing costs, postage fees and the use of natural resources. Each LifeLock stockholder who participates in householding will continue to be able to access or receive a separate proxy card.
If you wish to receive a separate set of our disclosure documents at this time, contact Broadridge Financial Solutions, Inc. by telephone at
866-540-7095 (inside or outside of the U.S.), or by writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717. If you wish to receive a separate set of our disclosure documents in the future,
you may contact Investor Relations, LifeLock, Inc. 60 East Rio Salado Parkway, Suite 400, Tempe, Arizona 85281.
If you are a LifeLock
stockholder who has multiple accounts in your name or you share an address with other LifeLock stockholders and would like to receive a single set of our disclosure documents for your household, you may notify your broker, if your shares are held in
a brokerage account, or if you hold registered shares, by notifying either LifeLock Investor Relations or Broadridge using the contact methods above.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on [
●
], 2017
This proxy statement is available at
www.lifelock.com
under InvestorsSEC Filings.
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Questions and Additional Information
If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of this proxy
statement or need help voting your shares of common stock, please contact our proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New
York, New York 10022
LifeLock Stockholders May Call:
(877) 825-8621 (Toll-Free From the U.S. and Canada)
or
(412) 232-3651 (From Other
Locations)
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THE MERGER
This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached as Annex A to this proxy
statement and incorporated into this proxy statement by reference. You should read the entire merger agreement carefully as it is the legal document that governs the merger.
Parties Involved in the Merger
LifeLock, Inc.
60
East Rio Salado Parkway, Suite 400
Tempe, Arizona 85281
(480) 682-5100
LifeLock is a
leading provider of proactive identity theft protection services for consumers and consumer risk management services for enterprises. LifeLocks threat detection, proactive identity alerts, and comprehensive remediation services help provide
peace of mind for consumers amid the growing threat of identity theft. Leveraging unique data, science and patented technology from ID Analytics, LLC, a wholly owned subsidiary, LifeLock offers identity theft protection that goes significantly
beyond credit monitoring. As part of its commitment to help fight identity theft, LifeLock works to train law enforcement and partners with a variety of non-profit organizations to help consumers establish positive habits to combat this threat.
LifeLocks common stock is listed on the NYSE under the symbol LOCK.
Symantec Corporation
350 Ellis St.
Mountain View,
California 94043
(650) 527-8000
Symantec is a global leader in cybersecurity. It operates its business on a global civilian cyber intelligence threat network and tracks a
vast number of threats across the internet from hundreds of millions of mobile devices, endpoints, and servers across the globe. Symantec is leveraging its capabilities in threat protection and data loss prevention and extending them into its core
security offerings. It is also pioneering new solutions in growing markets like cloud, advanced threat protection, information protection and cyber security services. Founded in 1982, Symantec has operations in more than 35 countries.
Symantecs common stock is listed on NASDAQ under the symbol SYMC.
L1116 Merger Sub, Inc.
c/o Symantec Corporation
350
Ellis St.
Mountain View, California 94043
(650) 527-8000
Acquisition Sub
is a wholly owned direct subsidiary of Symantec and was formed on November 17, 2016, solely for the purpose of engaging in the transactions contemplated by the merger agreement and has not engaged in any business activities other than in connection
with the transactions contemplated by the merger agreement.
Relationship Between LifeLock and Symantec
In the ordinary course of business, LifeLock and Symantec have entered into the following agreements and arrangements:
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|
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On December 15, 2012, LifeLock entered into a Cloud Services Agreement with Symantec, which we refer to as the
Services Agreement. Under the Services Agreement, Symantec provides certain cloud
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services to LifeLock. The term of the Services Agreement is for 36 months from the effective date of the Services Agreement and provides for automatic renewal for additional 12 month periods
until either party provides the other with written notification of non-renewal.
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On October 21, 2016, LifeLock entered into a partner Marketing Test Agreement with Symantec, which we refer to as the Marketing Agreement. Under the Marketing Agreement, LifeLock appointed Symantec as a
reseller of certain of its solutions to offer with Symantecs offering and co-marketed on Symantecs website pursuant to a limited time test. The Marketing Agreement is effective until such time as either party provides the other party 24
hour prior written notice of termination.
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Effect of the Merger
Upon the terms and subject to the conditions of the merger agreement, Acquisition Sub will merge with and into LifeLock, with LifeLock
continuing as the surviving corporation. As a result of the merger, LifeLock will continue as the surviving corporation and a wholly owned subsidiary of Symantec, and our common stock will no longer be publicly traded and will be delisted from the
NYSE. In addition, our common stock will be deregistered under the Exchange Act, and we may no longer file periodic reports with the SEC. If the merger is completed, you will not own any shares of the capital stock of the surviving
corporation.
The effective time of the merger will occur upon the filing of a certificate of merger with the Secretary of State of the
State of Delaware (or at such later time as we, Symantec and Acquisition Sub may agree in writing and specify in such certificate of merger).
Effect on LifeLock if the Merger is Not Completed
If the merger agreement is not adopted by LifeLock stockholders or if the merger
is not completed for any other reason, LifeLock stockholders will not receive any payment for their shares of common stock. Instead, LifeLock will remain an independent public company, our common stock will continue to be listed and traded on the
NYSE and registered under the Exchange Act and we will continue to file periodic reports with the SEC. In addition, if the merger is not completed, we expect that management will operate the business in a manner similar to that in which it is
being operated today and that LifeLock stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including risks related to the highly competitive industry in which LifeLock operates,
volatility of the stock price, evolving regulatory environment and adverse economic conditions.
Furthermore, if the merger is not
completed, and depending on the circumstances that caused the merger not to be completed, the price of our common stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of our common stock would return to
the price at which it trades as of the date of this proxy statement.
Accordingly, if the merger is not completed, there can be no
assurance as to the effect of these risks and opportunities on the future value of your shares of common stock. If the merger is not completed, the LifeLock Board will continue to evaluate and review, among other things, LifeLocks business
operations, strategic direction and capitalization, and will make whatever changes it deems appropriate. If the merger agreement is not adopted by LifeLock stockholders or if the merger is not completed for any other reason, LifeLocks
business, prospects or results of operation may be adversely impacted.
Under specified circumstances, LifeLock will be required to pay
Symantec a termination fee of $87.5 million upon the termination of the merger agreement. For more information, see the section of this proxy statement captioned The Merger AgreementTermination Fees.
Merger Consideration
In the merger, each outstanding share of common stock (other than shares held by (1) LifeLock as treasury stock; (2) Symantec or
Acquisition Sub; (3) any subsidiary of LifeLock, Symantec or Acquisition Sub; and
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(4) LifeLock stockholders who have neither voted in favor of the adoption of the merger agreement nor consented thereto in writing and have properly and validly exercised and perfected their
appraisal rights under the DGCL with respect to such shares) will be cancelled and extinguished and automatically converted into the right to receive the per share merger consideration.
After the merger is completed, you will have the right to receive the per share merger consideration, as described in the section of this
proxy statement captioned The Merger AgreementConversion of Shares, but you will no longer have any rights as a LifeLock stockholder (except that LifeLock stockholders who properly exercise their appraisal rights will have the
right to receive a payment for the fair value of their shares as determined pursuant to an appraisal proceeding as contemplated by the DGCL, as described in the section of this proxy statement captioned Appraisal
Rights).
Background of the Merger
The following chronology summarizes the key meetings and events that led to the signing of the merger agreement. This chronology does not
purport to catalogue every conversation among the Strategic Committee (as defined below), the LifeLock Board or the representatives of LifeLock, and other parties.
The LifeLock Board regularly evaluates LifeLocks strategic direction and ongoing business plans with a view toward strengthening its
core businesses and enhancing stockholder value. As part of this evaluation, the LifeLock Board has from time to time considered a variety of strategic alternatives, including (1) the continuation of LifeLocks current business plan as a
standalone entity; (2) modifications to LifeLocks business plan and strategy; (3) repurchases of common stock and other financing alternatives; (4) potential expansion opportunities into new business lines through acquisitions and combinations
of LifeLock with other businesses; and (5) other strategic alternatives.
In the second half of 2015, LifeLocks common stock price
was subject to significant volatility after a July 21, 2015 announcement of allegations by the Federal Trade Commission, which we refer to as the FTC, of contempt in relation to a prior consent decree LifeLock entered into with the
FTC. On December 17, 2015, LifeLock announced that it entered into a comprehensive settlement of these claims with the FTC and a settlement of related consumer class action lawsuits. Also in late 2015, LifeLock announced its intention to
repurchase up to $100 million of its common stock by the end of 2016, which was executed from February 2016 through May 2016, including through the use of two accelerated share repurchase agreements. LifeLocks closing stock price was $16.06 on
the day prior to the announcement of the FTC allegations, LifeLocks closing stock price was $8.15 on the day following the announcement of the FTC allegations, and LifeLocks closing stock price on the day of and prior to the filing of
Elliotts Schedule 13D after the close of market, as described below, was $15.06. During the period following the FTC allegations, LifeLock received occasional unsolicited communications from financial sponsors seeking to ascertain whether
LifeLock would be interested in entering into discussions concerning strategic alternatives with them, was considering or would consider a going private strategic transaction, and expressing interest in participating in discussions if it was a path
that LifeLock wanted to explore. None of these unsolicited inquiries resulted in the exchange of confidential information to facilitate such discussions at the time.
On June 16, 2016, Elliott Associates, L.P. and certain affiliated investment funds, which we refer to collectively as Elliott,
filed a Schedule 13D disclosing that Elliott had acquired beneficial ownership of 7.6% of LifeLock common stock, as well as a position in derivative instruments increasing Elliotts economic exposure in our by an additional 1.2% of our common
stock. Elliotts Schedule 13D stated that Elliott (1) believed that our common stock was undervalued relative to the price before LifeLock had announced an accelerated share repurchase program in May 2016, and (2) had initiated a dialogue with
LifeLock management and the LifeLock Board on opportunities to enhance stockholder value. Prior to Elliott filing its Schedule 13D, a representative of Elliott called LifeLocks Chief Executive Officer and President, Hilary Schneider, and
informed her that Elliott was about to make its Schedule 13D filing and requested a meeting with the LifeLock Board and LifeLock management.
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On June 16, 2016, in light of Elliotts Schedule 13D filing, representatives of LifeLock
management contacted Goldman Sachs. Goldman Sachs acted as the lead underwriter in LifeLocks initial public offering and from time to time advised LifeLock on other strategic matters. Around this time, LifeLock also contacted another
investment bank concerning Elliotts Schedule 13D filing, but did not retain that investment bank. A representative of LifeLock also contacted Wilson Sonsini Goodrich & Rosati, Professional Corporation, outside legal counsel to LifeLock,
which we refer to as Wilson Sonsini, to provide legal advice in connection with Elliotts Schedule 13D filing.
On June
24, 2016, Ms. Schneider, Chris Power, LifeLocks then Chief Financial Officer, Douglas Jeffries, LifeLocks then Chief Administrative Officer and current Chief Financial Officer, and another member of LifeLock management met with
representatives of Elliott and a private equity fund affiliated with Elliott. Elliott and this affiliated private equity fund are together referred to as Sponsor A. The representatives of Sponsor A stated that Sponsor A might be
interested in exploring a potential strategic transaction with LifeLock and requested that LifeLock enter into a confidentiality agreement with customary protections for LifeLock.
Following Elliotts Schedule 13D filing, LifeLock and its representatives received additional (and in some cases, renewed) unsolicited
communications from various financial sponsors regarding LifeLocks interest in exploring a potential acquisition transaction.
On
June 27, 2016, the LifeLock Board met, with representatives of each of LifeLock management, Goldman Sachs, and Wilson Sonsini in attendance. The representatives of Wilson Sonsini discussed with the members of the LifeLock Board their fiduciary
duties. The representatives of Goldman Sachs discussed with the members of the LifeLock Board market perspectives on LifeLocks valuation, information on Elliott and potential responses to Elliott. These potential responses included engagement
with Sponsor A or Elliott individually, initiation of a value discovery process or continuing to operate LifeLocks business on a standalone basis. The members of the LifeLock Board discussed the potential engagement of a financial advisor. The
LifeLock Board reviewed Goldman Sachs expertise, its familiarity with LifeLocks business and the overall industry and Elliott, and LifeLocks prior experience with Goldman Sachs. Following review of potential financial advisors, the
LifeLock Board approved the engagement of Goldman Sachs and authorized LifeLock management to enter into an engagement letter with Goldman Sachs on the terms presented to the LifeLock Board.
On June 28, 2016, Elliott sent a letter to the LifeLock Board providing background on Elliott. The letter also provided Elliotts views
regarding LifeLocks performance as a public company and the advantages that Elliott perceived in LifeLock operating as a private company. Also on June 28, 2016, Elliott filed an amendment to its Schedule 13D disclosing that its beneficial
ownership was 7.6% of LifeLock common stock, and a position in derivative instruments increasing its economic exposure in LifeLock by an additional 2.3% of LifeLock common stock.
On July 5, 2016, a significant LifeLock stockholder contacted a representative of LifeLock management and requested a conversation with
LifeLock management and an independent member of the LifeLock Board to discuss the stockholders perspective on LifeLock, as well as the long-term views of LifeLock management and the LifeLock Board. On July 6, 2016, Ms. Schneider and Roy
Guthrie, an independent director and the Chairman of the LifeLock Board, spoke with this stockholder. During this conversation, the stockholder stated that it would be in favor of LifeLock exploring a potential sale transaction. In June and July
2016, representatives of LifeLock management also held conversations with several other major LifeLock stockholders to discuss their reactions with respect to the Elliott Schedule 13D filings; in response, some of these major stockholders stated
they would be open to a sale of LifeLock on appropriate terms.
On July 13, 2016, LifeLock formally engaged Goldman Sachs to assist
LifeLock with stockholder activism and, if requested by the LifeLock Board, the exploration of strategic alternatives.
On July 14, 2016,
the LifeLock Board met, with representatives of each of LifeLock management, Goldman Sachs and Wilson Sonsini in attendance. The LifeLock Board discussed Sponsor As interest in a potential
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acquisition of LifeLock, as well as the other inquiries regarding a potential acquisition that LifeLock had received. The LifeLock Board also reviewed the discussions with significant
stockholders LifeLock that had taken place. Representatives of LifeLock management reviewed their forecasts of LifeLocks standalone plan and the key assumptions underlying the forecasts. These forecasts were prepared as a part of
LifeLocks internal strategic planning review process; however, the timing of the process was accelerated in light of Elliott filing its Schedule 13D. The LifeLock Board discussed alternatives available to LifeLock, including whether to
conduct an accelerated return of capital and whether to engage in a process to explore interest in a possible acquisition of LifeLock. The representatives of Goldman Sachs provided a preliminary financial analysis of LifeLock and reviewed with the
LifeLock Board potential strategic acquirors and financial sponsors who might have an interest in acquiring LifeLock, should the LifeLock Board determine to explore a sale. The representatives of Wilson Sonsini reviewed with the members of the
LifeLock Board their fiduciary duties. Following discussion, the LifeLock Board determined that LifeLock should privately solicit interest in a potential acquisition from a group of potential acquirors for a potential acquisition, which included
both financial sponsors and strategic acquirors. The LifeLock Board authorized Goldman Sachs, on behalf of LifeLock, to contact various parties identified by the LifeLock Board, with input from Goldman Sachs, that might have an interest in acquiring
LifeLock. These parties included Sponsor A and each of the substantial parties that had previously expressed interest. The parties were selected based on the LifeLock Boards review of numerous factors, including financial and other factors
impacting the ability to consummate an acquisition, interest in LifeLocks business, and potential strategic fit. After discussion with its advisors, the LifeLock Board determined that engagement with any party would be conditioned on reaching
an appropriate confidentiality agreement. In addition, in light of the potentially significant workload involved in exploring strategic alternatives and the possibility that in connection with such exploration LifeLock management might need feedback
and direction on relatively short notice, the LifeLock Board created a strategic committee, which we refer to as the Strategic Committee. The Strategic Committee was authorized to (1) advise and direct LifeLock management with
respect to the exploration, consideration and negotiation of strategic alternatives; (2) facilitate negotiation; and (3) report to the LifeLock Board on a regular basis. The LifeLock Board retained authority to review, assess and approve any
transaction. The LifeLock Board appointed Mr. Guthrie and Albert Rocky Pimentel to the Strategic Committee. Mr. Guthrie and Mr. Pimentel were selected to be on the Strategic Committee after considering their independence (including Mr.
Guthries status as independent Chairman of the LifeLock Board), business and industry expertise, and experience in finance and acquisition matters.
On July 15, 2016, representatives of Goldman Sachs spoke with representatives of Sponsor A to further explore Sponsor As interest in a
possible acquisition of LifeLock. At the conclusion of the discussion, representatives of Goldman Sachs and Sponsor A discussed having counsel to Sponsor A contact Wilson Sonsini to further discuss the terms of a confidentiality agreement. The
representatives of Wilson Sonsini, on behalf of LifeLock, conveyed to counsel to Sponsor A concerns regarding confidentiality and Sponsor As use of LifeLocks information.
On July 19, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs and Wilson Sonsini in
attendance. The Strategic Committee discussed with the representatives of Goldman Sachs the financial sponsors and strategic acquirors identified as possibly having an interest in a potential acquisition of LifeLock. The Strategic Committee
authorized Wilson Sonsini to negotiate the terms of confidentiality agreements with the parties identified by the LifeLock Board at its meeting on July 14, 2016, including Sponsor A.
As discussed below, beginning in late July 2016, and continuing through September 2016, representatives of Goldman Sachs contacted a total of
30 potential strategic acquirors and 16 potential financial sponsors, which included each of the substantial financial sponsors that had expressed interest regarding a potential acquisition of LifeLock both before and after the filing of the
Schedule 13D by Elliott. Of the parties contacted, two potential strategic acquirors, in addition to Symantec, and seven financial sponsors, in addition to Sponsor A, ultimately executed confidentiality agreements with LifeLock. These
confidentiality agreements contained customary standstill provisions that restricted the potential acquirors from making unsolicited proposals to LifeLock
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stockholders for a period of nine to 18 months. The standstill provisions did not restrict the potential acquirors from making confidential proposals and requests to waive the standstill to the
LifeLock Board. As discussed below, LifeLock ultimately received acquisition proposals from five financial sponsors and Symantec.
On July
20, 2016, counsel to Sponsor A provided a draft of a confidentiality agreement to Wilson Sonsini, on behalf of LifeLock, for review. After negotiation, LifeLock and Sponsor A signed the confidentiality agreement on August 13, 2016. The
confidentiality agreement contained customary restrictions on Sponsor As disclosure of LifeLocks confidential information and use of LifeLocks information only for a transaction during the term of the agreement. The agreement did
not contain an explicit standstill provision, but provided that prior to January 20, 2017, LifeLocks confidential information could only be used in connection with a negotiated transaction.
On July 22, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs and Wilson Sonsini in
attendance. The Strategic Committee discussed inquiries received by LifeLock from financial sponsors regarding a potential acquisition both before and after the filing of the Schedule 13D by Elliott. The representatives of Goldman Sachs discussed
with the Strategic Committee planned outreach to financial sponsors and strategic acquirors, including the substantial financial sponsors that had previously expressed interest.
On July 29, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs and Wilson Sonsini in
attendance. The representatives of Goldman Sachs discussed with the Strategic Committee the preliminary results of outreach to certain financial sponsors and strategic acquirors identified as possibly having an interest in a potential transaction
with LifeLock. With input from the representatives of Goldman Sachs, the members of the Strategic Committee discussed other companies that could potentially have an interest in an acquisition of LifeLock, should the LifeLock Board wish to expand the
process.
On August 2, 2016, LifeLock announced its 2016 second quarter results.
On August 3, 2016 and August 4, 2016, the LifeLock Board met. For portions of these meetings, representatives of each of LifeLock
management, Goldman Sachs, Wilson Sonsini, and Skadden, Arps, Slate, Meagher & Flom LLP, which we refer to as Skadden, were in attendance. LifeLock retained Skadden to act as special counsel to the LifeLock Board on stockholder
activism and the exploration of strategic alternatives. The representatives of Goldman Sachs updated the members of the LifeLock Board regarding the ongoing outreach to financial sponsors and strategic acquirors identified as possibly having an
interest in a potential transaction with LifeLock. The representatives of Goldman Sachs also stated that Sponsor A was interested in working with another financial sponsor, which we refer to as Sponsor B, with respect to a potential
acquisition of LifeLock. Based on the LifeLock Boards belief that allowing Sponsor A to work with Sponsor B might enable them to present a stronger proposal than either could alone, the LifeLock Board authorized entry into a confidentiality
agreement with Sponsor B (and corresponding provisions in the confidentiality agreement being negotiated with Sponsor A) that would permit Sponsor B to cooperate with Sponsor A in connection with a potential acquisition of LifeLock. With the
assistance of the representatives of Goldman Sachs, the members of the LifeLock Board reviewed additional financial sponsors and strategic acquirors not previously contacted that might have an interest in an acquisition of LifeLock, and approved
contact with additional parties. The representatives of Goldman Sachs discussed next steps for exploring a potential acquisition of LifeLock, including management meetings with potential acquirors. As part of LifeLocks strategic planning
process, the LifeLock Board and LifeLock management reviewed in detail LifeLocks standalone strategic and financial plan.
On August
5, 2016, the Strategic Committee met, with representatives of each of LifeLock management and Goldman Sachs in attendance. The representatives of Goldman Sachs discussed with the member of the Strategic Committee the ongoing status of discussions
with financial sponsors and strategic acquirors interested in a potential acquisition of LifeLock.
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On August 10, 2016, the Strategic Committee met, with representatives of each of LifeLock
management and Goldman Sachs in attendance. The representatives of Goldman Sachs discussed with the members of the Strategic Committee an update on the financial sponsors and strategic acquirors that had indicated they were interested in continuing
to participate in a process to explore a potential acquisition of LifeLock.
On August 12, 2016, Elliott filed an amendment to its
Schedule 13D to disclose that its beneficial ownership was 8.4% of LifeLock common stock, and its position in derivative instruments increased its economic exposure in LifeLock to an additional 2.5% of LifeLock common stock. This filing also stated
that it had communicated with members of LifeLock management and had encouraged LifeLock to undertake a strategic review process.
On
August 17, 2016, the Strategic Committee met, with representatives of each of LifeLock management and Goldman Sachs in attendance. The representatives of Goldman Sachs discussed with the members of the Strategic Committee the status of outreach to
parties that had indicated preliminary interest in pursuing a potential transaction. The members of the Strategic Committee considered contacting additional strategic acquirors, and authorized Goldman Sachs to contact these strategic acquirors. The
representatives of Goldman Sachs then discussed the progress of entering into confidentiality agreements with financial sponsors and strategic acquirors and the planned commencement of management meetings with the parties who had executed
confidentiality agreements.
On August 19, 2016, Symantec informed Goldman Sachs that it was interested in exploring a potential
acquisition of LifeLock, and Goldman Sachs subsequently updated the Strategic Committee regarding this interest.
From August 29 to August
31, 2016, representatives of each of LifeLock management and Goldman Sachs met with representatives of one strategic acquiror (that was not Symantec) and two financial sponsors to provide preliminary due diligence information regarding LifeLock with
respect to a potential acquisition. Additional meetings with strategic acquirors and financial sponsors were scheduled for September 2016.
On August 31, 2016, representatives of Goldman Sachs provided Symantec with a draft of a confidentiality agreement. After negotiation, the
confidentiality agreement was executed by the parties on September 15, 2016. It contained a customary standstill provision that restricted Symantec from making an unsolicited proposal to LifeLock stockholders for a period of 12 months. The
standstill provision did not restrict Symantec from making confidential proposals to the LifeLock Board.
Beginning in September 2016,
LifeLock opened an online data room containing due diligence materials. Interested parties, including Symantec, that entered into confidentiality agreements with LifeLock were provided access to the online data room, which included the July
Forecasts and October Revisions that are described in the section of this proxy statement captioned Financial Forecasts.
On September 2, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and
Skadden in attendance. Ms. Schneider discussed the meetings that had been held with potential acquirors. The representatives of Goldman Sachs discussed with the members of the Strategic Committee the status of outreach to parties that had indicated
preliminary interest in a potential transaction and recommended an expansion of outreach efforts to additional financial sponsors and strategic acquirors identified as possibly having an interest in a potential transaction with LifeLock. The
representatives of Goldman Sachs also noted that Symantec had informed them of its interest in exploring a potential acquisition transaction with LifeLock. The Strategic Committee authorized the representatives of Goldman Sachs to expand the
outreach efforts as suggested.
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Throughout September 2016, in addition to the meetings with two financial sponsors and one
strategic acquiror that occurred in August 2016, representatives of each of LifeLock management and Goldman Sachs met with representatives of each of Symantec and two other strategic acquirors and six financial sponsors, including Sponsor A and
Sponsor B together, to provide due diligence information regarding LifeLock. The meeting with Symantec occurred on September 16, 2016.
On
September 9, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and Skadden in attendance. Ms. Schneider and representatives of Goldman Sachs provided an update on the status of
potential acquisition discussions, including the parties that indicated they were declining to proceed with exploring a possible acquisition, the parties that remained interested in a possible acquisition and the parties from whom LifeLock was still
awaiting a response. The members of the Strategic Committee discussed the overall timing for considering interest in a possible acquisition of LifeLock, including the expectation that LifeLock would request that preliminary indications of interest
be submitted during the first week of October 2016.
On September 14, 2016, the Strategic Committee met, with representatives of each of
LifeLock management, Goldman Sachs, Wilson Sonsini and Skadden in attendance. The representatives of Wilson Sonsini reviewed with the members of the LifeLock Board their fiduciary duties. Ms. Schneider discussed the meetings that had been held with
potential acquirors. The representatives of Goldman Sachs updated the members of the Strategic Committee on the status of the outreach efforts to various parties regarding a possible acquisition, including input received by LifeLock and Goldman
Sachs. The Strategic Committee authorized the representatives of LifeLock management and Goldman Sachs to request that bidders submit preliminary indications of interest by the first week of October 2016.
Between September 17 and September 26, 2016, Goldman Sachs delivered to the nine remaining interested parties a process letter requesting that
parties interested in exploring a transaction with LifeLock submit preliminary indications of interest by October 5, 2016.
On September
30, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and Skadden in attendance. Ms. Schneider provided the members of the Strategic Committee with an update on the recent
management meetings held with potential acquirors. The representatives of Goldman Sachs updated the members of the Strategic Committee on the status of recent discussions and stated that parties interested in exploring a transaction with LifeLock
had been instructed to submit preliminary indications of interest by October 5, 2016. The members of the Strategic Committee discussed with the representatives of Goldman Sachs various valuation metrics related to LifeLock on a standalone basis,
along with other strategic alternatives available to LifeLock.
On October 5, 2016, LifeLock received indications of interest from five
financial sponsors: (1) Sponsor A and Sponsor B together submitted a non-binding indication of interest to acquire LifeLock for a price between $20.00 to $22.00 in cash per share of common stock; (2) a financial sponsor, which we refer to as
Sponsor C, submitted a non-binding indication of interest to acquire LifeLock for a price between $18.50 to $19.50 in cash per share of common stock; (3) a consortium of financial sponsors, which we refer to as Sponsor D,
submitted a non-binding indication of interest to acquire LifeLock for a price between $20.00 to $22.00 in cash per share of common stock; (4) a financial sponsor, which we refer to as Sponsor E, submitted a non-binding indication of
interest to acquire LifeLock for a price between $20.00 to $22.00 in cash per share of common stock; and (5) a financial sponsor, which we refer to as Sponsor F, orally provided a non-binding indication of interest to acquire LifeLock
for a price between $20.00 to $22.00 in cash per share of common stock and stated that it was interested in partnering with another financial sponsor.
On October 7, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and
Skadden in attendance. Following discussion of the five indications of interest that had been received, the members of the Strategic Committee discussed with the representatives of
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each of Goldman Sachs, Wilson Sonsini and Skadden potential next steps in the process. The representatives of Goldman Sachs noted that Symantec had indicated that it expected to submit a
preliminary indication of interest soon after the meeting. The representatives of Goldman Sachs also noted that one of the strategic acquirors with whom LifeLock previously had discussions was not interested in pursuing a potential acquisition of
LifeLock, but remained interested in pursuing a potential commercial agreement. After further discussion, the Strategic Committee concluded to revisit a potential commercial agreement with that strategic acquiror in the event that the sale process
did not result in an acquisition of LifeLock. The representatives of Goldman Sachs provided an overview of LifeLock on a standalone basis and discussed a preliminary valuation analysis. Also on October 7, 2016, Sponsor F indicated that it was no
longer pursuing an acquisition of LifeLock, but would be interested in being part of a consortium led by another financial sponsor.
Later
on October 7, 2016, Symantec submitted a non-binding indication of interest to acquire LifeLock for a price of $20.00 in cash per share of common stock.
On October 10, 2016, the LifeLock Board met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and Skadden in
attendance. The representatives of Wilson Sonsini and Skadden reviewed the fiduciary duties of the members of the LifeLock Board. The representatives of Goldman Sachs reviewed the process to date and the indications of interest received. The members
of the LifeLock Board discussed the indications of interest received and noted in particular that Sponsor Cs proposal was below the other proposals. The LifeLock Board instructed the representatives of Goldman Sachs to inform Sponsor C that
its proposal was materially lower than the other proposals that had been received. The representatives of Wilson Sonsini reviewed a form of proposed merger agreement to be distributed to financial sponsors, as well as changes to the proposed form of
merger agreement to be distributed to Symantec, as a strategic acquiror. The representatives of Wilson Sonsini and Goldman Sachs discussed the customary transaction structures for financial sponsors and strategic acquirors, including the differences
between them, particularly in relation to financing and potential effects on certainty of closing. The representatives of Goldman Sachs reviewed with the LifeLock Board an overview of LifeLock on a standalone basis and discussed a preliminary
valuation analysis, including the Forecasts discussed in the section of this proxy statement captioned Financial Forecasts. The LifeLock Board authorized the distribution of draft merger agreements to Sponsor A-Sponsor B,
Sponsor C, Sponsor D, Sponsor E and Symantec.
Later on October 10, 2016, representatives of Goldman Sachs spoke with Sponsor C regarding
the status of its indication of interest. Sponsor C responded by increasing the price in its indication of interest to $20.00 in cash per share of common stock and stating its desire to partner with Sponsor D going forward.
On October 14, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and
Skadden in attendance. The representatives of Goldman Sachs reviewed the indications of interest that had been received and the process to date. The representatives of Goldman Sachs also discussed that Sponsor C had increased its indication of
interest to $20.00 in cash per share of common stock and had asked to be paired with Sponsor D in order to continue to proceed with the exploration of an acquisition of LifeLock. The representatives of Goldman Sachs also noted the possibility of
pairing Sponsor E and Sponsor F, given Sponsor Fs indication that it was no longer interested in pursuing a transaction by itself. The members of the Strategic Committee discussed whether to allow the pairing of Sponsor C and Sponsor D and the
pairing of Sponsor E and Sponsor F, and determined that these pairings could enable the respective consortiums to potentially make stronger proposals. The Strategic Committee requested that Goldman Sachs facilitate the pairings. The representatives
of Goldman Sachs also reviewed with the Strategic Committee the debt financing sources that had been disclosed by interested parties. The members of the Strategic Committee discussed the anticipated timeline for soliciting final proposals from the
participating parties. Following the meeting, Sponsor F partnered with Sponsor E to evaluate a potential acquisition transaction with LifeLock going forward.
On October 14, October 17, and October 25, 2016, representatives of each of LifeLock management, including Ms. Schneider and Mr. Jeffries, and
Goldman Sachs met with representatives of each of Sponsor C and Sponsor D to allow Sponsor C and Sponsor D to conduct due diligence on LifeLock.
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On October 18, 2016, and October 19, 2016, representatives of each of LifeLock management,
including Ms. Schneider and Mr. Jeffries, and Goldman Sachs met with representatives of each of Sponsor A and Sponsor B to allow Sponsor A and Sponsor B to conduct due diligence on LifeLock.
On October 19, 2016, and October 20, 2016, representatives of each of LifeLock management, including Ms. Schneider and Mr. Jeffries, and
Goldman Sachs met with representatives of each of Symantec, including Citigroup Global Markets Inc., one of Symantecs financial advisors, and Fenwick & West LLP, counsel to Symantec, which we refer to as Fenwick, to allow
Symantec to conduct due diligence on LifeLock.
On October 21, 2016, the Strategic Committee met, with representatives of each of LifeLock
management, Goldman Sachs and Wilson Sonsini in attendance. Ms. Schneider and the representatives of Goldman Sachs provided the members of the Strategic Committee with an update on the recent management meetings held with potential acquirors.
On October 23, 2016, interested parties were provided with the October Revisions, as described in the section of this proxy statement
captioned Financial Forecasts.
On October 25, 2016, and October 26, 2016, representatives of each of LifeLock
management, including Ms. Schneider and Mr. Jeffries, and Goldman Sachs met with representatives of Sponsor E and Sponsor F to allow Sponsor E and Sponsor F to conduct due diligence on LifeLock.
On October 28, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and
Skadden in attendance. Ms. Schneider updated the members of the Strategic Committee on the management meetings held with potential acquirors, including the areas of due diligence upon which the interested parties were focused. The representatives of
Goldman Sachs updated the members of the Strategic Committee on the process to date and the proposed timeline for soliciting additional indications of interest from the remaining parties. The Strategic Committee instructed the representatives of
Goldman Sachs to request final proposals from interested parties in mid-November 2016, in light of the potential for information leaks and the risk of continuing management distraction.
On October 31, 2016, Sponsor E and Sponsor F notified representatives of Goldman Sachs that they were no longer interested in pursuing a
potential acquisition transaction with LifeLock.
In late October 2016 and early November 2016, representatives of Goldman Sachs
distributed drafts of the merger agreement and related documents to interested parties (including drafts of the disclosure letter and, for the financial sponsors a proposed form of guarantee). During the first two weeks of November 2016,
representatives of LifeLock management held numerous diligence meetings with Sponsor A and Sponsor B, Sponsor C and Sponsor D, and Symantec.
On November 1, 2016, LifeLock announced its 2016 third quarter results.
On November 4, 2016, the LifeLock Board met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and Skadden in
attendance. The representatives of Wilson Sonsini reviewed the fiduciary duties of the members of the LifeLock Board. The representatives of Goldman Sachs discussed the process to date and areas of focus in due diligence from each of the parties.
The representatives of Goldman Sachs discussed the initial indications of interest received from parties interested in acquiring LifeLock and the proposed timeline and approach for soliciting final proposals. The representatives of Goldman Sachs
informed the LifeLock Board that they had orally communicated to interested parties that November 15, 2016, would be the deadline for proposals. The representatives of Goldman Sachs noted that Symantec had requested an extension of the deadline that
had been communicated and that, in response, representatives of Goldman Sachs informed Symantec to provide as definitive of a proposal as was possible by the deadline. The members of the LifeLock Board discussed the timing and expectations regarding
receipt of final proposals, including customary transaction structures for financial sponsors and strategic acquirors.
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On November 7, 2016, Goldman Sachs, on behalf of LifeLock, distributed second-round process
letters to the three groups that remained interested an acquisition of LifeLock, which were (1) Sponsor A and Sponsor B, (2) Sponsor C and Sponsor D, and (3) Symantec. The letters called for final proposals by November 15, 2016. Interested
parties were requested to submit revised drafts of a merger agreement and financing documents, as well as, in the case of financial sponsors, a revised guarantee, with their final proposal.
On November 8, 2016, representatives of each of LifeLock management, including Ms. Schneider and Mr. Jeffries, and Goldman Sachs met with
representatives of each of Sponsor A and Sponsor B to allow Sponsor A and Sponsor B to continue to conduct due diligence on LifeLock.
On
November 9, 2016, representatives of each of LifeLock management, including Ms. Schneider and Mr. Jeffries, and Goldman Sachs met with representatives of each of Sponsor C and Sponsor D to allow Sponsor C and Sponsor D to conduct due diligence on
LifeLock.
On November 10, 2016, Sponsor A and Sponsor B together submitted a preliminary revised draft of the merger agreement to Wilson
Sonsini, on behalf of LifeLock. On November 14, 2016, representatives of Wilson Sonsini discussed with counsel to Sponsor B the draft of the merger agreement and provided preliminary feedback on key provisions in the merger agreement.
Also on November 10, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and
Skadden in attendance. Ms. Schneider and representatives of Goldman Sachs provided the members of the Strategic Committee with an update on the recent management meetings held with potential acquirors and discussed the timing and expectation for
final proposals from interested parties, including Symantecs continued interest in a potential transaction.
On November 11, 2016,
prior to the close of the NYSE, media sources reported that LifeLock was pursuing a potential sale. That day, LifeLocks closing stock price was $19.12, an increase of $1.48 from the prior days close.
On November 13, 2016, Sponsor A and Sponsor B together submitted a preliminary revised draft guarantee and disclosure letter, and a proposed
equity commitment letter.
On November 14, 2016, a company, which we refer to as Strategic A, contacted representatives of
Goldman Sachs to discuss recent media reports regarding the potential sale of LifeLock. Strategic A stated that it might be interested in participating in a process to acquire LifeLock. The LifeLock Board had previously determined not to contact
Strategic A for a variety of reasons, including, among other things, concerns about Strategic As ability to consummate a transaction and the business risks associated with sharing confidential information with Strategic A.
On November 15, 2016, the Strategic Committee met, with representatives of each of LifeLock management, Goldman Sachs and Wilson Sonsini in
attendance. The representatives of Goldman Sachs provided the Strategic Committee with an update on the process to date and noted that Strategic A had contacted representatives of Goldman Sachs to find out additional information on the process
following recent media reports regarding the potential sale of LifeLock. The members of the Strategic Committee discussed the outreach from Strategic A and instructed Goldman Sachs and Wilson Sonsini to provide and negotiate a confidentiality
agreement with Strategic A to determine its interest in an acquisition of LifeLock.
On November 15, 2016, Sponsor D, who had been
conducting due diligence and was working with Sponsor C on a combined proposal to acquire LifeLock, communicated to Goldman Sachs that it was no longer pursuing an acquisition.
On November 15, 2016, Sponsor A and Sponsor B together submitted a final written proposal to acquire LifeLock for $22.50 per share of common
stock in cash. Sponsor A and Sponsor B also submitted revised drafts
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of the merger agreement (which included the minimum cash condition requirement), guarantee, and disclosure letter, and drafts of equity and debt commitment letters.
Later on November 15, 2016, Sponsor C submitted a final written proposal to acquire LifeLock for $17.50 per share of common stock in cash.
Sponsor C provided revised drafts of the merger agreement, guarantee, and disclosure letter, and drafts of equity and debt commitment letters.
On November 16, 2016, Symantec submitted a final written proposal to acquire LifeLock for $22.05 per share of common stock in cash. In
connection with Symantecs revised proposal, it also submitted revised drafts of the merger agreement and the disclosure letter, and draft debt commitment letters. In addition, Symantec provided a form of support agreement to be entered into by
Ms. Schneider, Todd Davis, Executive Vice Chairman of the LifeLock Board, David Cowan, a member of the LifeLock Board and partner at Bessemer Venture Partners, Bessemer Venture Partners, a significant stockholder of LifeLock, and other parties to be
determined. Symantecs proposal requested that LifeLock agree to negotiate on an exclusive basis through the morning of November 21, 2016. Representatives of Symantec also contacted several members of the LifeLock Board and representatives
of LifeLocks advisors to reiterate Symantecs interest.
Later on November 16, 2016, representatives of Goldman Sachs responded
to Strategic A and advised that Strategic A would need to enter into a confidentiality agreement with LifeLock in order to discuss a potential acquisition of LifeLock. The representatives of Goldman Sachs then sent Strategic A a draft
confidentiality agreement. Strategic A never responded to that agreement.
Later on November 16, 2016, the Strategic Committee met, with
representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and Skadden in attendance. The members of the Strategic Committee reviewed and discussed the process to date, and the terms of the proposals submitted by (1) Symantec; (2)
Sponsor A and Sponsor B; and (3) Sponsor C. The members of the Strategic Committee discussed with the representatives of each of Goldman Sachs, Wilson Sonsini and Skadden the difference in price and terms among the proposals. After discussing
the terms of Sponsor Cs offer, the Strategic Committee instructed the representatives of Goldman Sachs to inform Sponsor C that its offer was well below the other offers that LifeLock had received and to inform Sponsor C that LifeLock was no
longer considering Sponsor Cs proposal. The members of the Strategic Committee considered the breadth of the process to date and the interactions with the parties to date. The Strategic Committee also discussed the various risks involved in a
prolonged continuation of the process, including possible adverse impact on LifeLocks business and the risk that one or more of the parties that had participated in the process to date would withdraw from the process in response to any request
to improve their respective proposals. The Strategic Committee discussed with representatives of Goldman Sachs their collective judgment, based on their interactions with parties and the terms of the proposals, that both of the remaining interested
partiesSponsor A-Sponsor B and Symanteceach likely had the ability to increase the price that it was offering. The Strategic Committee instructed Goldman Sachs to communicate to Symantec that Symantec would need to increase its price in
order to remain competitive and to encourage Sponsor A-Sponsor B to increase its proposal as well. The Strategic Committee instructed representatives of Goldman Sachs to request both Sponsor A-Sponsor B and Symantec to submit revised best and final
proposals to acquire LifeLock the next day.
On November 17, 2016, Sponsor A and Sponsor B together submitted a revised proposal for an
acquisition of LifeLock at a price of $23.15 in cash per share of common stock. The proposal indicated that Sponsor A-Sponsor B would lower the amount of the minimum cash condition. Later on November 17, 2016, Symantec submitted a revised proposal
for an acquisition of LifeLock at a price of $23.80 in cash per share of common stock. During the morning of November 17, 2016, in connection with the review of the revised offers submitted by each of Sponsor A-Sponsor B and Symantec, it was
discovered that the number of fully diluted shares of common stock previously supplied to bidders in due diligence materials posted to LifeLocks electronic data room may have been interpreted by interested parties to be overstated.
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Later on November 17, 2016, the Strategic Committee met, with representatives of each of LifeLock
management, Goldman Sachs, Wilson Sonsini and Skadden in attendance. The members of the Strategic Committee discussed the acquisition process and discussions with the remaining interested parties. The representatives of Goldman Sachs discussed with
the members of the Strategic Committee the proposals received and noted that both Sponsor A-Sponsor B and Symantec had expressed concern related to the continued incremental bidding and were seeking a conclusion of the process. The members of the
Strategic Committee discussed the potential overstatement of the fully diluted shares of common stock and the impact that any overstatement could have on the proposals that had been submitted. In that regard, it was noted that an overstatement
should have no impact on LifeLocks enterprise value. The Strategic Committee instructed Goldman Sachs to contact Symantec and Sponsor A-Sponsor B concerning the potential overstatement and to ask both parties to either submit a revised
proposal to take into account the potential overstatement or to confirm its proposal, in each case before the meeting of the LifeLock Board scheduled for later that afternoon.
Following the Strategic Committee meeting, the representatives of Goldman Sachs contacted Symantec and Sponsor A-Sponsor B to discuss the
correct number of fully diluted shares of common stock to be used in preparing proposals. Symantec stated that it had identified the potential overstatement in its due diligence and it therefore would not change its proposal of $23.80 in cash per
share. Sponsor A and Sponsor B revised their joint proposal to $23.31 in cash per share, which reflected the same enterprise value as their previous proposal of $23.15.
Later on November 17, 2016, the LifeLock Board met, with representatives of each of LifeLock management, Goldman Sachs, Wilson Sonsini and
Skadden in attendance. The representatives of Wilson Sonsini reviewed with the members of the LifeLock Board their fiduciary duties. The members of the LifeLock Board and the representatives of Goldman Sachs reviewed and discussed the process to
date, including the fact that 46 parties had been contacted during the outreach period from July 2016 to September 2016. The members of the LifeLock Board reviewed the terms of the final offers. The members of the Strategic Committee provided
their view on the process and offers received. The members of the LifeLock Board discussed various considerations raised by the two proposals, including, among other things, (1) the certainty and execution risks of the respective proposals,
including the financing provisions included in Sponsor A-Sponsor Bs proposal; (2) likely timing for closing; and (3) the relative financing needs of Sponsor A-Sponsor B and Symantec. The LifeLock Board considered, in light of LifeLocks
request for best and final offers, (1) what each bidder had communicated regarding its ability or inability to increase its offer; (2) Goldman Sachs previous communications with each bidder; and (3) the risk to the process of potentially
alienating one or both parties by requesting an increased proposal. The representatives of Wilson Sonsini noted that a definitive agreement for an acquisition would permit LifeLock to respond to unsolicited acquisition proposals and include the
ability to accept a superior proposal, subject to payment of a termination fee. The LifeLock Board evaluated the two proposals and authorized the representatives of Goldman Sachs to contact Symantec and inform Symantec that if Symantec increased its
offer to $24.00 per share in cash, then LifeLock would agree to negotiate exclusively with Symantec through the morning of November 21, 2016. The LifeLock Board also authorized Goldman Sachs to indicate to Sponsor A-Sponsor B that LifeLock was
planning to enter into exclusive negotiations with another party.
Later on November 17, 2016, representatives of Goldman Sachs informed
Sponsor A-Sponsor B that LifeLock was pursuing a transaction with another party. Representatives of Goldman Sachs then communicated the proposed price increase and exclusivity proposal to Symantec. Representatives of Goldman Sachs also described to
Symantec various areas of concern with Symantecs markup of the merger agreement, which would need to be negotiated. Symantec notified the representatives of Goldman Sachs that it would increase its proposal to $24.00 in cash per share if
LifeLock would enter exclusivity that evening and work to execute a definitive agreement by November 20, 2016. Following this, representatives of Fenwick, on behalf of Symantec, negotiated an exclusivity agreement with representatives of Wilson
Sonsini, on behalf of LifeLock. Later that evening, Symantec and LifeLock executed the exclusivity agreement, which among other things, prohibited LifeLock from soliciting alternative acquisition proposals, or engaging in negotiations with other
parties regarding an alternative acquisition, until the morning of November 21, 2016.
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From November 18, 2016, to November 20, 2016, representatives of Wilson Sonsini and Skadden, on
behalf of LifeLock, and Fenwick, on behalf of Symantec, negotiated terms of the merger agreement, disclosure letter and the proposed support agreements. The principal issues that were the subject of negotiation included: (1) the termination fee
payable by LifeLock, which was the subject of numerous proposals and counterproposals; (2) financing cooperation terms; (3) the outside date to satisfy regulatory approvals; and (4) employee retention matters. Also during this period, Symantec
confirmed it was requesting support agreements from Ms. Schneider, Mr. Davis, Mr. Cowan and Bessemer Venture Partners, and these parties and their respective counsels negotiated the terms of the support agreements with Fenwick, on behalf of
Symantec.
In the afternoon of November 20, 2016, the LifeLock Board met, with representatives of each of LifeLock management, Goldman
Sachs, Wilson Sonsini and Skadden in attendance. The representatives of Wilson Sonsini discussed with the members of the LifeLock Board their fiduciary duties. The representatives of Goldman Sachs and Wilson Sonsini reviewed the terms of the merger
agreement and Symantecs proposal for an acquisition of LifeLock at $24.00 in cash per share, as well as the terms of the proposal that had been received from Sponsor A and Sponsor B. The representatives of Goldman Sachs reviewed with the
members of the LifeLock Board Goldman Sachs financial analysis of the $24.00 per share cash consideration offered to LifeLock stockholders in the proposed merger. The representatives of Wilson Sonsini discussed the process to date, including
the proposals that had been made by Sponsor A-Sponsor B and by Symantec. The representatives of Wilson Sonsini reported on negotiations with Symantec and described the principal terms of the proposed merger agreement. The members of the LifeLock
Board discussed the process conducted, parties contacted, the negotiations with multiple parties and proposals received, as well as the likelihood that an additional extension of the process and additional negotiations could yield incremental value
relative to the risk that such extension and additional negotiations could have on Symantecs or Sponsor A-Sponsor Bs willingness to proceed. The members of the LifeLock Board discussed potential reasons for, and risks inherent in,
entering into the merger agreement, including consideration of the factors described in the section of this proxy statement captioned Reasons for the Merger. The members of the Strategic Committee reviewed with the LifeLock
Board its process to date. Each member of the Strategic Committee provided his recommendation that LifeLock should accept Symantecs proposal. The representatives of Goldman Sachs then rendered Goldman Sachs oral opinion to the LifeLock
Board, which opinion was subsequently confirmed by delivery of a written opinion dated November 20, 2016, that, as of November 20, 2016, and based upon and subject to the various assumptions, considerations, limitations and other matters set forth
therein, the per share merger consideration to be received by the holders of shares of common stock (other than Symantec or any affiliate of Symantec) pursuant to the merger agreement was fair from a financial point of view to such holders. For more
information about Goldman Sachs opinion, see the section of this proxy statement captioned Fairness Opinion of Goldman, Sachs & Co. After further discussion, the LifeLock Board unanimously (1) determined that it was
in the best interests of LifeLock and its stockholders, and declared it advisable, to enter into the merger agreement and consummate the merger upon the terms and subject to the conditions set forth in the merger agreement; (2) approved the
execution and delivery of the merger agreement by LifeLock, the performance by LifeLock of its covenants and other obligations in the merger agreement, and the consummation of the merger upon the terms and conditions set forth in the merger
agreement; (3) directed that the adoption of the merger agreement be submitted to a vote at a meeting of the stockholders of LifeLock; and (4) resolved to recommend that LifeLock stockholders vote in favor of adoption of the merger
agreement in accordance with the DGCL and the other proposals to be presented at the special meeting.
Later on November 20, 2016, the
merger agreement was signed by LifeLock, Acquisition Sub and Symantec, and the support agreements were signed by Symantec and each of Ms. Schneider, Mr. Davis, Mr. Cowan and Bessemer Venture Partners. LifeLock and Symantec then issued a joint press
release announcing the entry into the merger agreement.
On December 8, 2016, the LifeLock Board met, with representatives of each of
LifeLock management, Goldman Sachs, Wilson Sonsini and Skadden in attendance. The representatives of Wilson Sonsini and Skadden discussed with the members of the LifeLock Board their fiduciary duties and the terms of the merger agreement,
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including the provisions regarding the LifeLock Boards recommendation to stockholders. The representatives of Goldman Sachs advised the members of the LifeLock Board that a stock price
used in the historical stock trading analysis and in the M&A premia analysis as the closing stock price of LifeLock on June 16, 2016, was not correct, but that had Goldman Sachs performed its financial analyses as of November 20, 2016, using the
correct stock price (as described below under Fairness Opinion of Goldman, Sachs & Co. and reviewed with the LifeLock Board at such meeting), there would have been no change to the conclusion set forth in the written opinion of
Goldman Sachs. The LifeLock Board then considered such confirmation from Goldman Sachs, any relevant developments since the execution of the merger agreement (concluding that there were no material developments) and the terms of the merger
agreement. After deliberation, the LifeLock Board unanimously determined to authorize the filing of the preliminary proxy statement, including the recommendation to the stockholders to adopt the merger agreement as set forth herein.
Recommendation of the LifeLock Board and Reasons for the Merger
Recommendation of the LifeLock Board
The LifeLock Board has unanimously (1) determined that it is in the best interests of LifeLock and its stockholders, and declared it
advisable, to enter into the merger agreement and consummate the merger upon the terms and subject to the conditions set forth in the merger agreement; (2) approved the execution and delivery of the merger agreement by LifeLock, the performance by
LifeLock of its covenants and other obligations in the merger agreement, and the consummation of the merger upon the terms and conditions set forth in the merger agreement; (3) directed that the adoption of the merger agreement be submitted to a
vote at the special meeting; and (4) resolved to recommend that the LifeLock stockholders vote in favor of the adoption of the merger agreement in accordance with the DGCL.
The LifeLock Board unanimously recommends that you vote (1) FOR the adoption of the merger agreement;
(2) FOR the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting;
and (3) FOR the approval, on a non-binding, advisory basis, of compensation that will or may become payable by LifeLock to our named executive officers in connection with the merger.
Reasons for the Merger
In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement, the LifeLock Board consulted
with the Strategic Committee, LifeLock management, its financial advisor and its outside legal advisors. In recommending that LifeLock stockholders vote in favor of adoption of the merger agreement, the LifeLock Board considered a number of factors,
including the following (which factors are not necessarily presented in order of relative importance):
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LifeLocks competitive positioning and prospects as a standalone company;
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LifeLocks business operations and management;
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LifeLocks historical and projected financial performance, results of operation and financial prospects, including the risks associated with achieving the Forecasts;
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the financial analysis presentation of Goldman Sachs, and the opinion of Goldman Sachs delivered to the LifeLock Board that, as of November 20, 2016, and based upon and subject to the factors and assumptions set forth
therein, the $24.00 in cash per share of common stock to be paid to the holders (other than Symantec and its affiliates) of common stock pursuant to the merger agreement was fair from a financial point of view to such holders, as more fully
described in the section of this proxy statement captioned Fairness Opinion of Goldman, Sachs & Co;
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the relationship of the per share merger consideration to the trading prices of the common stock, including that the per share merger consideration constituted a premium of approximately (1) 59.4% to
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the closing price of the common stock on June 16, 2016, the last trading day prior to the public filing by Elliott Associates, L.P. and certain affiliates that they had accumulated a significant
minority interest in LifeLock; (2) 91.8% to the three-month volume weighted average price per share of common stock, which we refer to as the VWAP, for the period ending June 16, 2016; (3) 96.6% to the six-month VWAP for the period
ending June 16, 2016; (4) 94.9% to the nine-month VWAP for the period ending June 16, 2016; and (5) 108.3% to the 12-month VWAP for the period ending June 16, 2016;
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based on its review of the process conducted by the Strategic Committee and the LifeLock Board and negotiations with Symantec as well as the other parties participating in such process, the LifeLock Boards belief
that $24.00 per share in cash and the terms of the merger agreement offer the best value reasonably attainable for LifeLock stockholders;
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that the all-cash merger consideration will provide certainty of value and liquidity to LifeLock stockholders, while eliminating the effect of long-term business and execution related risks;
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the LifeLock Boards view that the merger agreement was the product of arms-length negotiation and contained customary terms and conditions;
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the terms of the merger agreement, including:
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LifeLocks ability, under certain circumstances, to furnish information to and conduct negotiations with third parties regarding unsolicited acquisition proposals;
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the LifeLock Boards view that the terms of the merger agreement would be unlikely to deter third parties from making a superior proposal, including the merger agreements terms and conditions as they relate
to the ability to make changes in the recommendation of the LifeLock Board (see the sections of this proxy statement captioned The Merger AgreementNo Solicitation of Alternative Acquisition Offers and The Merger
AgreementThe LifeLock Boards Recommendation; Adverse Recommendation Change);
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LifeLocks ability to terminate the merger agreement in order to accept an unsolicited superior proposal, subject to paying Symantec a termination fee of $87.5 million and complying with the other conditions of the
merger agreement;
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the LifeLock Boards belief that the termination fee of $87.5 million, which is approximately 3.5% of LifeLocks implied equity value in the merger, is reasonable, consistent with comparable transactions and
not preclusive of other offers, especially in light of the comprehensive process conducted by the Strategic Committee and the LifeLock Board;
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LifeLocks entitlement to specific performance to prevent breaches of the merger agreement and to enforce specifically the terms of the merger agreement, including the consummation of the merger in accordance with
the terms of the merger agreement; and
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that the consummation of the merger is not subject to any financing condition or limitation on damages for failure to close;
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the requirement that the merger will only be consummated if the merger agreement is adopted by the holders of at least a majority of the outstanding shares of common stock;
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the extensive process employed by the Strategic Committee and the LifeLock Board to identify potential acquirors of LifeLock, including contacting a broad range of companies and financial sponsors to assess their
interest in a potential acquisition of LifeLock;
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the following, each of which provided an opportunity for unsolicited proposals to be made for LifeLock:
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the public filing by Elliott Associates, L.P. and certain affiliates that they had accumulated a significant minority interest in LifeLock and the subsequent filing encouraging LifeLock to undertake a strategic review
process; and
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publicly reported rumors of the sale process and the identity of LifeLocks financial advisor;
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that of the potential acquirors that submitted final proposals to acquire LifeLock, none made a final bid equal to or in excess of $24.00 per share of common stock;
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the extensive, arms-length negotiations with Symantec and other interested parties, which, among other things, resulted in an increase in the merger consideration to $24.00 per share of common stock, an increase
from Symantecs original proposed merger consideration of $20.00 per share and Symantecs November 16, 2016, proposal of $22.50 per share and a further increase from Symantecs November 17, 2016, proposal of $23.80 per share;
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the perceived risk of continuing as a standalone public company or pursuing other alternatives, including (1) the continuation of LifeLocks business plan as an independent enterprise; (2) modifications to
LifeLocks strategy and product direction; and (3) potential expansion opportunities into new business lines through acquisitions and combinations of LifeLock with other businesses, in addition to other operating risks identified in
LifeLocks public filings with the SEC;
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that the members of the Strategic Committee unanimously recommended the merger to the LifeLock Board;
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the fact that LifeLock stockholders are entitled to appraisal rights under the DGCL; and
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the LifeLock Boards fiduciary duties in light of the foregoing.
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The LifeLock Board also considered a
number of uncertainties and risks concerning the merger, including the following (which factors are not necessarily presented in order of relative importance):
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that LifeLock stockholders will not participate in any future earnings or growth of LifeLock and will not benefit from any appreciations in the value of LifeLock, including any appreciation in value that could be
realized as a result of the combination of LifeLock with Symantec;
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the risk that the merger might not be completed unless and until certain specified conditions are satisfied or waived (as more fully described in the section of this proxy statement captioned The Merger
AgreementConditions to the Closing of the Merger);
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the right of Symantec to terminate the merger agreement under certain circumstances (as more fully described in the section of this proxy statement captioned The Merger AgreementTermination of the Merger
Agreement);
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the effect of the resulting public announcement of the termination of the merger agreement on the trading price of the common stock;
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that under the terms of the merger agreement, LifeLock is unable to solicit other acquisition proposals during the pendency of the merger;
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the restrictions on the conduct of LifeLocks business prior to the consummation of the merger, including the requirement that LifeLock conduct its business in the ordinary course, subject to specific limitations,
which may delay or prevent LifeLock from undertaking business opportunities that may arise before the completion of the merger and that, absent the merger agreement, LifeLock might have pursued;
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the requirement that LifeLock pay Symantec a termination fee of $87.5 million under certain circumstances following termination of the merger agreement, including if the LifeLock Board terminates the merger
agreement to accept a superior offer;
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the requirement that the merger will only be consummated if the merger agreement is adopted by the holders of at least a majority of the outstanding shares of common stock;
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the significant costs involved in connection with entering into the merger agreement and completing the merger, and the substantial time and effort of LifeLock management required to complete the merger, which may
disrupt LifeLocks business operations;
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that LifeLocks business, sales operations and financial results could suffer in the event that the merger is not consummated;
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that the completion of the merger will require antitrust clearance in the United States;
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that LifeLocks directors and officers may have interests in the merger that may be different from, or in addition to, those of other LifeLocks stockholders (see the section of this proxy statement captioned
Interests of LifeLocks Directors and Executive Officers in the Merger);
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that the announcement and pendency of the merger, or the failure to complete the merger, may cause substantial harm to LifeLocks relationships with its employees (including making it more difficult to attract and
retain key personnel and the possible loss of key management, technical, sales and other personnel), vendors, customers and other partners and may divert management and employees attention away from LifeLocks day-to-day business operations;
and
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that receipt of the merger consideration will generally be a taxable transaction for U.S. federal income tax purposes, as more fully described in the section of this proxy statement captioned Material U.S.
Federal Income Tax Consequences of the Merger.
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The foregoing discussion is not meant to be exhaustive, but
summarizes the material factors considered by the LifeLock Board in its consideration of the merger. After considering these and other factors, the LifeLock Board concluded that the potential benefits of the merger outweighed the uncertainties and
risks. In view of the variety of factors considered by the LifeLock Board and the complexity of these factors, the LifeLock Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the foregoing factors in
reaching its determination and recommendations. Moreover, each member of the LifeLock Board applied his or her own business judgment to the process and may have assigned different weights to different factors. The LifeLock Board unanimously approved
the merger agreement, the merger and the other transactions contemplated by the merger agreement and recommends that LifeLock stockholders adopt the merger agreement based upon the totality of the information presented to and considered by the
LifeLock Board.
Fairness Opinion of Goldman, Sachs & Co.
Goldman Sachs rendered its opinion to the LifeLock Board on November 20, 2016, which opinion was subsequently confirmed in a written opinion
dated as of the same date, that, as of the date of such opinion and based upon and subject to the factors and assumptions set forth therein, the per share merger consideration to be paid to the holders (other than Symantec and its affiliates) of
common stock pursuant to the merger agreement was fair from a financial point of view to such holders.
The full text of the written
opinion of Goldman Sachs, dated November 20, 2016, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided its
opinion for the information and assistance of the LifeLock Board in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of common stock should vote with respect to the merger, or
any other matter.
In connection with rendering the opinion described above and performing its related financial analyses, Goldman
Sachs reviewed, among other things:
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annual reports to stockholders and Annual Reports on Form
10-K
of LifeLock for the four fiscal years ended December 31, 2015;
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LifeLocks Registration Statement on Form S-1, including the prospectus contained therein, dated September 27, 2012, relating to LifeLocks initial public offering of common stock;
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certain interim reports to stockholders and Quarterly Reports on Form 10-Q of LifeLock;
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certain other communications from LifeLock to its stockholders;
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certain publicly available research analyst reports for LifeLock; and
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certain internal financial analyses and forecasts for LifeLock, inclusive of estimated net present value of standalone net operating losses, prepared by its management, summarized below in the section of this proxy
statement captioned Financial Forecasts, as approved for Goldman Sachs use by LifeLock, which are referred to in such section as the Five-Year Forecasts.
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Goldman Sachs also held discussions with members of the senior management of LifeLock regarding their assessment of the past and current
business operations, financial condition and future prospects of LifeLock; reviewed the reported price and trading activity for the common stock; compared certain financial and stock market information for LifeLock with similar information for
certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.
For purposes of rendering its opinion, Goldman Sachs, with LifeLocks consent, relied upon and assumed the accuracy and completeness
of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with
LifeLocks consent that the Five-Year Forecasts were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of LifeLock. Goldman Sachs did not make an independent evaluation or appraisal
of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of LifeLock or any of its subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that
all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs also
assumed that the merger would be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.
Goldman Sachs opinion does not address the underlying business decision of LifeLock to engage in the merger or the relative merits of
the merger as compared to any strategic alternatives that may be available to LifeLock; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs opinion addresses only the fairness from a financial point of view to
the holders (other than Symantec and its affiliates) of common stock, as of the date of the opinion, of the per share merger consideration to be paid to such holders pursuant to the merger agreement. Goldman Sachs opinion does not express any
view on, and does not address, any other term or aspect of the merger agreement or the transaction or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the
merger, including, the fairness of the merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of LifeLock; nor as to the fairness of the amount or nature
of any compensation to be paid or payable to any of the officers, directors or employees of LifeLock, or class of such persons, in connection with the merger, whether relative to the per share merger consideration to be paid to the holders (other
than Symantec and its affiliates) of common stock pursuant to the merger agreement or otherwise. Goldman Sachs opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available
to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, Goldman Sachs
does not express any opinion as to the impact of the merger on the solvency or viability of LifeLock or Symantec or the ability of LifeLock or Symantec to pay their respective obligations when they come due. Goldman Sachs opinion was approved
by a fairness committee of Goldman Sachs.
-52-
The following is a summary of the material financial analyses delivered by Goldman Sachs to the
LifeLock Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described
represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary
and are alone not a complete description of Goldman Sachs financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before
November 18, 2016, the last trading day before the public announcement of the merger, and is not necessarily indicative of current market conditions.
Following Goldman Sachs presentation to the LifeLock Board on November 20, 2016, (which we refer to as the November 20
Presentation), Goldman Sachs determined, and notified LifeLock, on December 2, 2016, that the closing stock price of LifeLock on June 16, 2016, used in the historical stock trading analysis and in the M&A premia analysis was not correct.
Goldman Sachs subsequently performed both such analyses, as of November 20, 2016, using the correct closing stock price of LifeLock on June 16, 2016 (which we refer to as the Corrected Stock Price) and delivered such analyses to LifeLock
on December 6, 2016, and discussed such analyses with the members of the LifeLock Board at a meeting held on December 8, 2016. Such subsequent analyses performed by Goldman Sachs do not address any circumstances, developments or events
occurring after November 20, 2016, which is the date of the written opinion of Goldman Sachs, and Goldman Sachs opinion set forth in its written opinion letter was provided only as of such date. Based upon and subject to the foregoing, Goldman
Sachs confirmed to the LifeLock Board on December 6, 2016, and discussed its confirmation with the members of the LifeLock Board at a meeting held on December 8, 2016, that, had Goldman Sachs performed its financial analyses set forth in the
presentation on November 20, 2016, using the Corrected Stock Price, there would have been no change to the conclusion set forth in the written opinion of Goldman Sachs that the per share merger consideration to be paid to the holders (other than
Symantec and its affiliates) of common stock pursuant to the merger agreement was fair from a financial point of view to such holders.
Historical Stock Trading Analysis
Goldman Sachs reviewed historical trading prices and volumes for shares of common stock. In addition, Goldman Sachs analyzed the consideration
to be paid to holders of shares of common stock pursuant to the merger agreement in relation to (1) the closing price per share of common stock on November 18, 2016, the last trading day before the meeting of the LifeLock Board at which the LifeLock
Board approved the merger; (2) the closing price per share of common stock on June 16, 2016, the last trading day prior to the public filing by Elliott and certain of its affiliates of a Statement of Beneficial Ownership on Schedule 13D with the
SEC, which date we refer to as the Pre-13D date; (3) the VWAP for the preceding three-month, six-month, nine-month and 12-month periods ended on the Pre-13D date; (4) the high and low trading prices per share of common stock over the
52-week period ended November 18, 2016; and (5) the all-time high closing price per share of common stock on or prior to November 18, 2016.
This analysis indicated that the price per share to be paid to LifeLock stockholders pursuant to the merger agreement represented:
|
|
|
a premium of 15.7% based on the closing price per share of common stock of $20.75 on November 18, 2016, which was also the highest trading price per share of common stock over the 52-week period ended on November 18,
2016;
|
|
|
|
a premium of 59.4% based on the closing price per share of common stock on the Pre-13D date of $15.06;*
|
*
|
The November 20 Presentation stated that the price per share to be paid to the LifeLock stockholders pursuant to the merger agreement represented a premium of 83.1% based on the use of an incorrect closing price of
$13.11 per share of common stock on the Pre-13D date.
|
-53-
|
|
|
a premium of 91.8% based on the VWAP for the three-month period ended on the Pre-13D date of $12.51;
|
|
|
|
a premium of 96.6% based on the VWAP for the six-month period ended on the Pre-13D date of $12.21;
|
|
|
|
a premium of 94.9% based on the VWAP for the nine-month period ended on the Pre-13D date of $12.32;
|
|
|
|
a premium of 108.3% based on the VWAP for the 12-month period ended on the Pre-13D date of $11.52;
|
|
|
|
a premium of 162.6% based on $9.14, the lowest trading price per share of common stock over the 52-week period ended November 18, 2016; and
|
|
|
|
a premium of 6.1% based on $22.62, the closing price per share of common stock on February 13, 2014, the all-time high closing price per share of common stock on or prior to November 18, 2016.
|
Illustrative Present Value of Future Share Price Analysis
Goldman Sachs performed illustrative analyses of the implied present value of the future price per share of common stock, which were designed
to provide an indication of the present value of a theoretical future value of a companys equity as a function of (1) LifeLocks estimated forward free cash flow yield, which we refer to as the Forward FCF Yield, and an
assumed price to Forward FCF Yield per share multiple and (2) LifeLocks Enterprise Value (which is defined as the equity value, calculated using the number of fully diluted shares of common stock, as provided by management of LifeLock, plus
total debt, less total cash and cash equivalents, and which we refer to as EV), as a one-year forward multiple of estimated future Adjusted EBITDA (which is defined in the section of this proxy statement captioned Financial
Forecasts, which multiple we refer to as the Forward EV/EBITDA multiple). For these analyses, Goldman Sachs used the Five-Year Forecasts for each of the fiscal years 2018 to 2021 and the number of fully diluted shares as of the end
of each such year as set forth in the Five-Year Forecasts, in each case as provided to Goldman Sachs by the management of LifeLock. Goldman Sachs first calculated the implied future equity values per share of common stock at year-end for each of the
fiscal years 2017 to 2020 using the forward free cash flow per share set forth in the Five-Year Forecasts for those years and then applying a Forward FCF Yield range of 6.6% to 9.9%. In addition, Goldman Sachs calculated implied future equity values
per share of common stock at year-end for each of the fiscal years 2017 through 2020 using the
next-12
month Adjusted EBITDA set forth in the Five-Year Forecasts for those years by applying Forward EV/EBITDA
multiples ranging from 9.0x to 13.6x to the applicable next-twelve month Adjusted EBITDA as set forth in the Five-Year Forecasts. Goldman Sachs then, in each case, discounted the implied year-end 2017 to 2020 equity values back to September 30, 2016
using an illustrative discount rate of 10.0%, reflecting an estimate of LifeLocks cost of equity. These analyses resulted in an illustrative range of implied present values per share of common stock of (1) $11.86 to $19.84 using the Forward
FCF Yield method and (2) $12.25 to $26.20 using the Forward EV/EBITDA multiples.
Illustrative Discounted Cash Flow Analysis
Using the Five-Year Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on LifeLock. Using discount
rates ranging from 7.50% to 8.50%, reflecting estimates of LifeLocks weighted average cost of capital, Goldman Sachs discounted to present value as of September 30, 2016 (1) estimates of unlevered free cash flow for LifeLock for the fourth
calendar quarter of 2016 and the fiscal years 2017 through 2021 as reflected in the Five-Year Forecasts and (2) a range of illustrative terminal values for LifeLock, which were calculated by applying perpetuity growth rates ranging from 2.50% to
3.50%, to a terminal year estimate of the free cash flow to be generated by LifeLock, as reflected in the Five-Year Forecasts. Goldman Sachs derived ranges of illustrative enterprise values for LifeLock by adding the ranges of present values it
derived above and the present value of the net operating losses, as prepared by LifeLocks management. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for LifeLock the
-54-
amount by which LifeLocks indebtedness exceeded its cash as of September 30, 2016, as provided by the management of LifeLock, to derive a range of illustrative equity values for LifeLock.
Goldman Sachs then divided the range of illustrative equity values that it derived by the number of fully diluted outstanding shares of LifeLock, as provided by the management of LifeLock, to derive a range of illustrative present values per share
ranging from $19.26 to $26.38.
Selected Historical Premia Analysis
Goldman Sachs reviewed and analyzed, using publicly available data, the average and median acquisition premia calculated using the closing
trading prices per share one day, one week and four weeks prior to announcement, respectively, for all-cash acquisition transactions with disclosed transaction enterprise values between $1 billion and $5 billion from January 1, 2004 through November
18, 2016. The results of this analysis are set forth below:
|
|
|
|
|
|
|
|
|
Reference trading price date
|
|
Average Premium
|
|
|
Median Premium
|
|
1 day prior to announcement
|
|
|
32.2
|
%
|
|
|
26.6
|
%
|
1 week prior to announcement
|
|
|
33.6
|
%
|
|
|
29.9
|
%
|
4 weeks prior to announcement
|
|
|
38.5
|
%
|
|
|
32.9
|
%
|
In addition, Goldman Sachs reviewed and analyzed, using publicly available data, the acquisition premia
represented by the trading price per share one day prior to the announcement of the transaction for the same set of transactions outlined above after they had been categorized according to the percentage of the 52-week high trading price represented
by the closing trading price per share one day prior to the announcement of the transaction. The results of this analysis were as follows:
|
|
|
|
|
% of 52-week High Represented by Closing
Trading Price One Day Prior to
Announcement
|
|
Average One-Day Premia Paid
|
|
0-10%
|
|
|
(3.2
|
)%
|
10-20%
|
|
|
181.4
|
%
|
20-30%
|
|
|
38.5
|
%
|
30-40%
|
|
|
121.4
|
%
|
40-50%
|
|
|
48.6
|
%
|
50-60%
|
|
|
20.0
|
%
|
60-70%
|
|
|
54.7
|
%
|
70-80%
|
|
|
26.5
|
%
|
80-90%
|
|
|
25.0
|
%
|
90-100%
|
|
|
17.7
|
%
|
Goldman Sachs then applied an illustrative range of premia of 26.5%, representing the average one day premium
paid for companies with closing trading prices one day prior to announcement that were 70 to 80% of their 52 week high, to 26.6%, representing the average premium paid over the closing price one day prior to announcement, to derive an illustrative
range of implied values per share of common stock of $19.05 to $19.07. In the November 20 Presentation, due to the use of the incorrect closing stock price as of the Pre-13D date, this analysis used a range of premia of 26.6% to 54.7%
(representing the average one day premium paid for companies with closing trading prices one day prior to announcement that were 60 to 70% of their 52 week high) and derived an illustrative range of implied values per share of common stock of
$16.60 to $20.28.
The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or
summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs opinion. In arriving at its
fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman
-55-
Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the
above analyses as a comparison is directly comparable to LifeLock or the contemplated transaction.
Goldman Sachs prepared these analyses
for purposes of Goldman Sachs providing its opinion to the LifeLock Board as to the fairness from a financial point of view of the per share merger consideration to be paid to the holders (other than Symantec and its affiliates) of common stock
pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of
the parties or their respective advisors, none of LifeLock, Symantec, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.
The per share merger consideration was determined through arms-length negotiations between LifeLock and Symantec and was approved by the
LifeLock Board. Goldman Sachs did not recommend any specific amount of consideration to LifeLock or the LifeLock Board or that any specific amount of consideration constituted the only appropriate consideration for the merger.
As described above, Goldman Sachs opinion to the LifeLock Board was one of many factors taken into consideration by the LifeLock Board
in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by
reference to the written opinion of Goldman Sachs attached as Annex B.
Goldman Sachs and its affiliates are engaged in advisory,
underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and
funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans,
commodities, currencies, credit default swaps and other financial instruments of the LifeLock, Symantec, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transaction contemplated by the
merger agreement. Goldman Sachs acted as financial advisor to LifeLock in connection with, and participated in certain of the negotiations leading to, the transaction contemplated by the merger agreement. During the two year period ended November
20, 2016, the Investment Banking Division of Goldman Sachs has not been engaged by LifeLock, Symantec or any of their respective affiliates to provide financial advisory or underwriting services for which Goldman Sachs has received compensation.
Goldman Sachs may in the future provide investment banking services to LifeLock, Symantec and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.
The LifeLock Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that
has substantial experience in transactions similar to the merger. Pursuant to a letter agreement dated July 13, 2016, LifeLock engaged Goldman Sachs to act as its financial advisor in connection with the merger. The engagement letter between
LifeLock and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of announcement, at approximately $24.5 million, $23.5 million of which is contingent upon consummation of the merger. In
addition, LifeLock has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities
under the federal securities laws.
-56-
Financial Forecasts
LifeLock provided to Symantec, as part of the due diligence process, in September 2016, certain internal financial analyses and projections for
2016 through 2019 that LifeLock had prepared in July 2016, which we refer to as the July Forecasts. The July Forecasts were provided to other interested parties who were part of the strategic transaction exploration process. LifeLock
does not publicly disclose these types of projections as a matter of course and they were shared with parties who had executed confidentiality agreements with LifeLock. In October 2016, LifeLock updated the July Forecasts solely to reflect LifeLock
managements updated view of LifeLocks estimated fiscal year 2016 performance, which we refer to as the October Revisions. The October Revisions were provided to Symantec and the other remaining participants in the strategic
transaction exploration process in late October 2016.
In addition, based on certain estimates and assumptions of LifeLock management, for
purposes of assisting Goldman Sachs with its financial analysis, the LifeLock Board also reviewed, and LifeLock approved for Goldman Sachs use, projected financial information for the period from 2020 to 2021 extrapolated from the forecasts
for the period 2016 through 2019. We refer to the projected financial information for the period from 2020 to 2021 extrapolated from the July Forecasts as the Additional Two-Year Forecasts. We refer to the July Forecasts, as updated by
the October Revisions, together with the Additional Two-Year Forecasts, as the Five-Year Forecasts. We refer to the July Forecasts and the October Revisions, together with the Additional Two-Year Forecasts, collectively as the
Forecasts.
The Forecasts were not prepared for purpose of public disclosure and are included in this proxy statement only
because (1) the July Forecasts and the October Revisions were made available to Symantec and its lenders in connection with the due diligence review of LifeLock as outlined above; (2) the Five-Year Forecasts were made available to Goldman Sachs for
use in connection with its financial analysis as described in the section of this proxy statement captioned Fairness Opinion of Goldman, Sachs & Co. and (3) the Forecasts (including the Additional Two-Year Forecasts) were made
available to the LifeLock Board in connection with their consideration of a potential acquisition of LifeLock. The Forecasts were not prepared with a view to compliance with (1) generally accepted accounting principles as applied in the United
States, which we refer to as GAAP; (2) the published guidelines of the SEC regarding projections and forward-looking statements; or (3) the guidelines established by the American Institute of Certified Public Accountants for preparation
and presentation of prospective financial information. The Forecasts included in this proxy statement were not prepared by, and are not the responsibility of, Ernst & Young LLP, our independent registered public accounting firm. Furthermore,
Ernst & Young LLP has not examined, reviewed, compiled or otherwise applied procedures to the Forecasts and, accordingly, assumes no responsibility for, and expresses no opinion or any other form of assurance on, them. The Ernst & Young LLP
report incorporated by reference in this proxy statement relates to our historical financial information. It does not extend to prospective financial information and should not be read to do so.
Although the Forecasts are presented with numerical specificity, they reflect numerous assumptions and estimates as to future events made by
LifeLock management that they believed were reasonable at the time the Forecasts were prepared, taking into account the relevant information available to LifeLock management at the time. However, this information is not fact and should not be relied
upon as being necessarily indicative of actual future results. Important factors that may affect actual results and cause the Forecasts not to be achieved include (1) general economic conditions; (2) LifeLocks ability to achieve forecasted
revenue; (3) the accuracy of certain accounting assumptions; (4) changes in actual or projected cash flows; (5) competitive pressures; and (6) changes in tax laws. In addition, the Forecasts do not take into account any circumstances or events
occurring after the date that they were prepared and do not give effect to the merger. As a result, there can be no assurance that the Forecasts will be realized, and actual results may be materially better or worse than those contained in the
Forecasts. The inclusion of the Forecasts in this proxy statement should not be regarded as an indication that the LifeLock Board, LifeLock or any other recipient of this information considered, or now considers, the Forecasts to be predictive of
actual future results, or that the Forecasts are material. The Forecasts were not prepared for
-57-
public disclosure and are not included in this proxy statement in order to induce any stockholder to vote in favor of the adoption of the merger agreement or any of the other proposals to be
voted on at the special meeting.
LifeLock does not intend to update or otherwise revise the Forecasts to reflect circumstances existing after
the date when made or to reflect the occurrence of future events, even in the event that any or
all of the assumptions underlying the Forecasts are shown to be in error or no longer appropriate.
In light of the foregoing factors and the uncertainties inherent in the Forecasts, LifeLock stockholders are cautioned not to rely
on the projections included in this proxy statement and LifeLock may not achieve the Forecasts whether or not the merger is completed.
As referred to below, Adjusted EBITDA is a financial measure commonly used in the technology industry but is not defined under
GAAP. We calculate Adjusted EBITDA as net income (loss) before depreciation and amortization, stock-based compensation, interest expense, interest income, other income (expense), income tax (benefit) expense, and acquisition related expenses, when
applicable. For fiscal year 2016, we have also excluded from Adjusted EBITDA expenses related to the FTC litigation and the impact of a legal reserve for the settlement of a stockholder derivative lawsuit. We believe that the exclusion of certain
items of income and expense from net income (loss) in calculating Adjusted EBITDA is useful because the amount of such income or expense may not directly correlate to the underlying operational performance of our business and/or such income and
expense can vary significantly between periods.
We define Free Cash Flow as net cash provided by operating activities less
net cash used in investing activities for acquisitions of property and equipment. For fiscal year 2016, we have added back cash paid for expenses related to the FTC litigation and the impact of a legal reserve for the settlement of a shareholder
derivative lawsuit to net cash provided by operating activities.
We included Adjusted EBITDA and Free Cash Flow because they are key
measures we used to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses and cash flows
in calculating Adjusted EBITDA and Free Cash Flow can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key financial measure used in determining managements incentive
compensation.
Although Adjusted EBITDA and Free Cash Flow are frequently used by investors in their evaluations of companies, these
non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Because of these limitations, these non-GAAP financial
measures should be considered alongside other financial performance measures. Further, these non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures
presented by other companies.
Forecasts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
July
Forecasts
2016E
|
|
|
October
Revisions
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Revenue
|
|
$
|
666
|
|
|
$
|
668
|
|
|
$
|
743
|
|
|
$
|
832
|
|
|
$
|
938
|
|
|
$
|
1,060
|
|
|
$
|
1,200
|
|
Gross Profit
|
|
$
|
516
|
|
|
$
|
517
|
(1)
|
|
$
|
589
|
|
|
$
|
664
|
|
|
$
|
754
|
|
|
$
|
862
|
|
|
$
|
986
|
|
Adjusted EBITDA
|
|
$
|
86
|
|
|
$
|
90
|
|
|
$
|
100
|
|
|
$
|
118
|
|
|
$
|
152
|
|
|
$
|
200
|
|
|
$
|
264
|
|
Free Cash Flow
|
|
$
|
87
|
|
|
$
|
86
|
|
|
$
|
113
|
|
|
$
|
133
|
|
|
$
|
153
|
|
|
$
|
171
|
|
|
$
|
216
|
|
Unlevered Free Cash Flow(2)
|
|
$
|
39
|
|
|
$
|
14
|
|
|
$
|
61
|
|
|
$
|
71
|
|
|
$
|
90
|
|
|
$
|
116
|
|
|
$
|
155
|
|
(1)
|
This figure was calculated in accordance with GAAP and was the figure presented to the LifeLock Board. The October Revisions provided to Symantec reflected a non-GAAP adjusted gross margin of $523 million, which was
calculated by adding expenses for stock-based compensation and depreciation back to gross profit as calculated in accordance with GAAP.
|
(2)
|
LifeLock estimated the net present value of standalone net operating losses to be $77 million.
|
-58-
Reconciliation of Adjusted EBITDA to Net Income
The Forecasts include a forecast of our Adjusted EBITDA. A reconciliation of the differences between Adjusted EBITDA and net income, a
financial measurement prepared in accordance with GAAP, is set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) (totals may not add due to rounding)
|
|
July
Forecasts
2016E
|
|
|
October
Revisions
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Reconciliation of Adjusted EBITDA to Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
26
|
|
|
$
|
34
|
|
|
$
|
54
|
|
|
$
|
79
|
|
|
$
|
114
|
|
Depreciation and amortization
|
|
|
22
|
|
|
|
22
|
|
|
|
20
|
|
|
|
20
|
|
|
|
16
|
|
|
|
15
|
|
|
|
15
|
|
Income tax (benefit) expense
|
|
|
10
|
|
|
|
9
|
|
|
|
17
|
|
|
|
23
|
|
|
|
36
|
|
|
|
53
|
|
|
|
76
|
|
Share-based compensation
|
|
|
34
|
|
|
|
34
|
|
|
|
37
|
|
|
|
42
|
|
|
|
47
|
|
|
|
53
|
|
|
|
60
|
|
FTC Litigation Expense and legal settlements
|
|
|
6
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
86
|
|
|
$
|
90
|
|
|
$
|
100
|
|
|
$
|
118
|
|
|
$
|
152
|
|
|
$
|
200
|
|
|
$
|
264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities
The Forecasts include a forecast of our Free Cash Flow. A reconciliation of the differences between Free Cash Flow and Net Cash Provided by
Operating Activities, a financial measurement prepared in accordance with GAAP, is set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) (totals may not add due to rounding)
|
|
July
Forecasts
2016E
|
|
|
October
Revisions
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
100
|
|
|
$
|
77
|
|
|
$
|
126
|
|
|
$
|
147
|
|
|
$
|
168
|
|
|
$
|
185
|
|
|
$
|
230
|
|
Acquisitions of property and equipment
|
|
|
(24
|
)
|
|
|
(18
|
)
|
|
|
(13
|
)
|
|
|
(14
|
)
|
|
|
(14
|
)
|
|
|
(15
|
)
|
|
|
(15
|
)
|
Payments for FTC litigation and legal settlements
|
|
|
11
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
|
87
|
|
|
|
86
|
|
|
|
113
|
|
|
|
133
|
|
|
|
153
|
|
|
|
171
|
|
|
|
216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Unlevered Free Cash Flow to Net Income
A reconciliation of the differences between Unlevered Free Cash Flow and Net Income, a financial measurement prepared in accordance with GAAP,
is set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) (totals may not add due to rounding)
|
|
July
Forecasts
2016E
|
|
|
October
Revisions
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Reconciliation of Unlevered Free Cash Flow to Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
26
|
|
|
$
|
34
|
|
|
$
|
54
|
|
|
$
|
79
|
|
|
$
|
114
|
|
Depreciation and amortization
|
|
|
22
|
|
|
|
22
|
|
|
|
20
|
|
|
|
20
|
|
|
|
16
|
|
|
|
15
|
|
|
|
15
|
|
Acquisitions of property and equipment
|
|
|
(24
|
)
|
|
|
(18
|
)
|
|
|
(13
|
)
|
|
|
(14
|
)
|
|
|
(14
|
)
|
|
|
(15
|
)
|
|
|
(15
|
)
|
Changes in net working capital
|
|
|
25
|
|
|
|
(5
|
)
|
|
|
29
|
|
|
|
32
|
|
|
|
35
|
|
|
|
37
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered Free Cash Flow
|
|
$
|
39
|
|
|
$
|
14
|
|
|
$
|
61
|
|
|
$
|
71
|
|
|
$
|
90
|
|
|
$
|
116
|
|
|
$
|
155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interests of LifeLocks Directors and Executive Officers in the Merger
When considering the recommendation of the LifeLock Board that you vote to approve the adoption of the merger agreement, you should be aware
that our directors and executive officers have interests in the merger that
-59-
are different from, or in addition to, the interests of LifeLock stockholders generally, as more fully described below. The LifeLock Board was aware of and considered these interests to the
extent that they existed at the time, among other matters, in approving the merger agreement and the merger and recommending that the merger agreement be adopted by LifeLock stockholders. This section discusses such interests as held by each of (1)
our non-employee directors, consisting of Gary Briggs, David Cowan, Roy Guthrie, Albert Pimentel, Thomas J. Ridge and Jaynie Miller Studenmund, and (2) individuals who serve or have served as our executive officers, including named executive
officers of LifeLock specified in the annual proxy statement of LifeLock filed on March 24, 2016, consisting of Todd Davis, Hilary Schneider, Doug Jeffries, Sharon Segev, Ty Shay, Chris Power and Ramakrishna (Schwark) Satyavolu. Messrs.
Powers and Satyavolus service with us ended in October 2016 and September 2016, respectively. Solely for purposes of this section of this proxy, references to executive officers include each of these individuals.
Insurance and Indemnification of Directors and Executive Officers
The merger agreement provides that the surviving corporation and its subsidiaries will (and Symantec and its subsidiaries will cause the
surviving corporation to) honor and fulfill, in all respects to the extent permitted under applicable law the obligations of LifeLock and its subsidiaries pursuant to any indemnification agreements between LifeLock, on the one hand, and any of their
respective current or former directors, officers or employees of LifeLock, on the other hand. In addition, the merger agreement provides that, during the six year period commencing at the effective time of the merger, the surviving corporation will
(and Symantec will cause the surviving corporation to) indemnify and hold harmless each current or former director, officer or employee of LifeLock or its subsidiaries, to the fullest extent permitted by law, for acts and omissions in such capacity
as well as legal proceedings relating to the merger. Prior to the closing of the merger, LifeLock will be permitted to purchase, or after the closing Symantec will cause the surviving corporation to maintain, a tail policy to its
directors and officers insurance policies prior to the effective time of the merger, provided that the annual premium for such insurance does not exceed 300% of the aggregate annual premiums currently paid by LifeLock. For more
information, see the section of this proxy statement captioned The Merger AgreementIndemnification and Insurance.
Post-Closing Employee Benefits
From and for a period of one year after the effective time of the merger, Symantec has agreed that each continuing employees aggregate
cash compensation, including base salary and target incentive compensation opportunity, payable to him or her will not be reduced and has agreed to either (1) maintain for the benefit of each continuing employee LifeLocks benefit plans (other
than the opportunity to participate in equity-based benefits, cash incentive, bonus, severance and, subject to the merger agreement, individual employment agreements, which existing plans and agreements will be governed by and may only be amended
according to their respective terms) at benefit levels that are substantially equivalent to those in effect at LifeLock on the date of the merger agreement, and provide compensation and benefits to each continuing employee pursuant to such benefit
plans; (2) provide benefits to each continuing employee that, taken as a whole, are substantially equivalent to those benefits provided to similarly situated employees of Symantec; or (3) provide some combination of LifeLock and Symantec benefit
plans such that each continuing employee receives benefits that, taken as a whole, in any case with respect to clauses (1) through (3), are in the aggregate substantially equivalent to those benefits provided to similarly situated employees of
Symantec. Additionally, for a period of one year following the effective time of the merger, Symantec has agreed to provide severance benefits that are substantially equivalent to those benefits provided to similarly situated employees of Symantec
and its affiliates. For more information, see the section of this proxy statement captioned The Merger AgreementEmployee Benefits.
Treatment of Equity-Based Awards
The discussion below describes the treatment of LifeLocks outstanding equity awards under the merger agreement. Any cash payments with
respect to LifeLock equity awards described below will be subject to any applicable tax withholdings and unless otherwise noted below, will be made shortly following the effective time.
-60-
Treatment of Stock Options
As of November 15, 2016, there were 374,111 shares of common stock subject to outstanding options held by our
non-employee
directors and 3,947,083 shares of common stock subject to outstanding options held by our executive officers. At the effective time of the merger, except with respect to any options to purchase shares
of common stock held by
non-employee
directors, (a) the portion of each option to purchase shares of common stock, including those pursuant to the LifeLock Stock Plans but not the ESPP, that is outstanding and
unexercised immediately before the effective time of the merger and that is vested as of the effective time of the merger and (b) any portion of an option to purchase common stock, including pursuant to the LifeLock Stock Plans but not the ESPP,
that is outstanding and unexercised immediately before the effective time of the merger that by its terms accelerates vesting in connection with the holder of such option ceasing, before, upon, or immediately after the effective time of the merger,
to be a service provider of LifeLock or its subsidiaries, which service providers we collectively refer to as terminated service providers and which options we collectively refer to as the vested options, will be cancelled and automatically
converted into the right to receive cash amount(s), without interest, equal to the product obtained by multiplying (1) the total number of shares of common stock issuable upon exercise in full of such vested option by (2) the excess, if any, of the
per share merger consideration, over the applicable per share exercise price of such cancelled vested option.
At the effective time of the
merger, except with respect to options to purchase shares of common stock held by a non-employee director, the portion of each option to purchase shares of common stock, including those pursuant to the LifeLock Stock Plans but not the ESPP, that is
outstanding immediately before and at the effective time of the merger, that is unvested, unexercised and held by a LifeLock service provider at the effective time of the merger, which we refer to as the unvested options, will be assumed
by Symantec and automatically converted into an option to acquire Symantec common stock, on the same terms and conditions applicable to the unvested option immediately before the effective time of the merger, including the term, exercisability, and
vesting schedule, provided that the number of shares of Symantec common stock subject to the option and the per share exercise price will be adjusted, which we refer to as assumed options. Each assumed option will cover a number of
shares of Symantec common stock equal to the number of shares of common stock that were subject to the unvested option immediately before the effective time of the merger multiplied by an exchange ratio, with the resulting number rounded down to the
nearest whole share. The per share exercise price for each assumed option will equal the per share exercise price for the unvested option immediately before the effective time of the merger, divided by the exchange ratio, with the resulting number
rounded up to the nearest whole cent. The assumed options also remain subject to any applicable provisions under the LifeLock Stock Plan under which the award was granted or any stock option, employment, change of control, or other plan or agreement
between the holder of the assumed option and LifeLock.
In addition, certain executive officers are eligible to receive accelerated
vesting of up to 100% of the remaining unvested portion of certain stock options under his or her employment agreement or the LifeLock, Inc. Severance Plan, as amended, which we refer to as the severance plan, as applicable, in
connection with an involuntary termination of employment other than for cause or if the executive officers service is constructively terminated, each during a time frame that begins a specified period before and ends a specified period after
the effective time of the merger, as described in more detail in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments upon Change in Control or
Termination in Connection with Change in Control.
At the effective time of the merger, each option to purchase shares of common
stock outstanding as of immediately before the effective time of the merger, whether vested or unvested, that is held by an individual who is a non-employee director as of the closing date of the merger and is outstanding as of immediately before
the effective time of the merger, which we refer to as a director option, will be cancelled and automatically converted into the right to receive cash amount(s), without interest and subject to any required tax withholdings, equal to the
total number of shares of common stock issuable upon exercise in full of such option multiplied by the excess, if any, of the per share merger consideration over the applicable per share exercise price of such cancelled option.
-61-
Treatment of RSUs
As of November 15, 2016, there were 73,012 shares of common stock subject to outstanding restricted stock unit awards held by our
non-employee
directors and 537,180 shares of common stock subject to outstanding restricted stock unit awards held by our executive officers.
At the effective time of the merger, except with respect to any restricted stock units covering shares of common stock held by
non-employee
directors, (1) the portion of each RSU outstanding and unsettled immediately before the effective time of the merger that is vested as of the effective time of the merger; and (2) any portion
of an RSU that by its terms accelerates vesting that is held by a terminated service provider, which RSUs we refer to as the vested RSUs, will be cancelled and automatically converted into the right to receive cash amount(s), without interest and
subject to any required tax withholdings, equal to the total number of shares of common stock subject to the vested RSU multiplied by the per share merger consideration.
At the effective time of the merger, except with respect to any RSU held by a non-employee director, each unvested RSU will be assumed by
Symantec and automatically converted into an assumed RSU. Each assumed RSU will cover a number of shares of Symantec common stock equal to the number of shares of common stock subject to the unvested RSU immediately before the effective time of
the merger, multiplied by the exchange ratio, with the resulting number rounded down to the nearest whole share. The assumed RSUs also remain subject to any applicable provisions under the LifeLock Stock Plan under which the award was granted or any
restricted stock unit, employment, change of control or other plan or agreement between the holder of the assumed RSU and LifeLock.
In
addition, certain executive officers are eligible to receive accelerated vesting of up to 100% of the remaining unvested portion of certain RSUs under his or her employment agreement or the severance plan, as applicable, in connection with an
involuntary termination of employment other than for cause or if the executive officer is constructively terminated, each during a time frame that begins a specified period before and ends a specified period after the merger, as described in more
detail in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments upon Change in Control or Termination in Connection with Change in Control.
At the effective time of the merger, each director RSU will be cancelled and automatically converted into the right to receive cash amount(s),
without interest, equal to the total number of shares of common stock subject to the RSU multiplied by the per share merger consideration.
Treatment of Restricted Stock
As of November 15, 2016, there were no shares of common stock subject to time-based RSAs held by our
non-employee
directors and 458,293 shares of common stock subject to time-based RSAs held by our executive officers, excluding PRSAs. At the effective time of the merger, each share of common stock subject to
an RSA that is outstanding as of immediately before the effective time of the merger will be cancelled and automatically converted into the right to receive a cash amount, without interest and subject to any required tax withholdings, equal to the
per share merger consideration. Such cash payment will be retained by Symantec and will become payable only upon the occurrence of the date that such RSAs would have become vested under the vesting schedule in place for such RSAs immediately before
or at the effective time of the merger (subject to the restrictions and other terms of such vesting schedule and giving effect to any applicable agreement between the holder of such RSAs and Symantec).
In addition, certain executive officers are eligible to receive accelerated vesting of up to 100% of certain RSAs under his or her employment
agreement or the severance plan, as applicable, in connection with an involuntary termination of employment other than for cause or if the executive officer is constructively terminated, each during a time frame that begins a specified period before
and ends a specified period after the
-62-
merger, as described in more detail in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments upon
Change in Control or Termination in Connection with Change in Control.
Treatment of PRSAs
As of November 15, 2016, there were 76,922 shares of common stock subject to an outstanding PRSA (measured at the target number of shares, or
115,384 at the maximum number of shares but subject to a cap of 99,998 shares upon the closing of the merger) held by Ms. Schneider. None of the other executive officers or
non-employee
directors of LifeLock
hold any PRSAs.
Ms. Schneiders PRSA is subject to the following performance metrics: (1) a total of 23,076 shares of common stock
(calculated at the target level) are subject to achievement of a specified goal relating to total shareholder return, which we refer to as the TSR goal, measured over a 2-year performance period scheduled to end in February 2018; (2) a
total of 23,076 shares of common stock (calculated at the target level) are subject to achievement of a specified TSR goal measured over a 3-year performance period scheduled to end in February 2019; (3) a total of 15,385 shares of common stock
(calculated at the target level) are subject to goals relating to the achievement of LifeLocks annual revenue achievement over LifeLocks 2017 fiscal year (and certain other performance goals); and (4) a total of 15,385 shares of
common stock (calculated at the target level) are subject to goals relating to the achievement of LifeLocks annual revenue achievement over LifeLocks 2018 fiscal year (and certain other performance goals).
The merger agreement provides that at the effective time of the merger, any PRSAs will be treated in accordance with the award agreement, as
amended, governing the PRSA and any employment, change of control, or other plan or agreement between the holder of the PRSA and LifeLock.
PRSAs Subject to TSR Goals.
Ms. Schneiders PRSA agreement, as amended, provides that if Ms. Schneider remains an employee of
LifeLock through the closing of the merger, any ongoing performance period under the PRSA that is subject to the TSR goal (which goal compares the TSR of LifeLock to the companies that comprise the NASDAQ Composite Index) will be shortened so that
each applicable performance period will end on the date of the change in control. The extent of achievement of the TSR goal will be measured with respect to the shortened performance period, as certified by the Compensation Committee of the LifeLock
Board. The Compensation Committee of the LifeLock Board will certify LifeLocks TSR percentile rank as compared to the companies comprising the NASDAQ Composite Index and a specified number of shares of common stock (if any) will become
eligible to vest based on such performance, which shares we refer to as the Eligible PRSAs. In addition, on such date of certification, a number of the Eligible PRSAs prorated based on the portion of the performance period that was
completed through the change in control compared to the original length of the
2-
or
3-year
performance period, as applicable, which we refer to as the Prorated
PRSAs, will be subject to accelerated vesting. The remaining Eligible PRSAs that do not so vest will be converted into time-based RSAs and will be scheduled to vest in equal installments on a calendar quarter basis over the remainder of the
original applicable performance period, subject to Ms. Schneider remaining an employee through each respective vesting date. If a change in control occurs while Ms. Schneider is an employee (or if Ms. Schneider is an employee during the three
month period preceding a change in control, as described below), any Eligible PRSAs that are not Prorated PRSAs will be eligible for accelerated vesting upon certain terminations of employment to the extent provided in Ms. Schneiders
employment agreement with LifeLock, as described in more detail in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments upon Change in Control or
Termination in Connection with Change in Control.
PRSAs Subject to Revenue Goals.
Ms. Schneiders PRSA agreement, as
amended, also provides that if Ms. Schneider remains an employee of LifeLock through the closing date of the merger and in light of the anticipated termination of employment of Ms. Schneider upon the closing of the merger, the target number of
shares subject to the performance goals that are based on the achievement of LifeLocks annual revenue for each of the 2017
-63-
and 2018 fiscal years under the PRSA, which is a total of 30,770 shares of common stock, will become vested as of the closing of the merger.
Each share of common stock subject to any Prorated PRSAs will be converted at the effective time of the merger into the right to receive a
cash payment of the per share merger consideration and each share of common stock subject to an Eligible PRSA that remains unvested and outstanding immediately before the effective time of the merger will be treated in the same manner as the
time-based RSAs, as described under the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerTreatment of Equity-Based AwardsTreatment of RSAs.
Deferred RSUs
Each of
our non-employee directors was eligible to defer payment of shares issuable to them upon the vesting of RSUs that were granted to him or her on May 5, 2016, referred to as the May 2016 RSUs, until the earlier of a date selected by the
director or the directors cessation of service on the LifeLock Board (and service to LifeLock in general). If such an election was made, the vested shares subject to the May 2016 RSUs will be paid to the director and be taxable to the
director in the year specified by the director or the year the director ceases to be a member of the LifeLock Board, as elected by the director, unless a change in control of LifeLock occurs earlier (which the merger will constitute), in which case
the RSUs will be paid in connection with the change in control. Accordingly, any shares that were so deferred under the May 2016 RSUs will become payable as a result of the closing of the merger and will be converted at the effective time into the
right to receive a cash payment of the per share merger consideration.
Equity Interests of LifeLocks Executive Officers and
Non-employee Directors
The following table sets forth the number of shares of common stock and the number of shares of common
stock underlying equity awards held by each of LifeLocks executive officers and non-employee directors outstanding as of the closing of the merger, assuming that such closing occurs on February 1, 2017. Except as noted below, the numbers
do not forecast any future grants, exercises or forfeitures that may occur between November 15, 2016, and February 1, 2017, and the forecasts of the number of shares and equity awards that will be outstanding on February 1, 2017, are based on the
shares and equity awards held as of November 15, 2016, with the vesting of such awards updated as of February 1, 2017.
-64-
The table also sets forth the values of these shares and equity awards based on the per share
merger consideration (minus any applicable per share exercise price with respect to options).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Interests of
LifeLocks Executive Officers and
Non-employee
Directors
|
|
Name
|
|
Number
of
Shares
(#)(1)
|
|
|
Value
of
Shares
($)
|
|
|
Number
of
Shares
Subject
to
Vested
Options
(#)(2)
|
|
|
Value of
Vested
Options
($)
|
|
|
Number
of
Shares
Subject
to
Unvested
Options
(#)(3)
|
|
|
Value
of
Unvested
Options
($)
|
|
|
Number
of
Shares
Subject
to RSUs
(#)(4)
|
|
|
Value
of RSUs
($)
|
|
|
Number
of RSAs
(including
PRSA)
(#)(5)
|
|
|
Value of
RSAs
(including
PRSA)
($)
|
|
|
Total
Value
($)
|
|
Non-Employee Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Briggs
|
|
|
20,336
|
|
|
|
488,064
|
|
|
|
47,000
|
|
|
|
552,720
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,275
|
|
|
|
318,600
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,359,384
|
|
David Cowan
|
|
|
578,802
|
|
|
|
13,891,248
|
|
|
|
47,000
|
|
|
|
705,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,275
|
|
|
|
318,600
|
|
|
|
0
|
|
|
|
0
|
|
|
|
14,914,848
|
|
Roy Guthrie
|
|
|
36,086
|
|
|
|
866,064
|
|
|
|
47,000
|
|
|
|
705,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,275
|
|
|
|
318,600
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,889,664
|
|
Albert Pimentel
|
|
|
36,086
|
|
|
|
866,064
|
|
|
|
100,000
|
|
|
|
1,903,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,275
|
|
|
|
318,600
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,087,664
|
|
Gov. Tom Ridge
|
|
|
32,224
|
|
|
|
773,376
|
|
|
|
83,111
|
|
|
|
1,546,165
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,637
|
|
|
|
159,288
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,478,829
|
|
Jaynie Miller Studenmund
|
|
|
10,578
|
|
|
|
253,872
|
|
|
|
20,840
|
|
|
|
178,807
|
|
|
|
29,160
|
|
|
|
250,193
|
|
|
|
13,275
|
|
|
|
318,600
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,001,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd Davis
|
|
|
753,353
|
|
|
|
18,080,472
|
|
|
|
1,375,082
|
|
|
|
22,838,550
|
|
|
|
161,918
|
|
|
|
1,386,015
|
|
|
|
201,231
|
|
|
|
4,829,544
|
|
|
|
13,020
|
|
|
|
312,480
|
|
|
|
47,447,061
|
|
Hilary Schneider
|
|
|
120,306
|
|
|
|
2,887,344
|
|
|
|
810,247
|
|
|
|
10,657,352
|
|
|
|
666,705
|
|
|
|
8,550,064
|
|
|
|
169,731
|
|
|
|
4,073,544
|
|
|
|
339,418
|
|
|
|
8,146,032
|
|
|
|
34,314,336
|
|
Doug Jeffries
|
|
|
5,000
|
|
|
|
120,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
222,532
|
|
|
|
2,031,557
|
|
|
|
0
|
|
|
|
0
|
|
|
|
106,351
|
|
|
|
2,552,424
|
|
|
|
4,703,981
|
|
Sharon Segev
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
123,342
|
|
|
|
1,398,651
|
|
|
|
0
|
|
|
|
0
|
|
|
|
64,949
|
|
|
|
1,558,776
|
|
|
|
2,957,427
|
|
Ty Shay
|
|
|
62,976
|
|
|
|
1,511,424
|
|
|
|
58,835
|
|
|
|
876,042
|
|
|
|
136,702
|
|
|
|
2,013,395
|
|
|
|
112,500
|
|
|
|
2,700,000
|
|
|
|
29,666
|
|
|
|
711,984
|
|
|
|
7,812,845
|
|
Chris Power
|
|
|
438,170
|
|
|
|
10,516,080
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,516,080
|
|
Schwark Satyavolu
|
|
|
73,332
|
|
|
|
1,759,968
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,759,968
|
|
(1)
|
Includes the number of shares of common stock directly held by the individual as of November 15, 2016, plus the number of shares of common stock that are subject to RSUs that are scheduled to vest and
be settled, and RSAs that are scheduled to vest, between the date of the merger agreement and February 1, 2017. The options held by Mr. Power are scheduled to expire before February 1, 2017, if not exercised prior to such date,
and have a per share exercise price less than the per share merger consideration. Accordingly, such options are assumed to be exercised in full prior to their expiration, and the exercised option shares are reflected in this column. However, the
amounts do not take into account any shares of common stock that may be used to satisfy any tax withholding obligations with respect to any equity awards. The number of shares shown does not include shares that the executive officer may purchase
after the date of the merger agreement under the ESPP. The number of shares held by Mr. Cowan also includes (1) 153,413 shares held by Cowan Family Trust UDT dated 10-17-02; and (2) 389,303 shares held by David Cowan Partners II, a
Delaware Multiple Series Limited Partnership (Series A). The number of shares held by Mr. Davis also includes 633,923 shares held by the 2010 Todd Davis Trust. For additional information regarding the beneficial ownership of common stock, see
the section of this proxy statement captioned Security Ownership of Certain Beneficial Owners and Management below.
|
(2)
|
Includes the number of vested shares of common stock subject to LifeLock stock options that are expected to be held by the individual on February 1, 2017. Such vested options will be cancelled at the effective time in
exchange for the right to receive cash with respect to such cancelled options.
|
-65-
(3)
|
Includes the number of unvested shares of common stock subject to LifeLock stock options that are expected to be held by the individual on February 1, 2017. Such unvested options held by the executive officers will be
assumed by Symantec at the effective time and such unvested options held by non-employee directors will be cancelled at the effective time in exchange for the right to receive cash with respect to such cancelled options.
|
(4)
|
Includes the number of shares of common stock subject to restricted stock units expected to be held by the individual on February 1, 2017, including any vested shares of common stock subject to restricted stock units
that are expected not to have been settled by February 1, 2017 (including any vested shares that were deferred under the May 2016 RSUs). Six thousand six hundred thirty-eight shares of common stock underlying the restricted stock units
held by each of the
non-employee
directors other than Mr. Ridge will have become vested before February 1, 2017, but not yet settled as of such date. Each RSU held by a non-employee director and
any vested RSUs held by the executive officers will be cancelled at the effective time in exchange for a cash payment, on a per share basis, equal to the per share merger consideration ($24.00), subject to any applicable tax withholdings. Any
unvested RSUs held by executive officers will be assumed by Symantec at the effective time of the merger agreement. Any RSUs that are scheduled to vest and be settled prior to February 1, 2017, are not included in this column and instead are
included in the Number of Shares column.
|
(5)
|
Includes the number of shares of common stock subject to RSAs that are expected to be held by the individual on February 1, 2017, including the PRSA held by Ms. Schneider. Any RSAs that are scheduled to vest by February
1, 2017, are not included in this column and instead are included in the Number of Shares column. Each RSA will be converted into the right to receive a cash payment, on a per share basis, equal to the per share merger consideration
($24.00), subject to any applicable tax withholdings, paid upon and subject to the original vesting schedule applicable to such RSAs.
|
Includes 99,998 shares of common stock subject to the PRSA held by Ms. Schneider, assuming (i) achievement of the TSR goals at the
maximum levels, resulting in 69,228 shares of common stock subject to the PRSA that are subject to such TSR goals could become eligible to vest, with 26,442 of such shares could vest at the effective time of the merger upon certification of
performance against the TSR goals and 42,786 of such shares could convert into time-based RSAs, and (ii) the target number of shares of common stock subject to the PRSA that is subject to the achievement of performance goals relating to
LifeLocks revenue for LifeLocks fiscal years 2017 and 2018 vesting as of the closing of the merger, resulting in 30,770 shares of common stock vesting with respect to such portion of the PRSA. Each share subject to the PRSA that is
vested as of the closing of the merger will be converted into the right to receive a cash payment, on a per share basis, equal to the per share merger consideration ($24.00), subject to any applicable tax withholdings. Each share subject to the PRSA
that converts to a time-based RSA that has not vested as of the closing of the merger will be converted into the right to receive a cash payment, on a per share basis, equal to the per share merger consideration ($24.00), subject to any applicable
tax withholdings, paid upon and subject to the vesting schedule applicable to such shares.
Payments Upon Change in Control or
Termination in Connection with Change in Control
Hilary Schneider, Todd Davis, Douglas Jeffries, and Sharon Segev
We entered into employment agreements, as amended, with each of Hilary Schneider, Todd Davis, Douglas Jeffries, and Sharon Segev, which we
refer to as the executive agreements.
Each executive agreement provides for certain severance benefits in the event that the
applicable executive officers employment is terminated by us without cause or the applicable executive officer terminates his or her employment due to a constructive termination (as each is defined in the applicable
executive agreement and described generally below). In such an event, Ms. Schneider, Mr. Davis, Mr. Jeffries, and Ms. Segev, respectively, subject to an effective release in our favor, will receive continuing, monthly payments of the executive
officers base salary as in effect on the date of termination of his or her employment (referred to as salary severance) and a lump sum cash payment, generally payable on the first payroll date following the effectiveness of the
release of claims as described further below, based on a multiple of the monthly COBRA premium that would be necessary to continue group insurance coverage under our plans (referred to as the COBRA premium) in the following amounts: for
Ms. Schneider, 18 months of salary severance and 36 times her COBRA premium for Mr. Davis, 18 months of salary
-66-
severance and 36 times his COBRA premium for Mr. Jeffries, 12 months of salary severance and 24 times his COBRA premium and for Ms. Segev, 12 months of salary severance
and 24 times her COBRA premium.
Each executive agreement further provides that, in the event that, during the period beginning 3
months prior to our change in control (as defined in the employment agreements, described generally below, and which the merger constitutes), and ending 18 months following such change in control, which period we refer to as change
in control period, the applicable executive officers employment is terminated by us without cause or the applicable executive officer terminates his or her employment due to a constructive termination, then, subject to an effective
release in our favor, in addition to the payments described above, the applicable executive officer will receive 100% of his or her annualized target bonus under the applicable bonus plan for the performance period in which the employment
termination occurs or, with respect to Ms. Schneider, Mr. Jeffries and Ms. Segev, if greater, the target bonus in effect for the performance period in which our change in control occurs, with such payment to be made generally on the
first payroll date following the effectiveness of the release of claims. In addition, we have from time to time granted Ms. Schneider, Mr. Davis, Mr. Jeffries, and Ms. Segev, individually, equity awards under the LifeLock Stock Plans.
Each of the executive agreements provides that if we terminate the employment of the executive officer without cause or the executive officer terminates his or her employment due to a constructive termination during the change in control period,
then, subject to an effective release in our favor, his or her unvested and outstanding time-based equity awards (including, for Ms. Schneider, any PRSAs that have been converted into
time-based
RSAs)
will become 100% vested (and fully exercisable, as applicable).
With respect to Ms. Segev, assuming that the closing of the merger
occurs on February 1, 2017, and as of the same date, her employment is terminated under circumstances that would entitle her to severance payments under her executive agreement, the cash-based severance and COBRA premium benefits described
above would include: $350,000 of salary severance, $175,000 in target bonus severance, $36,667 of COBRA premium severance and acceleration of all unvested equity awards held by Ms. Segev as of the date of termination of her employment. The severance
benefits with respect to the other executive officers are set forth in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerGolden Parachute Compensation.
The severance benefits under each of the executive agreements are conditioned on the applicable executive officer executing and not
revoking a release of claims in our favor. Additionally, the severance benefits under the executive agreements for Ms. Schneider and Mr. Davis are conditioned on the executive officer refraining from certain restricted activities for a
period of 18 months following employment termination, and the severance benefits under Mr. Davis executive agreement are conditioned on his compliance with
non-solicitation
requirements, for a
period of 18 months following employment termination.
Each executive agreement further provides that, in the event that the benefits
provided under the executive agreement or otherwise payable to the executive officer would constitute a parachute payment within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (referred to as the Code)
and would be subject to an excise tax under Code Section 4999, then the benefits will be either reduced by an amount so that no portion of the benefits are subject to the excise tax, or not reduced by any amount, whichever would result in the
greater amount of net after-tax benefits to the executive officer.
Chris G. Power
We entered into an amended and restated employment agreement (referred to as his employment agreement) with Chris G. Power on March
7, 2016. Mr. Powers last day of service with us was October 30, 2016. We entered into a transition agreement and release of claims with Mr. Power on November 8, 2016 and Mr. Power will not be entitled to any cash
severance upon or in connection with the merger.
-67-
We have from time to time granted Mr. Power equity awards under our incentive compensation plans.
Mr. Powers equity award agreements provide that the equity awards will accelerate vesting in full in the event that, during the period beginning 2 months prior to and ending 12 months following our change in control (which the
merger constitutes), we terminate Mr. Powers employment without cause (as each are defined in the LifeLock Stock Plan governing the applicable award and described generally below) or Mr. Power terminates his employment due to
a constructive termination (as defined in his applicable award agreements and described generally below). Mr. Powers service with us terminated prior to the merger in a manner that does not trigger any vesting acceleration of
his equity awards.
Ty Shay
Mr. Shay, our Chief Marketing Officer, is a participant in our severance plan pursuant to a participation agreement entered into between
Mr. Shay and us. Under the severance plan, in the event Mr. Shay terminates his employment with us due to a constructive termination, or we terminate Mr. Shays employment for a reason other than cause and other
than Mr. Shays death or disability (which we refer to in each case as a qualifying termination and as each such term is defined in the severance plan) outside of the change in control period (which is the period
beginning 3 months before through 18 months after our change in control, and which the merger constitutes), Mr. Shay, subject to an effective release in our favor, will be entitled to receive, generally on or commencing with the first
payroll date following the effectiveness of the release, (1) continuing payments of 9 months of his base salary in effect immediately before the date of termination of his employment, and (2) a lump sum cash payment equal to 18 times his COBRA
premium. In the event such qualifying termination of Mr. Shay employment occurs during the change in control period, Mr. Shay instead will receive, generally on or commencing with the first payroll date following the effectiveness of the
release, (1) continuing payments of 12 months of his base salary in effect immediately before the date of termination of his employment, provided that the base salary amount will be no less than as in effect immediately before the change
in control period, (2) a lump sum cash payment equal to 24 times his COBRA premium, (3) a lump sum cash payment equal to 100% of his target bonus for the performance period in which the qualifying termination occurs or if greater, the
target bonus for the year in which our change in control occurs, and (4) 100% acceleration of all unvested, time-based equity awards. The severance plan provides that in order to receive these separation benefits, Mr. Shay must sign and not revoke a
separation and release of claims agreement in a form reasonably satisfactory to us and continue to comply with the terms of any confidentiality, proprietary rights and non-solicitation agreement, and any other agreements with us under which he may
have a material duty or obligation to us, including the terms of any confidentiality, proprietary rights and non-solicitation agreement, and any other written agreement or agreements between Mr. Shay and LifeLock. His proprietary rights and
non-solicitation agreement provides that he will not use LifeLock confidential or proprietary information to induce any LifeLock employee to end his or her employment with LifeLock. Under such agreement, Mr. Shay also is subject to a
non-disparagement obligation, and confidentiality obligation with respect to LifeLocks proprietary information and certain other confidential information, in each case during and following his employment with LifeLock. The severance plan
further provides that, in the event that the benefits provided under the severance plan or otherwise payable to the participant would constitute a parachute payment within the meaning of Code Section 280G and would be subject to an excise tax
under Code Section 4999, then the benefits will be either reduced by an amount so that no portion of the benefits are subject to the excise tax, or not reduced by any amount, whichever would result in the greater amount of net after-tax
benefits to the participant.
Prior to becoming a participant under the severance plan, Mr. Shay entered into a severance agreement
with us. The severance agreement provides that in the event Mr. Shays employment is terminated by us without cause (as defined in the severance agreement), Mr. Shay would receive continued payments of salary in effect at
the time of employment termination for a period of 6 months following employment termination, conditioned on his executing a release of claims in our favor, which payments generally are payable commencing on the first payroll date following the
effectiveness of the release of claims. However, the severance plan provides that in the event that a participant of the severance plan becomes entitled to severance benefits under any other plan, program, arrangement, offer letter or employment
agreement with us, that are duplicative to those provided under
-68-
the severance plan, then the participant will receive the severance benefits under the severance plan or such other arrangement, whichever provides for the greater benefit to prevent duplication.
Accordingly, in the event Mr. Shay becomes entitled to receive severance benefits under the severance plan, he will not receive the severance benefits set forth under his severance agreement.
Certain Definitions
Under the executive agreements, Mr. Powers unvested equity awards granted under the 2012 Plan, the severance agreement, and the severance
plan described in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments Upon Change in Control or Termination in Connection with Change in Control,
the term cause is defined as (1) an act or acts of personal dishonesty, fraud, or embezzlement by the executive officer; (2) a demonstrably willful and deliberate violation by the executive officer of his or her obligations under his or
her executive agreement, if applicable, employment agreement or offer letter, his or her proprietary rights agreement or other applicable agreement with LifeLock, that is not remedied in a reasonable period of time after receipt of written notice
from LifeLock; (3) any willful or deliberate refusal to follow the requests or instructions of the LifeLock Board or our Chief Executive Officer, or, in the case of Mr. Shay, his direct supervisor, that are not remedied in a reasonable period
of time after receipt of written notice from LifeLock; (4) the conviction of the executive officer for any criminal act that is a felony or that is a crime involving acts of personal dishonesty causing material harm to the standing and reputation of
LifeLock; or (5) with respect to Ms. Segev, the loss, revocation, or suspension of her license to practice law in any state in which she is presently or may in the future be licensed to practice, other than short-term suspension for non-payment of
license fees or other similar procedural reasons or her voluntary withdrawal of the executive officers license to practice law in any state.
Under the executive agreements, Mr. Powers employment agreement and award agreements, and the severance plan with respect to Mr.
Shay described in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments Upon Change in Control or Termination in Connection with Change in Control,
the term constructive termination is defined as (1) LifeLocks material breach of the material terms and conditions required to be complied with by LifeLock pursuant to an applicable agreement; (2) a material diminution in the
executive officers title, duties, or responsibilities; or (3) except in the case of Mr. Powers employment agreement and award agreements, a relocation of the executive officers principal work site by more than 50 miles.
Under the executive agreements, severance plan and our 2012 Incentive Compensation Plan described under this section titled Payments
Upon Change in Control or Termination in Connection with Change in Control, the term change in control refers to (1) acquisition by any person of beneficial ownership of more than 50% of either the value of the equity securities of
LifeLock or voting power of the voting securities of LifeLock entitled to vote generally in the election of directors, excluding any acquisition directly from LifeLock, by LifeLock, by a person who has a controlling beneficial ownership of LifeLock,
by LifeLocks or its affiliates employee benefit plans, or by an entity referenced in clauses (3)(i) through (iii) below; (2) the incumbent members of the Board, which includes any individual who becomes a director with approval by a vote
of at least a majority of the directors then comprising the incumbent Board members during any period of two years ceasing to constitute at least a majority of the Board; (3) completion of a reorganization, merger, statutory share exchange, or
consolidation or similar transaction involving LifeLock or any of its subsidiaries, but in the case of any subsidiaries, only if equity securities of LifeLock are issued or issuable in connection with the transaction; or a sale or other disposition
of all or substantially all of the assets of LifeLock, or the acquisition of assets or equity of another entity by LifeLock or any of its subsidiaries, unless following such transaction, (i) all or substantially all of the beneficial owners of
LifeLocks stock immediately prior to the transaction beneficially own more than 50% of the value of the outstanding securities and voting power of securities entitled to vote in the election of Board members in substantially the same
proportion as immediately prior to the transaction, (ii) no person of LifeLock, the continuing entity following the transaction, any entity controlled by the continuing entity or any person that had beneficial ownership of a controlling interest in
LifeLock when the 2012 Incentive Compensation
-69-
Plan became effective, beneficially owns at least 50% of the value or voting power of the continuing entity following the transaction (unless such ownership existed prior to the transaction), and
(iii) at least a majority of the Board members of the continuing entity following the transaction were incumbent directors at the time of execution of the transaction agreement or Board action providing for the transaction; or (4) approval by
LifeLocks stockholders of a complete liquidation or dissolution of LifeLock. The merger is considered a change in control under this definition.
Employment Arrangements Following the Merger
As of the date of this proxy statement, none of LifeLocks executive officers have reached an understanding on potential employment or
other retention terms with the surviving corporation or with Symantec, and no LifeLock executive officers have entered into any definitive agreements or arrangements regarding employment or other retention with the surviving corporation or with
Symantec following the consummation of the merger. However, prior to the effective time of the merger, Symantec may initiate discussions regarding employment or other retention terms and may enter into definitive agreements regarding employment or
retention for certain of LifeLocks employees, to be effective as of the effective time of the merger. In addition, as disclosed in the section of this proxy statement captioned The Merger AgreementEmployee Benefits, Symantec
has agreed to assume the obligations and succeed to the rights of LifeLock under each of the Change of Control and Severance Agreements with LifeLocks current executive officers.
Symantec has informed LifeLock that it does not intend to retain Ms. Schneider and Mr. Davis after the closing of the merger and that
their employment with LifeLock will be terminated at the closing of the merger.
Golden Parachute Compensation
In accordance with Item 402(t) of Regulation S-K, the table below sets forth the compensation that is based on or that otherwise relates
to the merger that will or may become payable to each of our named executive officers in connection with the merger. For further information regarding this compensation, see the section of this proxy statement captioned Interests of
LifeLocks Directors and Executive Officers in the Merger.
LifeLocks named executive officers for purposes
of the disclosure in this proxy statement are Todd Davis, Hilary Schneider, Chris Power, Schwark Satyavolu, Ty Shay, and Douglas Jeffries. Mr. Jeffries was not a named executive officer of LifeLock under the definitive proxy statement filed
with the SEC for LifeLocks fiscal year ended December 31, 2015; however, during 2016, he became, and currently serves as, LifeLocks Chief Financial Officer.
-70-
The following table sets forth the information required by Item 402(t) of Regulation S-K
published by the SEC regarding certain compensation that each of LifeLocks named executive officers may receive that is based on, or that otherwise relates to, the merger. The figures in the table are estimated based on (1) compensation
and benefit levels as of November 15, 2016; (2) an assumed effective date of February 1, 2017, for the merger; (3) the termination of the named executive officers employment without cause at the effective time of the
merger; and (4) that each named executive officers equity awards held on November 15, 2016, will equal the equity awards held by such named executive officer on February 1, 2017 (after taking into account any vesting that is scheduled to occur
between November 15, 2016 and February 1, 2017). The amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including an assumption that the employment of each
of LifeLocks named executive officers will be terminated without cause at the effective time of the merger. As required by applicable SEC rules, all amounts below that are determined using the per share value of common stock have been
calculated based on a per share price of $24.00 (the per share merger consideration).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golden Parachute Compensation
|
|
Name
|
|
Cash ($)(1)
|
|
|
Equity
($)(2)(3)(4)
|
|
|
Perquisites /
Benefits
($)(5)
|
|
|
Total ($)(6)
|
|
Todd Davis
|
|
|
700,000
|
|
|
|
6,528,039
|
|
|
|
50,275
|
|
|
|
7,278,314
|
|
Hilary Schneider
|
|
|
1,250,000
|
|
|
|
20,488,864
|
|
|
|
50,275
|
|
|
|
21,789,139
|
|
Doug Jeffries
|
|
|
660,000
|
|
|
|
4,583,981
|
|
|
|
13,242
|
|
|
|
5,257,223
|
|
Ty Shay
|
|
|
579,375
|
|
|
|
5,425,379
|
|
|
|
37,393
|
|
|
|
6,042,147
|
|
Chris Power(7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Schwark Satyavolu(8)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
(1)
|
As described in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments upon Change in Control or Termination in Connection
with Change in Control, under the executive agreements with respect to Mr. Davis, Ms. Schneider, and Mr. Jeffries or the severance plan and participation agreement with respect to Mr. Shay, upon a termination of the named executive
officers employment by LifeLock without cause or a constructive termination by the named executive officer, in each case during the change in control period, the named executive officer would be entitled to (1) continuing payments of his
or her base salary for 12 months (or 18 months for Mr. Davis and Ms. Schneider); and (2) a lump sum payment equal to 100% of the greater of the named executive officers (a) target bonus as in effect for the year in which the
change in control occurs, or (b) target bonus as in effect for the year in which the termination of employment occurs (except with respect to Mr. Davis, whose target bonus is a specified amount under his employment agreement and set forth
in the table below). All such amounts are double-trigger and only get paid if the executive officers employment is terminated under the circumstances described within the change in control period.
|
The following table quantifies each separate form of cash severance reported in this column in the table to which this footnote relates.
|
|
|
|
|
|
|
|
|
Name
|
|
Base Salary
Severance ($)
|
|
|
Target Bonus
Severance ($)
|
|
Todd Davis
|
|
|
600,000
|
|
|
|
100,000
|
|
Hilary Schneider
|
|
|
750,000
|
|
|
|
500,000
|
|
Doug Jeffries
|
|
|
400,000
|
|
|
|
260,000
|
|
Ty Shay
|
|
|
386,250
|
|
|
|
193,125
|
|
Chris Power
|
|
|
0
|
|
|
|
0
|
|
Schwark Satyavolu
|
|
|
0
|
|
|
|
0
|
|
Mr. Powers and Mr. Satyavolus service with us ended prior to the date of the merger
agreement, as described in footnotes 6 and 7 below. Mr. Power received certain cash payments in connection with such termination. However, neither of these individuals will receive any enhanced or additional cash payments in connection with the
merger.
-71-
(2)
|
Represents the aggregate payments to be made in respect of unvested options, unvested restricted stock units, unvested RSAs and unvested PRSAs that will be subject to accelerated vesting upon either the closing of the
merger or a qualifying termination of employment in connection with the merger, as described in further detail in footnotes (3) and (4) below. The value of each share of common stock underlying an option is determined as the excess, if any, of
$24.00 (the per share merger consideration) over the per share exercise price of the option. The value of each share of common stock underlying any RSU, RSA, or PRSA is based on the per share merger consideration of $24.00.
|
(3)
|
As described in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerTreatment of Equity-Based Awards, a portion of the PRSA
held by Ms. Schneider that is outstanding as of the closing of the merger will vest or become eligible to vest as follows. The portion of the PRSA that is subject in part to the achievement of performance goals relating to LifeLocks
revenue for each of LifeLocks fiscal years 2017 and 2018, shall vest upon, and subject to the occurrence of the closing of the merger, at the target levels, which portion is equal to 30,770 shares of common stock underlying the
PRSA.
|
The remaining portion of the PRSA which is subject to the achievement of TSR goals will have the applicable performance
periods shortened as of the closing of the merger and actual performance measured against the applicable TSR goal. Upon certification of performance against the TSR goals, a prorated portion of the shares of common stock underlying the PRSA that
become eligible to vest based on such actual performance shall become vested, with the proration determined based on the extent to which the applicable performance period was completed through the closing of the merger (disregarding for purposes of
proration the shortening of the performance periods), and any remaining shares of common stock subject to the PRSA that become eligible to vest based on actual performance against the applicable TSR goal will be converted into time-based RSAs
scheduled to vest in equal installments on a quarterly calendar basis over the remainder of the original applicable performance period (with RSAs to be treated as other RSAs are treated in the merger generally). Solely for the purposes of the
estimates shown in the table to which this footnote relates, it is assumed that the applicable TSR goals will be achieved at the maximum levels as of the closing of the merger, resulting in 69,228 shares of common stock underlying the PRSA that
are subject to the achievement of the TSR goals becoming eligible to vest, with 26,442 of such shares vesting upon certification of performance against the TSR goals and 42,786 shares being converted into time-based RSAs.
The following table quantifies the value of the shares of common stock underlying the PRSA that accelerate vesting upon the closing of the
merger, based on the foregoing assumptions in this footnote as well as footnote (2) above. All such amounts are single-trigger in nature (which means that payment is conditioned on the closing of the merger but not on any qualifying
termination of employment), except that the portion of the PRSA that is subject to the TSR goals will be eligible for such vesting only to the extent that the applicable TSR goals are achieved based on actual performance during the applicable
performance period through and ending on the closing date of the merger; provided, however, that to the extent that Ms. Schneiders employment is terminated by LifeLock without cause or by her due to a constructive termination, in each
case during the change in control period but prior to our change in control, then the accelerated vesting will occur only if our change in control occurs within the
three-month
period following such
termination of employment, which in such limited circumstance will be considered double trigger. The PRSAs that are converted into
time-based
RSAs always will be considered double
trigger and are not included in the table below.
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Shares Subject
to Single
Trigger
Vesting Under
PRSA (#)
|
|
|
Value of Shares
Subject to
Single
Trigger
Vesting Under
PRSA ($)
|
|
Hilary Schneider
|
|
|
57,212
|
|
|
|
1,373,088
|
|
-72-
(4)
|
As described in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments upon Change in Control or Termination in Connection
with Change in Control, under the executive agreements with respect to Mr. Davis, Ms. Schneider, and Mr. Jeffries or the severance plan and participation agreement with respect to Mr. Shay, all of the equity awards that are
subject to time-based vesting would accelerate vesting in full upon a termination of the named executive officers employment by LifeLock without cause or a constructive termination by the named executive officer, in each case that occurs
during the change in control period. Such vesting acceleration with respect to Ms. Schneider will apply to any unvested portion of her PRSA that converts into a time-based RSA and becomes eligible to vest based on continued employment following
the closing of the merger as described in footnote (3) above and further described in the section of this proxy captioned Interests of LifeLocks Directors and Executive Officers in the MergerTreatment of Equity-Based
Awards. The following table quantifies the value of the equity awards that would accelerate upon a termination of the named executive officers employment by LifeLock without cause or a constructive termination by the named executive
officer, in each case during the change in control period (assuming for this purpose that the termination occurs on the closing of the merger). All such amounts are double-trigger. In addition, for purposes of the table below,
the number of shares of common stock underlying the PRSA includes the portion of the PRSA that were subject to single-trigger acceleration under footnote (3) above. Solely for the purposes of the estimates shown in the table to which
this footnote relates, it is assumed that the applicable TSR goals will be achieved at the maximum levels as of the closing of the merger. See footnote (2) above for additional assumptions that apply to the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Shares
Subject to
Unvested
Options
(#)
|
|
|
Value of
Unvested
Options ($)
|
|
|
Number
of Shares
Subject to
Unvested
RSUs (#)
|
|
|
Value of
Unvested
RSUs ($)
|
|
|
Number
of RSAs
(#)
|
|
|
Value of
RSAs ($)
|
|
|
Number of
Shares
Subject to
PRSAs (#)
|
|
|
Value of
PRSAs ($)
|
|
Todd Davis
|
|
|
161,918
|
|
|
|
1,386,015
|
|
|
|
201,231
|
|
|
|
4,829,544
|
|
|
|
13,020
|
|
|
|
312,480
|
|
|
|
0
|
|
|
|
0
|
|
Hilary Schneider
|
|
|
666,705
|
|
|
|
8,550,064
|
|
|
|
169,731
|
|
|
|
4,073,544
|
|
|
|
227,721
|
|
|
|
5,465,304
|
|
|
|
99,998
|
|
|
|
2,399,952
|
|
Doug Jeffries
|
|
|
222,532
|
|
|
|
2,031,557
|
|
|
|
0
|
|
|
|
0
|
|
|
|
106,351
|
|
|
|
2,552,424
|
|
|
|
0
|
|
|
|
0
|
|
Ty Shay
|
|
|
136,702
|
|
|
|
2,013,395
|
|
|
|
112,500
|
|
|
|
2,700,000
|
|
|
|
29,666
|
|
|
|
711,984
|
|
|
|
0
|
|
|
|
0
|
|
Chris Power
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Schwark Satyavolu
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
(5)
|
As described in the section of this proxy statement captioned Interests of LifeLocks Directors and Executive Officers in the MergerPayments upon Change in Control or Termination in Connection
with Change in Control, under the executive agreements with respect to Mr. Davis, Ms. Schneider, and Mr. Jeffries or severance plan and participation agreement with respect to Mr. Shay, amounts represent a lump sum payment
equal to the named executive officers applicable monthly COBRA premium, multiplied by: 36, for Mr. Davis and Ms. Schneider and 24, for Messrs. Jeffries and Shay. All such amounts are double-trigger.
Mr. Powers and Mr. Satyavolus service with us ended as described further in footnotes (6) and (7). Mr. Power received certain cash payments in connection with such termination. However, neither of these
individuals will receive enhanced cash severance benefits or additional cash payments in connection with the merger.
|
(6)
|
As noted above, pursuant to the executive agreements and severance plan, in the event that any payments to the named executive officers would be subject to the excise tax imposed by Section 4999 of the Code (as a result
of such payments being classified as parachute payments under Section 280G of the Code), then the benefits payable to any such named executive officers will be either reduced by an amount so that no portion of the benefits are subject to the excise
tax, or not reduced by any amount, whichever would result in the greater amount of net after-tax benefits to the named executive officer. The total amounts do not reflect any such reductions to parachute payments under Section 280G that
may be economically beneficial to the named executive officer in order to avoid the imposition of the excise tax. A definitive analysis will depend on the date of the effective time, the date of the termination of the named executive officers
employment (if any), whether any such termination occurs during the change in control period, and certain other assumptions.
|
-73-
(7)
|
Mr. Powers service with us ended effective October 30, 2016. However, the award agreements that govern his equity awards that were unvested at the time of termination of his services with us provide that
the awards will accelerate vesting in full in the event that, during the period beginning 2 months prior to and ending 12 months following our change in control (which the merger constitutes), we terminate Mr. Powers employment without
cause (as each are defined in the LifeLock Stock Plan governing the applicable award) or Mr. Power terminates his employment due to a constructive termination (as defined in his applicable award agreements). As a result,
in the event that the closing of the merger occurs on or before December 30, 2016, a total of 171,923 shares of common stock subject to his options with a total value of $1,846,739 (based on the $24.00 per share merger consideration
less any per share exercise price) would accelerate vesting, a total of 86,404 shares of common stock subject to his RSUs with a total value of $2,073,696 (based on the $24.00 per share merger consideration) would accelerate vesting, and a total of
51,347 shares of common stock subject to his RSAs with a total value of $1,232,328 (based on the $24.00 per share merger consideration) would accelerate vesting. The treatment of Mr. Powers equity awards is further described in the
section of this proxy captioned Interests of LifeLocks Directors and Executive Officers in the MergerTreatment of Equity-Based Awards and Interests of LifeLocks Directors and Executive Officers in the
MergerPayments upon Change in Control or Termination in Connection with Change in Control.
|
(8)
|
Mr. Satyavolus service with us ended effective September 30, 2016, and he is not entitled to any vesting acceleration, severance benefits, or other change in control payments in connection with the
merger.
|
Closing and Effective Time of the Merger
The closing of the merger will take place no later than the second business day following the satisfaction or waiver in accordance with the
merger agreement of all of the conditions to closing of the merger (as described under the section of this proxy statement captioned The Merger AgreementConditions to the Closing of the Merger), other than conditions that by their
terms are to be satisfied at the closing, but subject to the satisfaction or waiver of each of such conditions.
Appraisal
Rights
If the merger is consummated, LifeLock stockholders who do not vote in favor of the adoption of the merger agreement, who
properly demand appraisal of their shares, who continuously hold such shares through the effective time of the merger and who otherwise comply with the procedures of Section 262 of the DGCL (including with respect to certain aggregate ownership
requirements) will, subject to the conditions thereof, be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL, which we refer to as Section 262. Unless the context requires otherwise,
all references in Section 262 of the DGCL and in this summary to a stockholder are to a record holder of common stock.
The
following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, which is attached to this proxy statement as Annex C. The following
summary does not constitute any legal or other advice and does not constitute a recommendation that LifeLock stockholders exercise their appraisal rights under Section 262. Only a holder of record of shares of common stock is entitled to
demand appraisal rights for the shares registered in that holders name. A person having a beneficial interest in shares of common stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to
cause the record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal rights.
If you hold your shares of our common stock through a bank, broker or other nominee and you wish to exercise appraisal
rights, you should consult with your bank, broker or other nominee.
Under Section 262, holders of shares of common stock who
(1) submit a written demand for appraisal of such stockholders shares to LifeLock prior to the vote on the adoption of the merger agreement; (2) do not vote in favor of the adoption of the merger agreement nor consented thereto in
writing; (3) continuously are the record
-74-
holders of such shares through the effective time of the merger; and (4) otherwise follow the procedures set forth in Section 262 may be entitled to have their shares appraised by the
Delaware Court of Chancery and to receive payment in cash of the fair value of the shares of common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest to be paid
on the amount determined to be the fair value, if any, as determined by the Delaware Court of Chancery. However, after an appraisal petition has been filed, the Delaware Court of Chancery will dismiss appraisal proceedings as to all LifeLock
stockholders who asserted appraisal rights unless (a) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of common stock as measured in accordance with subsection (g) of Section 262 or (b) the value of the merger
consideration in respect of such shares exceeds $1 million. We refer to these conditions as the ownership thresholds. Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on
an appraisal award will accrue and compound quarterly from the effective time of the merger through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during such
period; provided, however, that at any time before the Delaware Court of Chancery enters judgment in the appraisal proceeding, the surviving corporation may pay to each LifeLock stockholder entitled to appraisal an amount in cash, in which case any
such interest will accrue after the time of such payment only on the amount that equals the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Court of Chancery and (2) any
interest accrued prior to the time of such voluntary payment, unless paid at such time. The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.
Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than
20 days prior to the meeting, must notify each of its stockholders entitled to appraisal rights that appraisal rights are available and include in the notice a copy of Section 262. This proxy statement constitutes LifeLocks notice to
stockholders that appraisal rights are available in connection with the merger, and the full text of Section 262 is attached to this proxy statement as Annex C. In connection with the merger, any holder of shares of common stock who wishes
to exercise appraisal rights, or who wishes to preserve such holders right to do so, should review Annex C carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner may result in the loss of
appraisal rights under the DGCL. A LifeLock stockholder who loses his, her or its appraisal rights will be entitled to receive the merger consideration described in the merger agreement. Moreover, because of the complexity of the procedures for
exercising the right to seek appraisal of shares of common stock, LifeLock believes that if a LifeLock stockholder considers exercising such rights, that stockholder should seek the advice of legal counsel.
LifeLock stockholders wishing to exercise the right to seek an appraisal of their shares of common stock must do
ALL
of the following:
|
|
|
the stockholder must not vote in favor of or consent to the adoption of the merger agreement;
|
|
|
|
the stockholder must deliver to LifeLock a written demand for appraisal before the vote on the merger agreement at the special meeting;
|
|
|
|
the stockholder must continuously hold the shares from the date of making the demand through the effective time of the merger (a LifeLock stockholder will lose appraisal rights if the stockholder transfers the shares
before the effective time of the merger); and
|
|
|
|
a stockholder or the surviving company must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares within 120 days after the effective time of the merger. The
surviving company is under no obligation to file any petition and has no intention of doing so.
|
In addition, one of the
ownership thresholds must be met.
Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of
the merger agreement, a LifeLock stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement, abstain or not vote its shares.
-75-
Filing Written Demand
Any holder of shares of common stock wishing to exercise appraisal rights must deliver to LifeLock, before the vote on the adoption of the
merger agreement at the special meeting at which the adoption of the merger agreement will be submitted to the stockholders, a written demand for the appraisal of the stockholders shares, and that stockholder must not vote, in person or by
proxy, in favor of or consent to the adoption of the merger agreement. A holder of shares of common stock exercising appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the
shares of record through the effective time of the merger. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, and it will constitute a waiver of the
LifeLock stockholders right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a LifeLock stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing
instructions to vote against the adoption of the merger agreement or abstain from voting on the adoption of the merger agreement. Neither voting against the adoption of the merger agreement nor abstaining from voting or failing to vote on the
adoption of the merger agreement will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on
the adoption of the merger agreement. A proxy or vote against the adoption of the merger agreement will not constitute a demand. A LifeLock stockholders failure to make the written demand prior to the taking of the vote on the adoption of the
merger agreement at the special meeting will constitute a waiver of appraisal rights.
Only a holder of record of shares of common stock
is entitled to demand appraisal rights for the shares registered in that holders name. A demand for appraisal in respect of shares of common stock should be executed by or on behalf of the holder of record, and must reasonably inform LifeLock
of the identity of the holder and state that the person intends thereby to demand appraisal of the holders shares in connection with the merger. If the shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or
custodian, such demand must be executed by or on behalf of the record owner, and if the shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or on behalf of all joint
owners. An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in
executing the demand, the agent is acting as agent for the record owner or owners.
LIFELOCK STOCKHOLDERS WHO HOLD THEIR SHARES IN
BROKERAGE OR BANK ACCOUNTS OR OTHER NOMINEE FORMS AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BANK, BROKER OR OTHER NOMINEES, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKER OR OTHER NOMINEE TO
MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKER OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY
AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.
All written demands for appraisal pursuant to Section 262
should be mailed or delivered to:
LifeLock, Inc.
60 East Rio Salado Parkway, Suite 400
Tempe, Arizona 85281
Attention:
Secretary
Any holder of shares of common stock may withdraw his, her or its demand for appraisal and accept the consideration offered
pursuant to the merger agreement by delivering to LifeLock a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the
-76-
effective time of the merger will require written approval of the surviving corporation. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed
without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that this shall not affect the right of any LifeLock stockholder who has
not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholders demand for appraisal and to accept the merger consideration within 60 days after the effective time of the merger.
Notice by the Surviving Corporation
If the merger is completed, within 10 days after the effective time of the merger, the surviving corporation will notify each holder of shares
of common stock who has made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of or consented to the adoption of the merger agreement, that the merger has become effective and the effective date thereof.
Filing a Petition for Appraisal
Within 120 days after the effective time of the merger, but not thereafter, the surviving corporation or any holder of shares of common stock
who has complied with Section 262 and is entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the surviving corporation in the
case of a petition filed by a LifeLock stockholder, demanding a determination of the fair value of the shares held by all LifeLock stockholders entitled to appraisal. The surviving corporation is under no obligation, and has no present intention, to
file a petition, and holders should not assume that the surviving corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of common stock. Accordingly, any holders of shares of common stock who
desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of common stock within the time and in the manner prescribed in Section 262. The failure of a holder of
common stock to file such a petition within the period specified in Section 262 could nullify the stockholders previous written demand for appraisal.
Within 120 days after the effective time of the merger, any holder of shares of common stock who has complied with the requirements for
exercise of appraisal rights will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in favor of the adoption of the merger agreement and with respect to
which LifeLock has received demands for appraisal, and the aggregate number of holders of such shares. The surviving corporation must mail this statement to the requesting stockholder within 10 days after receipt of the written request for such a
statement or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares held either in a voting trust or by a nominee on behalf of such person may, in such persons
own name, file a petition seeking appraisal or request from the surviving corporation the foregoing statements. As noted above, however, the demand for appraisal can only be made by a LifeLock stockholder of record.
If a petition for an appraisal is duly filed by a holder of shares of common stock and a copy thereof is served upon the surviving
corporation, the surviving corporation will then be obligated within 20 days after such service to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all LifeLock stockholders who have demanded
payment for their shares and with whom agreements as to the value of their shares have not been reached. After notice to the stockholders as required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to
determine those LifeLock stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the LifeLock stockholders who demanded payment for their shares to
submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings, and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as
to such stockholder.
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The Delaware Court of Chancery will dismiss appraisal proceedings as to all LifeLock stockholders
who assert appraisal rights unless (a) the total number of shares for which appraisal rights have been pursued and perfected exceeds 1% of the outstanding shares of common stock as measured in accordance with subsection (g) of Section 262 or (b) the
value of the merger consideration in respect of the shares for which appraisal rights have been pursued and perfected exceeds $1 million.
Determination of Fair Value
After determining the holders of common stock entitled to appraisal, and that at least one of the ownership thresholds above has been satisfied
in respect of the LifeLock stockholders seeking appraisal rights, the appraisal proceeding will be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such
proceeding, the Delaware Court of Chancery will appraise the fair value of the shares of common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be
paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. Unless the court in its discretion determines otherwise for good cause shown, interest from
the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period
between the effective date of the merger and the date of payment of the judgment. However, the surviving corporation has the right, at any point prior to the Delaware Court of Chancerys entry of judgment in the proceedings, to make a voluntary
cash payment to each LifeLock stockholder seeking appraisal. If the surviving corporation makes a voluntary cash payment pursuant to subsection (h) of Section 262, interest will accrue thereafter only on the sum of (i) the difference, if any,
between the amount paid by the surviving corporation in such voluntary cash payment and the fair value of the shares as determined by the Delaware Court of Chancery and (ii) interest accrued before such voluntary cash payment, unless paid at that
time. In
Weinberger
v. UOP, Inc.
, the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that proof of value by any techniques or
methods which are generally considered acceptable in the financial community and otherwise admissible in court should be considered, and that [f]air price obviously requires consideration of all relevant factors involving the value of a
company. The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be
ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be exclusive of any element of value arising from the accomplishment or expectation of
the merger. In
Cede
& Co.
v. Technicolor, Inc.
, the Delaware Supreme Court stated that such exclusion is a narrow exclusion [that] does not encompass known elements of value,
but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In
Weinberger
, the Supreme Court of Delaware also stated that elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.
LifeLock stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court
of Chancery could be more than, the same as or less than the consideration they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial
point of view of the consideration payable in a merger is not an opinion as to, and does not in any manner address, fair value under Section 262 of the DGCL.
Although LifeLock believes that the per share merger consideration is fair, no
representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and LifeLock stockholders should recognize that such an appraisal could result in a determination of a value higher or lower
than, or the same as, the per share merger consideration
. Neither LifeLock nor Symantec anticipates offering more than the per share merger consideration to any LifeLock stockholder exercising appraisal rights, and each of LifeLock and Symantec
reserves the right to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262, the fair value of
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a share of common stock is less than the per share merger consideration. If a petition for appraisal is not timely filed, or if neither of the ownership thresholds above has been satisfied in
respect of the LifeLock stockholders seeking appraisal rights, then the right to an appraisal will cease. The costs of the appraisal proceedings (which do not include attorneys fees or the fees and expenses of experts) may be determined by the
Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a LifeLock stockholder, the Delaware Court of Chancery may also order that all or a portion of the
expenses incurred by any LifeLock stockholder in connection with an appraisal, including, without limitation, reasonable attorneys fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to
be appraised.
If any LifeLock stockholder who demands appraisal of his, her or its shares of common stock under Section 262 fails to
perfect, or loses or successfully withdraws, such holders right to appraisal, the stockholders shares of common stock will be deemed to have been converted at the effective time of the merger into the right to receive the per share
merger consideration. A LifeLock stockholder will fail to perfect, or effectively lose or withdraw, the holders right to appraisal if no petition for appraisal is filed within 120 days after the effective time of the merger, if neither of the
ownership thresholds above has been satisfied in respect of the LifeLock stockholders seeking appraisal rights or if the stockholder delivers to the surviving corporation a written withdrawal of the holders demand for appraisal and an
acceptance of the per share merger consideration in accordance with Section 262.
From and after the effective time of the merger, no
LifeLock stockholder who has demanded appraisal rights will be entitled to vote such shares of common stock for any purpose or to receive payment of dividends or other distributions on the stock, except dividends or other distributions on the
holders shares of common stock, if any, payable to LifeLock stockholders as of a time prior to the effective time of the merger. If no petition for an appraisal is filed within the time provided in Section 262, if neither of the ownership
thresholds above has been satisfied in respect of the LifeLock stockholders seeking appraisal rights or if the stockholder delivers to the surviving corporation a written withdrawal of the demand for an appraisal and an acceptance of the merger,
either within 60 days after the effective time of the merger or thereafter with the written approval of the surviving corporation, then the right of such LifeLock stockholder to an appraisal will cease. Once a petition for appraisal is filed with
the Delaware Court of Chancery, however, the appraisal proceeding may not be dismissed as to any LifeLock stockholder who commenced the proceeding or joined that proceeding as a named party without the approval of the court.
Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of a LifeLock stockholders
statutory appraisal rights. Consequently, any LifeLock stockholder wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.
Accounting Treatment
The merger will be accounted for as a purchase transaction for financial accounting purposes.
Material U.S. Federal Income Tax Consequences of the Merger
The following discussion is a summary of material U.S. federal income tax consequences of the merger that may be relevant to U.S. Holders and
Non-U.S. Holders (each as defined below) of shares of common stock whose shares are converted into the right to receive cash pursuant to the merger. This discussion is based upon the Code, Treasury Regulations promulgated under the Code, court
decisions, published positions of the Internal Revenue Service, which we refer to as the IRS, and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing
interpretations, possibly with retroactive effect. This discussion is limited to holders who hold their shares of common stock as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment
purposes).
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This discussion is for general information only and does not address all of the tax consequences
that may be relevant to holders in light of their particular circumstances. For example, this discussion does not address:
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tax consequences that may be relevant to holders who may be subject to special treatment under U.S. federal income tax laws, such as financial institutions; tax-exempt organizations; S corporations or any other entities
or arrangements treated as partnerships or pass-through entities for U.S. federal income tax purposes; insurance companies; mutual funds; dealers in stocks and securities; traders in securities that elect to use the mark-to-market method of
accounting for their securities; regulated investment companies; real estate investment trusts; entities subject to the U.S. anti-inversion rules; or certain former citizens or long-term residents of the United States;
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tax consequences to holders holding the shares as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction;
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tax consequences to holders who received their shares of common stock in a compensatory transaction or pursuant to the exercise of options or warrants;
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tax consequences to holders who own an equity interest, actually or constructively, in Symantec or the surviving corporation following the merger;
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tax consequences to holders who hold their shares of common stock as qualified small business stock for purposes of Sections 1045 and/or 1202 of the Code;
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tax consequences to U.S. Holders whose functional currency is not the U.S. dollar;
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tax consequences to holders who hold their common stock through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States;
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tax consequences to holders who are controlled foreign corporations, passive foreign investment companies or personal holding companies for U.S. federal income tax purposes;
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tax consequences arising from the Medicare tax on net investment income;
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U.S. federal estate, gift or alternative minimum tax consequences, if any;
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any state, local or foreign tax consequences; or
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tax consequences to holders that do not vote in favor of the merger nor consent thereto in writing and who have properly and validly exercised and perfected their appraisal rights under the DGCL.
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If a partnership (including an entity or arrangement, domestic or foreign, treated as a partnership for U.S. federal income tax purposes) is a
beneficial owner of shares of common stock, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. Partnerships holding shares of common
stock and partners therein should consult their tax advisors regarding the consequences of the merger.
No ruling has been or will be
obtained from the IRS regarding the U.S. federal income tax consequences of the merger described below. If the IRS contests a conclusion set forth herein, no assurance can be given that a holder would ultimately prevail in a final determination by a
court.
THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE TO ANY HOLDER. A HOLDER
SHOULD CONSULT ITS OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER FEDERAL NON-INCOME TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR
NON-U.S. TAXING JURISDICTION.
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U.S. Holders
For purposes of this discussion, a U.S. Holder is a beneficial owner of shares of common stock that is for U.S. federal income tax
purposes:
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an individual who is a citizen or resident of the United States;
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a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
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an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
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a trust (1) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in section 7701(a)(30) of the Code; or (2) that has a
valid election in effect under applicable Treasury regulations to be treated as a United States person.
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The receipt of cash
by a U.S. Holder in exchange for shares of common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holders gain or loss will be equal to the difference, if any, between the
amount of cash received and the U.S. Holders adjusted tax basis in the shares surrendered pursuant to the merger. A U.S. Holders adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares. Such gain or
loss will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holders holding period in such shares is more than one year at the time of the completion of the merger. A reduced tax rate on capital gain generally
will apply to long-term capital gain of a non-corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to limitations.
Non-U.S. Holders
For purposes of this discussion, the term Non-U.S. Holder means a beneficial owner of shares of common stock that is neither a U.S.
Holder nor a partnership for U.S. federal income tax purposes.
Special rules not discussed below may apply to certain Non-U.S. Holders
subject to special tax treatment such as controlled foreign corporations or passive foreign investment companies. Non-U.S. Holders (and investors therein) should consult their own tax advisors to determine the U.S.
federal, state, local and other tax consequences that may be relevant to them in light of their particular circumstances.
Any gain
realized by a Non-U.S. Holder pursuant to the merger generally will not be subject to U.S. federal income tax unless:
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the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by
such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax at rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to
the branch profits tax at a rate of 30% (or a lower rate under an applicable income tax treaty);
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such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the merger, and certain other specified conditions are met, in which case such gain will be subject
to U.S. federal income tax at a rate of 30% (or a lower rate under an applicable income tax treaty); or
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LifeLock is or has been a United States real property holding corporation as such term is defined in
Section 897(c) of the Code, which we refer to as a USRPHC, at any time within the shorter of the five-year period preceding the merger or such Non-U.S. Holders holding period with respect to the applicable shares of common
stock, which we refer to as the relevant period, and, if shares of common stock are regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code), such Non-U.S. Holder owns directly or is
deemed to own pursuant to attribution rules more than 5% of our common stock at any time during the relevant period, in which
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case such gain will be subject to U.S. federal income tax at rates generally applicable to U.S. persons (as described in the first bullet point above), except that the branch profits tax will not
apply. We believe that we are not, and have not been, a USRPHC at any time during the five-year period preceding the merger.
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Information Reporting and Backup Withholding
Information reporting and backup withholding (at a rate of 28%) may apply to the proceeds received by a holder pursuant to the merger. Backup
withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that such U.S. Holder is not subject to backup withholding on IRS Form W-9 (or a substitute or successor form); or
(2) a Non-U.S. Holder that (a) provides a certification of such Non-U.S. Holders foreign status on the appropriate series of IRS Form W-8 (or a substitute or successor form) or (b) otherwise establishes an exemption from backup
withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the holders U.S. federal income tax liability, provided that the required
information is timely furnished to the IRS.
Regulatory Approvals Required for the Merger
General
Each of
LifeLock, on the one hand, and Symantec and Acquisition Sub, on the other hand, have agreed to use its reasonable best efforts to comply with all regulatory notification requirements and obtain all regulatory approvals required to consummate the
merger and the other transactions contemplated by the merger agreement, including taking all reasonable actions and doing all things reasonably necessary to (1) resolve any objections from a governmental authority; and (2) avoid or
eliminate any impediment that may be asserted by a governmental authority. However, Symantec is not obligated to consent or offer to divest or hold separate any business or assets of Symantec or LifeLock. If, and to the extent necessary to obtain
clearance of the merger pursuant to the HSR Act and any other antitrust law applicable to the merger, each of Symantec and Acquisition Sub (and their respective affiliates, if applicable), have agreed under the merger agreement to (1) offer,
negotiate, commit to and effect, by consent decree, hold separate order or otherwise, (a) the sale, divestiture, license or other disposition of any and all of the capital stock or other equity or voting interests, assets (whether tangible or
intangible), rights, products or business of Symantec and Acquisition Sub (and their respective affiliates, if applicable) on the one hand, and LifeLock and its subsidiaries, on the other hand, in each case conditioned upon the consummation of the
merger and (b) any other restrictions on the activities of Symantec and Acquisition Sub (and their respective affiliates, if applicable), on the one hand and Symantec and its subsidiaries, on the other hand; and (2) contest, defend and appeal any
legal proceedings, whether judicial or administrative, challenging the merger agreement or the consummation of the merger, in each case unless taking such action would reasonably be expected to materially and adversely affect the benefits to be
obtained by virtue of the merger.
HSR Act and U.S. Antitrust Matters
Under the HSR Act and the rules promulgated thereunder, the merger cannot be completed until LifeLock and Symantec file a notification and
report form with the FTC and the Antitrust Division of the Department of Justice, which we refer to as the DOJ, under the HSR Act and the applicable waiting period has expired or been terminated. A transaction notifiable under the HSR
Act may not be completed until the expiration of a 30 calendar day waiting period following the parties filing of their respective HSR Act notification forms or the early termination of that waiting period. LifeLock and Symantec made the
necessary filings with the FTC and the Antitrust Division of the DOJ on December 6, 2016. The HSR Act waiting period is set to expire at 11:59 p.m., Eastern time, on January 5, 2017.
At any time before or after consummation of the merger, notwithstanding the termination of the waiting period under the HSR Act, the FTC or
the Antitrust Division of the DOJ could take such action under the
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antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger, seeking divestiture of substantial assets of the parties or
requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. At any time before or after the completion of the merger, and notwithstanding the termination of the waiting period under the HSR
Act, any state could take such action under the antitrust laws as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of the
parties. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.
Other Regulatory
Approvals
One or more governmental bodies may impose a condition, restriction, qualification, requirement or limitation when it grants
the necessary approvals and consents to the merger. Third parties may also seek to intervene in the regulatory process or litigate to enjoin or overturn regulatory approvals, which actions could significantly impede or even preclude obtaining
required regulatory approvals. There is currently no way to predict how long it will take to obtain all of the required regulatory approvals or whether such approvals will ultimately be obtained, and there may be a substantial period of time between
the approval by LifeLock stockholders and the completion of the merger.
Although we expect that all required regulatory clearances and
approvals will be obtained, we cannot assure you that these regulatory clearances and approvals will be timely obtained, obtained at all or that the granting of these regulatory clearances and approvals will not involve the imposition of additional
conditions on the completion of the merger or require changes to the terms of the merger agreement. These conditions or changes could result in the conditions to the merger not being satisfied.
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FUTURE STOCKHOLDER PROPOSALS
If the merger is completed, we will have no public stockholders and there will be no public participation in any future meetings of
stockholders of LifeLock. However, if the merger is not completed, LifeLock stockholders will continue to be entitled to attend and participate in stockholder meetings.
LifeLock will hold an annual meeting of stockholders in 2017 only if the merger has not already been completed.
In accordance with Rule 14a-8 under the Exchange Act, and as provided in Section 2.4 of our bylaws, any LifeLock stockholder who
intends to submit a proposal at our annual meeting in 2017, if held, and who wishes to have the proposal considered for inclusion in the proxy statement for that meeting must have, in addition to complying with Rule 14a-8 under the Exchange Act
and all other applicable laws and regulations governing submission of such proposals, delivered the notice of the proposal to us for consideration by November 26, 2016.
Pursuant to Section 2.4 of our bylaws, if a LifeLock stockholder intends to submit a proposal or director nomination for consideration at
our annual meeting in 2017, if held, that is not intended to be included in the proxy statement for that meeting, the stockholder must give notice in accordance with the requirements set forth in our bylaws no later than the 45th day and no
earlier than the 75th day prior to the one year anniversary of the mailing of the proxy statement for the previous years annual meeting of stockholders, or not earlier than January 8, 2017 and not later than February 7, 2017. Such notice
should be sent to our Secretary at LifeLock, Inc., 60 East Rio Salado Parkway, Suite 400, Tempe, Arizona 85281. In addition, our bylaws require that certain information and acknowledgments with respect to the proposal or the nominee and the LifeLock
stockholder making the proposal or nomination be set forth in the notice.
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WHERE YOU CAN FIND MORE INFORMATION
The SEC allows us to incorporate by reference information into this proxy statement, which means that we can disclose important
information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except for any information superseded by information in this proxy
statement or incorporated by reference subsequent to the date of this proxy statement. This proxy statement incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important
information about us and our financial condition and are incorporated by reference into this proxy statement.
The following LifeLock
filings with the SEC are incorporated by reference:
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LifeLocks Annual Report on Form 10-K for the fiscal year ended December 31, 2015;
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LifeLocks Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2016, June 30, 2016 and September 30, 2016; and
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LifeLocks Current Reports on Form 8-K filed on January 20, 2016, January 25, 2016, February 16, 2016, February 23, 2016, March 7, 2016, May 3, 2016, May 11, 2016, May 17, 2016, July 5, 2016, July 15, 2016, August
2, 2016, September 2, 2016 and November 21, 2016.
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We also incorporate by reference into this proxy statement additional
documents that we may file with the SEC between the date of this proxy statement and the earlier of the date of the special meeting or the termination of the merger agreement. These documents include periodic reports, such as Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q, as well as Current Reports on Form 8-K and proxy soliciting materials. The information provided on our website is not part of this proxy statement, and therefore is not incorporated by reference herein.
Information furnished under Item 2.02 or Item 7.01 of any Current Report on Form 8-K, including related exhibits, is not and will not be
incorporated by reference into this proxy statement.
You may read and copy any reports, statements or other information that we file with
the Securities and Exchange Commission at the SECs public reference room at the following location: 100 F Street, N.E., Room 1580, Washington, DC 20549. You may also obtain copies of those documents at prescribed rates by writing to the
Public Reference Section of the SEC at that address. Please call the SEC at (800) SEC-0330 for further information on the public reference room. These SEC filings are also available to the public from commercial document retrieval services and
at
www.sec.gov
.
You may obtain any of the documents we file with the SEC, without charge, by requesting them in writing or by
telephone from us at the following address:
LifeLock, Inc.
Attention: Secretary
60 East Rio
Salado Parkway
Suite 400
Tempe, AZ 85281
If you would
like to request documents from us, please do so as soon as possible to receive them before the special meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt method. Please note that
all of our documents that we file with the SEC are also promptly available through the Investor Relations section of our website,
www.LifeLock.com
. The information included on our website is not incorporated by reference into this proxy
statement.
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If you have any questions concerning the merger, the special meeting or this proxy statement,
would like additional copies of this proxy statement or need help voting your shares of common stock, please contact our proxy solicitor:
Innisfree M&A Incorporated
501
Madison Avenue, 20th Floor
New York, New York 10022
LifeLock Stockholders May Call:
(877) 825-8621 (Toll-Free From the U.S. and Canada)
or
(412) 232-3651 (From Other
Locations)
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MISCELLANEOUS
LifeLock has supplied all information relating to LifeLock, and Symantec has supplied, and LifeLock has not independently verified, all of the
information relating to Symantec and Acquisition Sub contained in this proxy statement.
You should rely only on the information contained
in this proxy statement, the annexes to this proxy statement and the documents that we incorporate by reference in this proxy statement in voting on the adoption of the merger agreement. We have not authorized anyone to provide you with information
that is different from what is contained or incorporated by reference in this proxy statement. This proxy statement is dated [●], 2016. You should not assume that the information contained in this proxy statement is accurate as of any
date other than that date (or as of an earlier date if so indicated in this proxy statement), and the mailing of this proxy statement to LifeLock stockholders does not create any implication to the contrary. This proxy statement does not constitute
a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make a proxy solicitation.
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ANNEX A
Agreement and Plan of Merger
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
SYMANTEC
CORPORATION,
L1116 MERGER SUB, INC.
and
LIFELOCK, INC.
Dated November 20, 2016
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS & INTERPRETATIONS
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A-1
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Section 1.1.
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Certain Definitions
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A-1
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Section 1.2.
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Additional Definitions
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A-13
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Section 1.3.
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Certain Interpretations
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A-14
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Section 1.4.
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Company Disclosure Letter
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A-16
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ARTICLE II THE MERGER
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A-16
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Section 2.1.
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The Merger
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A-16
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Section 2.2.
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The Effective Time
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A-16
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Section 2.3.
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Closing
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A-17
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Section 2.4.
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Effect of the Merger
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A-17
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Section 2.5.
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Certificate of Incorporation and Bylaws
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A-17
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Section 2.6.
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Directors and Officers
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A-17
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Section 2.7.
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Effect on Capital Stock
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A-18
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Section 2.8.
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Equity Awards
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A-19
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Section 2.9.
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Payment for Securities; Surrender of Certificates
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A-22
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Section 2.10.
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No Further Ownership Rights in Company Common Stock
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A-24
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Section 2.11.
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Lost, Stolen or Destroyed Certificates
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A-24
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Section 2.12.
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Required Withholding
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A-25
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Section 2.13.
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Necessary Further Actions
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A-25
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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A-25
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Section 3.1.
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Organization; Good Standing
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A-25
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Section 3.2.
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Corporate Power; Enforceability
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A-25
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Section 3.3.
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Company Board Approval; Fairness Opinion; Anti-Takeover Laws
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A-26
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Section 3.4.
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Requisite Stockholder Approval
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A-26
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|
Section 3.5.
|
|
Non-Contravention
|
|
|
A-26
|
|
|
|
Section 3.6.
|
|
Requisite Governmental Approvals
|
|
|
A-27
|
|
|
|
Section 3.7.
|
|
Company Capitalization
|
|
|
A-27
|
|
|
|
Section 3.8.
|
|
Subsidiaries
|
|
|
A-28
|
|
|
|
Section 3.9.
|
|
Company SEC Reports
|
|
|
A-29
|
|
|
|
Section 3.10.
|
|
Company Financial Statements; Internal Controls; Indebtedness
|
|
|
A-29
|
|
|
|
Section 3.11.
|
|
No Undisclosed Liabilities
|
|
|
A-30
|
|
|
|
Section 3.12.
|
|
Absence of Certain Changes
|
|
|
A-30
|
|
|
|
Section 3.13.
|
|
Material Contracts
|
|
|
A-30
|
|
|
|
Section 3.14.
|
|
Real Property
|
|
|
A-31
|
|
|
|
Section 3.15.
|
|
Environmental Matters
|
|
|
A-31
|
|
|
|
Section 3.16.
|
|
Intellectual Property
|
|
|
A-32
|
|
|
|
Section 3.17.
|
|
Customers; Suppliers; Resellers
|
|
|
A-34
|
|
|
|
Section 3.18.
|
|
Tax Matters
|
|
|
A-35
|
|
|
|
Section 3.19.
|
|
Employee Plans
|
|
|
A-36
|
|
|
|
Section 3.20.
|
|
Labor Matters
|
|
|
A-38
|
|
|
|
Section 3.21.
|
|
Permits
|
|
|
A-38
|
|
|
|
Section 3.22.
|
|
Compliance with Laws
|
|
|
A-39
|
|
|
|
Section 3.23.
|
|
Legal Proceedings; Orders
|
|
|
A-39
|
|
|
|
Section 3.24.
|
|
Insurance
|
|
|
A-40
|
|
|
|
Section 3.25.
|
|
Related Person Transactions
|
|
|
A-40
|
|
|
|
Section 3.26.
|
|
Brokers
|
|
|
A-40
|
|
|
|
Section 3.27.
|
|
Exclusivity of Representations and Warranties
|
|
|
A-40
|
|
A-i
TABLE OF CONTENTS
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
|
|
|
A-41
|
|
|
|
|
|
|
|
Section 4.1.
|
|
Organization; Good Standing
|
|
|
A-41
|
|
|
|
Section 4.2.
|
|
Power; Enforceability
|
|
|
A-41
|
|
|
|
Section 4.3.
|
|
Non-Contravention
|
|
|
A-41
|
|
|
|
Section 4.4.
|
|
Requisite Governmental Approvals
|
|
|
A-42
|
|
|
|
Section 4.5.
|
|
Legal Proceedings; Orders
|
|
|
A-42
|
|
|
|
Section 4.6.
|
|
Ownership of Company Capital Stock
|
|
|
A-42
|
|
|
|
Section 4.7.
|
|
Brokers
|
|
|
A-42
|
|
|
|
Section 4.8.
|
|
No Parent Vote or Approval Required
|
|
|
A-42
|
|
|
|
Section 4.9.
|
|
Financing.
|
|
|
A-42
|
|
|
|
Section 4.10.
|
|
Exclusivity of Representations and Warranties
|
|
|
A-44
|
|
|
|
Section 4.11.
|
|
Absence of Stockholder and Management Arrangements
|
|
|
A-45
|
|
|
|
ARTICLE V INTERIM OPERATIONS OF THE COMPANY
|
|
|
A-45
|
|
|
|
|
|
|
|
Section 5.1.
|
|
Affirmative Obligations
|
|
|
A-45
|
|
|
|
Section 5.2.
|
|
Forbearance Covenants
|
|
|
A-45
|
|
|
|
Section 5.3.
|
|
No Solicitation
|
|
|
A-47
|
|
|
|
Section 5.4.
|
|
No Control of the Other Partys Business
|
|
|
A-51
|
|
|
|
ARTICLE VI ADDITIONAL COVENANTS
|
|
|
A-51
|
|
|
|
|
|
|
|
Section 6.1.
|
|
Efforts; Required Actions and Forbearance
|
|
|
A-51
|
|
|
|
Section 6.2.
|
|
Antitrust Filings
|
|
|
A-52
|
|
|
|
Section 6.3.
|
|
Proxy Statement and Other Required SEC Filings
|
|
|
A-53
|
|
|
|
Section 6.4.
|
|
Company Stockholder Meeting
|
|
|
A-55
|
|
|
|
Section 6.5.
|
|
Financing
|
|
|
A-55
|
|
|
|
Section 6.6.
|
|
Financing Cooperation
|
|
|
A-57
|
|
|
|
Section 6.7.
|
|
Anti-Takeover Laws
|
|
|
A-60
|
|
|
|
Section 6.8.
|
|
Access
|
|
|
A-61
|
|
|
|
Section 6.9.
|
|
Section 16(b) Exemption
|
|
|
A-61
|
|
|
|
Section 6.10.
|
|
Directors and Officers Exculpation, Indemnification and Insurance
|
|
|
A-61
|
|
|
|
Section 6.11.
|
|
Employee Matters
|
|
|
A-63
|
|
|
|
Section 6.12.
|
|
Obligations of Merger Sub
|
|
|
A-65
|
|
|
|
Section 6.13.
|
|
Notification of Certain Matters
|
|
|
A-65
|
|
|
|
Section 6.14.
|
|
Public Statements and Disclosures
|
|
|
A-66
|
|
|
|
Section 6.15.
|
|
Transaction Litigation
|
|
|
A-66
|
|
|
|
Section 6.16.
|
|
Stock Exchange Delisting; Deregistration
|
|
|
A-67
|
|
|
|
Section 6.17.
|
|
Credit Agreement
|
|
|
A-67
|
|
|
|
Section 6.18.
|
|
Parent Vote
|
|
|
A-67
|
|
|
|
Section 6.19.
|
|
Resignations
|
|
|
A-67
|
|
|
|
ARTICLE VII CONDITIONS TO THE MERGER
|
|
|
A-67
|
|
|
|
|
|
|
|
Section 7.1.
|
|
Conditions to Each Partys Obligations to Effect the Merger
|
|
|
A-67
|
|
|
|
Section 7.2.
|
|
Conditions to the Obligations of Parent and Merger Sub to Effect the Merger
|
|
|
A-67
|
|
|
|
Section 7.3.
|
|
Conditions to the Companys Obligations to Effect the Merger
|
|
|
A-68
|
|
|
|
ARTICLE VIII TERMINATION; AMENDMENT AND WAIVER
|
|
|
A-69
|
|
|
|
|
|
|
|
Section 8.1.
|
|
Termination
|
|
|
A-69
|
|
|
|
Section 8.2.
|
|
Manner and Notice of Termination; Effect of Termination
|
|
|
A-70
|
|
|
|
Section 8.3.
|
|
Fees and Expenses
|
|
|
A-71
|
|
|
|
Section 8.4.
|
|
Amendment
|
|
|
A-72
|
|
|
|
Section 8.5.
|
|
Extension; Waiver
|
|
|
A-72
|
|
A-ii
TABLE OF CONTENTS
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE IX GENERAL PROVISIONS
|
|
|
A-72
|
|
|
|
|
|
|
|
Section 9.1.
|
|
Survival of Representations, Warranties and Covenants
|
|
|
A-72
|
|
|
|
Section 9.2.
|
|
Notices
|
|
|
A-72
|
|
|
|
Section 9.3.
|
|
Assignment
|
|
|
A-74
|
|
|
|
Section 9.4.
|
|
Confidentiality
|
|
|
A-74
|
|
|
|
Section 9.5.
|
|
Entire Agreement
|
|
|
A-74
|
|
|
|
Section 9.6.
|
|
Third Party Beneficiaries
|
|
|
A-74
|
|
|
|
Section 9.7.
|
|
Severability
|
|
|
A-75
|
|
|
|
Section 9.8.
|
|
Remedies
|
|
|
A-75
|
|
|
|
Section 9.9.
|
|
Governing Law
|
|
|
A-75
|
|
|
|
Section 9.10.
|
|
Consent to Jurisdiction
|
|
|
A-75
|
|
|
|
Section 9.11.
|
|
Waiver of Jury Trial
|
|
|
A-77
|
|
|
|
Section 9.12.
|
|
Counterparts
|
|
|
A-77
|
|
|
|
Section 9.13.
|
|
No Limitation
|
|
|
A-77
|
|
A-iii
AGREEMENT AND PLAN OF MERGER
This agreement and plan of merger (this
Agreement
), dated November 20, 2016, is among Symantec Corporation, a Delaware
corporation (
Parent
), L1116 Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
), and LifeLock, Inc., a Delaware corporation (the
Company
). Each of
Parent, Merger Sub and the Company are sometimes referred to as a
Party
. All capitalized terms that are used in this Agreement have the meanings given to them in Article I.
RECITALS
A. The Company
Board has (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement providing for the merger of Merger Sub with and into the Company (collectively with the other
transactions contemplated by this Agreement, the
Merger
) in accordance with the DGCL upon the terms and subject to the conditions set forth in this Agreement; (ii) approved the execution and delivery of this Agreement by the
Company, the performance by the Company of its covenants and other obligations in this Agreement, and the consummation of the Merger upon the terms and subject to the conditions set forth in this Agreement; (iii) directed that the adoption of this
Agreement be submitted to a vote of the Company Stockholders; and (iv) recommended that the Company Stockholders vote in favor of the adoption of this Agreement in accordance with the DGCL.
B. The boards of directors of each of Parent and Merger Sub have (i) declared it advisable to enter into this Agreement; and (ii) approved the
execution and delivery of this Agreement, the performance of their respective covenants and other obligations under this Agreement, and the consummation of the Merger upon the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
The Parties
therefore agree as follows:
ARTICLE I
DEFINITIONS & INTERPRETATIONS
Section 1.1.
Certain Definitions
. For all purposes of this Agreement, the following capitalized terms have the following
respective meanings:
(a)
Acceptable Confidentiality Agreement
means a confidentiality agreement containing provisions
no less favorable to the Company than those contained in the Confidentiality Agreement (it being understood that such agreement need not contain any standstill or similar provisions or otherwise prohibit the making of any Acquisition
Proposal, and that such agreement may not prohibit the Company from providing to Parent any of the information required to be provided to Parent pursuant to this Agreement).
(b)
Acquisition Proposal
means any offer or proposal (other than an offer or proposal by Parent or Merger Sub) relating to
an Acquisition Transaction.
(c)
Acquisition Transaction
means any transaction or series of related transactions (other
than the Merger) involving:
(i) any direct or indirect purchase or other acquisition by any Person or Group, whether from the Company or
any other Person, of securities representing more than 15% of the total outstanding voting power of
A-1
the Company after giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any Person or Group that, if consummated in
accordance with its terms, would result in such Person or Group beneficially owning more than 15% of the total outstanding voting power of the Company after giving effect to the consummation of such tender offer or exchange offer;
(ii) any direct or indirect purchase (including by way of a merger, consolidation, business combination, recapitalization, reorganization,
liquidation, dissolution or other transaction) or other acquisition by any Person or Group of assets constituting or accounting for more than 15% of the revenue, net income or consolidated assets of the Company and its Subsidiaries, taken as a
whole; or
(iii) any merger, consolidation, business combination, recapitalization, reorganization, liquidation, dissolution or other
transaction involving the Company or any of its Subsidiaries whose business accounts for more than 15% of the revenue, net income or consolidated assets of the Company and its Subsidiaries, taken as a whole, where the stockholders of the Company (or
such Subsidiary) prior to the transaction will not own, directly or indirectly, at least 85% of the surviving company.
(d)
Affiliate
means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. For purposes of this definition, the term control
(including, with correlative meanings, the terms controlling, controlled by and under common control with), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.
(e)
Antitrust Law
means the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, the HSR Act, the Federal
Trade Commission Act of 1914 and all other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or significant impediments or lessening of competition or
the creation or strengthening of a dominant position through merger or acquisition, in any case that are applicable to the Merger.
(f)
Audited Company Balance Sheet
means the consolidated balance sheet (and the notes thereto) of the Company and its consolidated Subsidiaries as of December 31, 2015, set forth in the Companys Annual Report on
Form 10-K
filed by the Company with the SEC for the fiscal year ended December 31, 2015.
(g)
Business Day
means each day that is not a Saturday, Sunday or other day on which the Federal Reserve Bank of San Francisco is closed.
(h)
Bylaws
means the bylaws of the Company in effect as of the date of this Agreement.
(i)
Capitalization Date
means 5:00 p.m., Pacific time, on November 14, 2016.
(j)
Certificate of Merger
means the certificate of merger, in customary form, relating to the Merger.
(k)
Charter
means the Amended and Restated Certificate of Incorporation of the Company in effect as of the date of this
Agreement.
(l)
Chosen Courts
means the Court of Chancery of the State of Delaware and any state appellate court
therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware does not have subject matter jurisdiction, then any state or federal court in the State of Delaware).
(m)
Code
means the Internal Revenue Code of 1986, as amended.
(n)
Company Benefit Plan
means each employee benefit plan (as defined in Section 3(3) of ERISA), whether
or not subject to ERISA, and each employment, bonus, stock option, stock purchase or other
A-2
equity-based, benefit, incentive compensation, profit sharing, savings, retirement, disability, insurance, vacation, deferred compensation, severance, termination, retention, change of control
and other similar material fringe, welfare or other employee benefit plans, programs, agreements, contracts, policies or binding arrangements (whether or not in writing) that is in each case maintained or contributed to for the benefit of any
current or former employee, director, or other service provider of the Company or any of its Subsidiaries or any other trade or business (whether or not incorporated) that would be treated as a single employer with the Company or any of its
Subsidiaries pursuant to Section 414 of the Code (an
ERISA Affiliate
) and with respect to which the Company or any of its Subsidiaries has any current material liability, contingent or otherwise.
(o)
Company Board
means the Board of Directors of the Company.
(p)
Company Capital Stock
means the Company Common Stock and the Company Preferred Stock.
(q)
Company Common Stock
means the common stock, par value $0.001 per share, of the Company.
(r)
Company Financial Advisor
means Goldman, Sachs & Co.
(s)
Company Intellectual Property
means any and all Company-Owned Intellectual Property Rights and any and all
Company-Owned Technology.
(t)
Company Material Adverse Effect
means any change, event, violation, inaccuracy, effect
or circumstance (each, an
Effect
) that, individually or taken together with all other Effects that exist or have occurred prior to the date of determination of the occurrence of the Company Material Adverse Effect, (A) has
had or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; or (B) would reasonably be expected to prevent or
materially impair or materially delay the consummation of the Merger. None of the following (by itself or when aggregated) will be deemed to be or constitute a Company Material Adverse Effect or will be taken into account when determining whether a
Company Material Adverse Effect has occurred or may, would or could occur (subject to the limitations set forth below):
(i) changes in
general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally (except to the extent that such Effect has had a disproportionate adverse effect on the Company
relative to other companies of a similar size operating in the industries in which the Company and its Subsidiaries conduct business, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether
there has occurred a Company Material Adverse Effect);
(ii) changes in conditions in the financial markets, credit markets or capital
markets in the United States or any other country or region in the world, including (A) changes in interest rates or credit ratings in the United States or any other country; (B) changes in exchange rates for the currencies of any country;
or (C) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market operating in the United States or any other country or region in the world
(except, in each case, to the extent that such Effect has had a disproportionate adverse effect on the Company relative to other companies of a similar size operating in the industries in which the Company and its Subsidiaries conduct business, in
which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has occurred a Company Material Adverse Effect);
(iii) changes in conditions in the industries in which the Company and its Subsidiaries conduct business (except to the extent that such
Effect has had a disproportionate adverse effect on the Company relative to other companies of a similar size operating in the industries in which the Company and its Subsidiaries conduct business, in which case only the incremental disproportionate
adverse impact may be taken into account in determining whether there has occurred a Company Material Adverse Effect);
A-3
(iv) changes in regulatory, legislative or political conditions in the United States or any
other country or region in the world (except to the extent that such Effect has had a disproportionate adverse effect on the Company relative to other companies of similar size operating in the industries in which the Company and its Subsidiaries
conduct business, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has occurred a Company Material Adverse Effect);
(v) any geopolitical conditions, outbreak of hostilities, acts of war, sabotage, terrorism or military actions (including any escalation or
general worsening of any such hostilities, acts of war, sabotage, terrorism or military actions) in the United States or any other country or region in the world (except to the extent that such Effect has had a disproportionate adverse effect on the
Company relative to other companies of similar size operating in the industries in which the Company and its Subsidiaries conduct business, in which case only the incremental disproportionate adverse impact may be taken into account in determining
whether there has occurred a Company Material Adverse Effect);
(vi) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides,
wild fires or other natural disasters, weather conditions and other force majeure events in the United States or any other country or region in the world (except to the extent that such Effect has had a disproportionate adverse effect on the Company
relative to other companies of similar size operating in the industries in which the Company and its Subsidiaries conduct business, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether
there has occurred a Company Material Adverse Effect);
(vii) any Effect resulting from the public announcement of this Agreement or the
pendency of the Merger, including the impact thereof on the relationships, contractual or otherwise, of the Company and its Subsidiaries with employees, suppliers, customers, partners, vendors, Governmental Authorities or any other third Person;
(viii) the compliance by any Party with the express terms of this Agreement, including any action taken or refrained from being taken
pursuant to or in accordance with the express terms of this Agreement, other than the Companys obligation to operate in the ordinary course pursuant to Section 5.1 of this Agreement;
(ix) any action taken or refrained from being taken, in each case to which Parent has expressly approved, consented to or requested in
writing (including via email) following the date of this Agreement;
(x) changes or proposed changes in GAAP or other accounting
standards or Law (or the enforcement or interpretation of any of the foregoing) (except to the extent that such Effect has had a disproportionate adverse effect on the Company relative to other companies of similar size operating in the industries
in which the Company and its Subsidiaries conduct business);
(xi) changes in the price or trading volume of the Company Common Stock, in
each case in and of itself (it being understood that any cause of such change may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse
Effect has occurred);
(xii) any failure, in and of itself, by the Company and its Subsidiaries to meet (A) any public estimates or
expectations of the Companys revenue, earnings or other financial performance or results of operations for any period; or (B) any internal budgets, plans, projections or forecasts of its revenues, earnings or other financial performance
or results of operations (it being understood that any cause of any such failure may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse
Effect has occurred);
(xiii) the availability or cost of equity, debt or other financing to Parent or Merger Sub;
A-4
(xiv) any Transaction Litigation or other Legal Proceeding threatened, made or brought by any of
the current or former Company Stockholders (on their own behalf or on behalf of the Company) against the Company, any of its executive officers or other employees or any member of the Company Board arising out of the Merger or any other transaction
contemplated by this Agreement; and
(xv) any matter disclosed in the Company Disclosure Letter to the extent the Effect is reasonably
foreseeable from the disclosure therein or the documents referenced therein.
(u)
Company Options
means any outstanding
options to purchase shares of Company Common Stock, including those outstanding pursuant to any of the Company Stock Plans, but other than pursuant to the ESPP.
(v)
Company-Owned Intellectual Property Right
means any and all Intellectual Property Right that is owned or purported to
be owned by the Company or any Subsidiary, including rights in the Company Registered Intellectual Property.
(w)
Company-Owned
Technology
means any and all Technology for which the Intellectual Property Rights therein are owned or purported to be owned by the Company or any Subsidiary.
(x)
Company Preferred Stock
means the preferred stock, par value $0.001 per share, of the Company.
(y)
Company Products
means all products or services produced, marketed, licensed, sold, distributed or performed by or on
behalf of the Company or any Subsidiary.
(z)
Company Registered Intellectual Property
means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company or any of its Subsidiaries.
(aa)
Company RSU
means a restricted stock unit award in respect of shares of Company Common Stock that is outstanding and unsettled as of immediately prior to the Effective Time.
(bb)
Company Stock-Based Award
means each right of any kind, contingent or accrued, to receive shares of Company Common
Stock or benefits measured in whole or in part by the value of a number of shares of Company Common Stock granted pursuant to the Company Stock Plans, Company Benefit Plans or otherwise (including performance shares, performance-based units, market
stock units, restricted stock, restricted stock units, phantom units, deferred stock units and dividend equivalents, but not including any 401(k) plan of the Company), other than Company Options. For the avoidance of doubt and notwithstanding the
terms of any restricted stock unit award agreement, all restricted stock units, whether vested or unvested, will be treated as Company Stock-Based Awards for all purposes of this Section 1.1(bb) and will be subject to the treatment provided
pursuant to Section 2.8 to the extent outstanding as of immediately prior to the Effective Time.
(cc)
Company Stock
Plans
means the compensatory plans set forth in Section 1.1(cc) of the Company Disclosure Letter.
(dd)
Company
Stockholders
means the holders of shares of Company Capital Stock.
(ee)
Company Unvested RSU
means any
portion of a Company RSU held by a service provider (as defined in the Companys Benefit Plans) as of the Effective Time that is unvested, outstanding and unsettled as of the Effective Time.
(ff)
Company Unvested Shares
means any shares of Company Common Stock that remain unvested as of immediately prior to the
Effective Time.
A-5
(gg)
Company Unvested Stock Option
means any portion of an award
of Company Options held by a service provider (as defined in the Companys Benefit Plans) as of the Effective Time that is unvested, outstanding and unexercised as of the Effective Time.
(hh)
Company Vested RSU
means (x) any portion of a Company RSU that is vested as of the Effective Time and outstanding
but unsettled immediately prior to the Effective Time, and (y) any portion of a Company RSU that is outstanding but unsettled immediately prior to the Effective Time that by its terms accelerates vesting in connection with the holder of such
Company RSU ceasing, prior to, upon or immediately following the Effective Time, to be a service provider of the Company or its Subsidiaries (such holder, a
Terminated Service Provider
), including those persons listed on Schedule
1.1(hh) of the Company Disclosure Letter (it being understood that this clause (y) shall not affect the terms upon which awards accelerate under the terms thereof).
(ii)
Company Vested Stock Option
means (x) any portion of a Company Option that is vested as of the Effective Time,
outstanding and unexercised immediately prior to the Effective Time, and (y) any portion of a Company Option that is outstanding and unexercised immediately prior to the Effective Time that by its terms accelerates vesting in connection with
such holder being or becoming a Terminated Service Provider (it being understood that this clause (y) shall not affect the terms upon which awards accelerate under the terms thereof).
(jj)
Compliant
means, with respect to the Requested Information, that (i) the Requested Information delivered pursuant to
clause (iii) of the definition of Requested Information is complete and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
contained therein not materially misleading; (ii) the Companys auditors have not withdrawn any audit opinion with respect to any audited financial statements contained in the Requested Information; and (iii) the Company has not been informed
by such auditors that it is required to restate, and the Company has not restated, any audited or unaudited financial statements included in the Requested Information or announced any intention to restate or that such restatement is under
consideration or may be a reasonable possibility;
provided
that if any such restatement occurs, the Requested Information shall be deemed Compliant if and when such restatement has been completed and the relevant financial statements have
been amended (so long as the Company does not subsequently restate the relevant financial statements included in such Requested Information).
(kk)
Confidentiality Agreement
means the confidentiality letter agreement, dated September 15, 2016, between the Company
and Parent.
(ll)
Consent
means any consent, approval, clearance, waiver, Permit or order.
(mm)
Continuing Employees
means each individual who is an employee of the Company or any of its Subsidiaries immediately
prior to the Effective Time and continues to be an employee of Parent or one of its Subsidiaries (including the Surviving Corporation) immediately following the Effective Time.
(nn)
Contract
means any written contract, lease, license, indenture, note, bond, agreement, concession, franchise or other
instrument.
(oo)
Credit Agreement
means the Credit Agreement, dated January 9, 2013, by and among the Company, the
guarantors named therein, and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, Silicon Valley Bank, as syndication agent, the other lenders named therein, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as
sole lead arranger and sole book manager, as amended.
(pp)
D&O Insurance
means the Companys current
directors and officers liability insurance.
(qq)
DGCL
means the General Corporation Law of the State of
Delaware.
A-6
(rr)
DOJ
means the United States Department of Justice or any successor
thereto.
(ss)
DTC
means the Depository Trust Company.
(tt)
Environmental Law
means all applicable federal, national, state, provincial or local Laws, issued or promulgated by
any Governmental Authority, relating to pollution, worker health and safety with respect to exposure to Hazardous Substance, and protection of the environment (including ambient air, surface water, groundwater, land surface or subsurface strata).
(uu)
ERISA
means the Employee Retirement Income Security Act of 1974.
(vv)
ESPP
means the Companys 2012 Employee Stock Purchase Plan.
(ww)
Exchange Act
means the Securities Exchange Act of 1934.
(xx)
Exchange Ratio
means the quotient obtained by dividing (i) the Per Share Price by (ii) the Parent Stock Price.
(yy)
Financing
means the debt financing incurred or intended to be incurred pursuant to the Financing Letters (as amended,
replaced, supplemented, or modified in accordance with this Agreement), including the offering of debt securities described therein.
(zz)
Financing Sources
means the Persons that have committed to provide, arrange or underwrite the Financing or alternative debt financings in connection with the Merger, including pursuant to any joinder agreements, purchase
agreements, indentures or credit agreements entered into pursuant thereto or relating thereto, and their respective successors and permitted assigns; it being understood that Parent and Merger Sub shall not be Financing Sources for any purposes of
this Agreement.
(aaa)
Financing Source Related Parties
means Financing Sources, together with their respective
Affiliates, and the respective officers, directors, employees, partners, trustees, shareholders, controlling persons, agents and representatives of the foregoing, and their respective successors and assigns.
(bbb)
FTC
means the United States Federal Trade Commission or any successor thereto.
(ccc)
GAAP
means generally accepted accounting principles, consistently applied, in the United States.
(ddd)
Government Contract
means any Contract between, on the one hand, the Company or any of its Subsidiaries and, on the
other hand: (i) any Governmental Authority; (ii) any prime contractor to any other Governmental Authority; or (iii) any subcontractor with respect to any Contract described in clauses (i) or (ii).
(eee)
Governmental Authority
means any federal, national, state, provincial or local, whether domestic or foreign,
government or any court of competent jurisdiction, administrative agency or commission of any governmental authority or other governmental authority or instrumentality, whether domestic, foreign or supranational.
(fff)
Group
means a group (as defined pursuant to Section 13(d) of the Exchange Act) of Persons.
(ggg)
Hazardous Substance
means any substance, material or waste that is characterized or regulated by a Governmental
Authority pursuant to any Environmental Law as hazardous, pollutant, contaminant, toxic or radioactive, including petroleum and petroleum products.
A-7
(hhh)
HSR Act
means the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
(iii)
Indebtedness
means, with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, or with respect to deposits or advances of any kind to such Person; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments; (iii) all capitalized lease obligations of such Person or obligations of such Person to pay the deferred and unpaid purchase price of property, equipment and software; (iv) all obligations of such
Person pursuant to securitization or factoring programs or arrangements; (v) all guarantees and arrangements having the economic effect of a guarantee of such Person of any Indebtedness of any other Person; (vi) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the obligations or property of others; (vii) net cash payment obligations of such Person under swaps, options,
derivatives and other hedging agreements or arrangements that will be payable upon termination thereof (assuming they were terminated on the date of determination); or (viii) letters of credit, bank guarantees, and other similar contractual
obligations entered into by or on behalf of such Person.
(jjj)
Intellectual Property
means (i) Intellectual Property
Rights and (ii) Technology.
(kkk)
Intellectual Property Rights
means the rights associated with or arising under any
of the following anywhere in the world: (i) patents and applications therefor (
Patents
); (ii) other similar rights in inventions and discoveries; (iii) copyrights, copyright registrations and applications therefor and
all other rights corresponding thereto throughout the world and other similar rights in works of authorship, including moral rights (
Copyrights
); (iv) trademarks, trade names, logos, and service marks, and
trademark and service mark registrations and applications therefor (
Marks
); (v) trade secrets rights and corresponding rights in confidential business and technical information and know-how (
Trade Secrets
); (vi)
domain name registrations, and (vii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.
(lll)
Intentional Breach
means an action or omission taken or omitted to be taken that the breaching party intentionally
takes (or fails to take) and knows would, or would reasonably be expected to, cause a material breach of this Agreement.
(mmm)
Intervening Event
means any Effect that (i) as of the date of this Agreement was not known to the Company Board, or the material consequences of which (based on facts known to the members of the Company Board as of the date
of this Agreement) were not reasonably foreseeable as of the date of this Agreement; and (ii) does not relate to an Acquisition Proposal.
(nnn)
IRS
means the United States Internal Revenue Service or any successor thereto.
(ooo)
Knowledge
of a Person, with respect to any matter in question, means, (i) with respect to the Company, the actual
knowledge as of the date of this Agreement of the individuals set forth on Section 1.1(ooo) of the Company Disclosure Letter, and (ii) with respect to Parent, the actual knowledge of the individuals disclosed by Parent in writing on the date
hereof, in each case after reasonable inquiry of those employees of the Company or Parent, as the case may be, who would reasonably be expected to have actual knowledge of the matter in question. With respect to matters involving the Company
Intellectual Property, Knowledge does not require the Company, or any of its directors, officers or employees, to have conducted or have obtained any freedom to operate opinions or any Patent, Mark or other Intellectual Property clearance searches.
If not conducted or obtained, no knowledge of any Patents, Marks or other Intellectual Property of any third Person that would have been revealed by such opinions or searches will be imputed to the Company or any of its directors, officers or
employees.
(ppp)
Law
means any statute, law (including common law), ordinance, rule, regulation or stock exchange
listing requirement.
A-8
(qqq)
Legal Proceeding
means any claim, action, charge, lawsuit, litigation or
other similarly formal legal proceeding brought by or pending before any Governmental Authority, arbitrator, mediator or other tribunal.
(rrr)
Lien
means any lien, pledge, hypothecation, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, or any
restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).
(sss)
Material
Contract
means any of the following Contracts (other than a Company Benefit Plan):
(i) any material contract (as
defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC, other than those agreements and arrangements described in Item 601(b)(10)(iii) of Regulation S-K) with respect to the Company and its Subsidiaries, taken as whole;
(ii) the IP Contracts;
(iii)
any Contract containing any covenant limiting the right of the Company or any of its Subsidiaries to engage in any line of business or to compete with any Person in any line of business, or which grants to any third Person any exclusivity with
respect to any geographic territory, any customer, or any market, product or service or Company Intellectual Property, other than any such Contracts that may be cancelled without material liability to the Company or its Subsidiaries upon notice of
90 days or less;
(iv) any licensing, purchasing, distribution or reseller Contract, as the case may be, with a Large Customer, Large
Supplier or Large Reseller;
(v) any Contract granting the Company or any of its Subsidiaries the right to market, distribute or resell
any Technology, products or services of any third Person, other than as would not reasonably be material to the Company and its Subsidiaries, taken as a whole;
(vi) any Government Contract that is currently in effect or is outstanding or within the past 12 months has been in effect or outstanding
that is either (A) material to the Company or (B) under which non-compliance would reasonably be expected to be material to the Company;
(vii) any Contract pursuant to which the Company or any of its Subsidiaries agrees to provide most favored nation pricing or
terms to any Person with respect to the sale, distribution, license or support of any Company Products;
(viii) any Contract relating to
the disposition or acquisition of material assets by the Company or any of its Subsidiaries after the date of this Agreement other than in the ordinary course of business;
(ix) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of
money or extension of credit, in each case in excess of $1,000,000 other than (A) accounts receivables and payables in the ordinary course of business; (B) pursuant to the Credit Agreement; (C) loans to Subsidiaries of the Company in the ordinary
course of business; and (D) extensions of credit to customers in the ordinary course of business;
(x) any Lease or Sublease set forth in
Section 3.14(b) of the Company Disclosure Letter or Section 3.14(c) of the Company Disclosure Letter; and
(xi) any Contract
that involves a joint venture or partnership.
A-9
(ttt)
Most Recent Company Balance Sheet
means the consolidated balance sheet
of the Company included in the Companys Quarterly Report on Form 10-Q for the quarterly period ending September 30, 2016.
(uuu)
NASDAQ
means the Nasdaq Global Select Market.
(vvv)
NYSE
means the New York Stock Exchange.
(www)
Parent Common Stock
means the common stock, $0.01 par value per share, of Parent.
(xxx)
Parent Material Adverse Effect
means any Effect that, individually or taken together with all other Effects that
exist or have occurred prior to the date of determination of the occurrence of the Parent Material Adverse Effect, would reasonably be expected to prevent or materially impair or materially delay the consummation of the Merger or the ability of
Parent and Merger Sub to perform their respective covenants and obligations pursuant to this Agreement.
(yyy)
Parent Stock
Price
means the volume-weighted average of the trading prices of the shares of Parent Common Stock on the NASDAQ (as reported by Bloomberg L.P., or, if not reported thereby, any other authoritative source), for the ten trading days ending
with, and including, the trading day that is the Closing Date.
(zzz)
Permit
means any permits, licenses, variances,
clearances, consents, commissions, franchises, exemptions, orders and approvals from Governmental Authorities.
(aaaa)
Permitted
Lien
means any of the following: (i) Liens for Taxes, assessments and governmental charges or levies either not yet delinquent or that are being contested in good faith and by appropriate proceedings and for which reserves have been
established to the extent required by GAAP; (ii) mechanics, carriers, workmens, warehousemans, repairmens, materialmens or other similar Liens or security interests that are not yet due or that are being contested
in good faith and by appropriate proceedings; (iii) third Person leases, subleases and licenses (other than capital leases and leases underlying sale and leaseback transactions) entered into the ordinary course of business under which there
exists no material default; (iv) pledges or deposits to secure obligations pursuant to workers compensation Laws or similar legislation or to secure public or statutory obligations; (v) pledges and deposits to secure the performance
of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business; (vi) defects, imperfections or irregularities in title, easements,
covenants and rights of way (unrecorded and of record) and other similar Liens (or other encumbrances of any type), in each case that do not, and are not reasonably likely to, adversely affect in any material respect the current use or occupancy of
the applicable property owned, leased, used or held for use by the Company or any of its Subsidiaries; (vii) zoning, building and other similar codes or restrictions that are not violated in any material respect by the current use or occupancy
of the real property subject thereto; (viii) Liens the existence of which are disclosed in the notes to the consolidated financial statements of the Company included in the Recent SEC Reports; (ix) non-exclusive licenses to Company
Intellectual Property entered into in the ordinary course of business; (x) any other Liens that are not material, do not secure a liquidated amount, and have been incurred or suffered in the ordinary course of business; (xi) statutory,
common law or contractual Liens of landlords under Leases or Liens against the fee interests of the landlord or owner of any Company properties unless caused by the Company or any of its Subsidiaries, unless the Company has Knowledge that such
Liens would or are reasonably likely to adversely affect in any material respect the current use or occupancy of the applicable property owned, leased, used or held for use by the Company or any of its Subsidiaries; and (xii) restrictions on
transfer of securities imposed by applicable securities Laws.
(bbbb)
Person
means any individual, corporation
(including any non-profit corporation), limited liability company, joint stock company, general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, firm, Governmental Authority or other enterprise,
association, organization or entity.
A-10
(cccc)
Registered Intellectual Property
means all (i) Patents;
(ii) registered Marks; and (iii) registered Copyrights.
(dddd)
Requested Information
means (i) audited
consolidated balance sheets and related audited consolidated statements of operations, comprehensive income, stockholders equity and cash flows of the Company for each of the three most recently ended fiscal years of the Company that have
ended at least 60 days prior to the Closing Date; (ii) unaudited consolidated balance sheets and related unaudited consolidated statements of operations, comprehensive income and cash flows of the Company for each subsequent interim quarterly period
of the Company that has ended at least 40 days prior to the Closing Date (and comparable periods for the prior fiscal year), in the case of each of clauses (i) and (ii), prepared in accordance with GAAP and meeting the Requirements of Regulation S-X
under the Exchange Act as would be applicable to an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q, as applicable; and (iii) (A) financial data, audit reports and other information regarding the Company and its Subsidiaries (including
information and disclosures regarding their businesses and operations) of the type required by Regulation S-X and Regulation S-K under the Securities Act for a registered public offering of non-convertible debt securities on Form S-1, but limited to
the type and form customarily included in an offering memorandum with respect to private placements of debt securities under Rule 144A of the Securities Act for similar issuers in similar industries and subject to exceptions customary for a Rule
144A offering involving high yield debt securities for similar issuers in similar industries; (B) assuming that such offering(s) were consummated at the same time during the Companys fiscal year as such offering(s) of debt securities will be
made, all other data that would be necessary for the underwriters or initial purchasers to receive customary comfort (including as to negative assurance comfort and change period) from the Companys independent
accountants in connection with the offering(s) of debt securities contemplated by the Financing Letters; (C) revenues, net income, income (loss) from operations, EBITDA, total assets and total liabilities for (and as of the end of) the most recently
completed fiscal year and, if quarterly financial statements are available, fiscal quarter, for which financial statements are included in the Requested Information with respect to entities that are guarantors and those that are non-guarantors under
the Financing; and (D) customary flash or recent development information with respect to revenues, net income, income (loss) from operations and EBITDA (which may be provided in a reasonable range or estimate and may be
provided on a non-GAAP basis) for the completed 12
-
month periods ended December 31, 2016, and, if the Closing does not occur by April 20, 2017, for the completed three-month period ended March 31, 2017. Notwithstanding anything to the
contrary in clauses (i), (ii) or (iii) in the preceding sentence, nothing shall require the Company to provide (or be deemed to require the Company to prepare) (1) financial statements or information required by Rules 3-10 or 3-16 of Regulation S-X;
(2) Compensation Discussion and Analysis otherwise required by Regulation S-K Item 402(b); (3) pro forma financial statements (it being understood that the Company shall be required to provide underlying historical financial and other historical
information of the Company reasonably necessary to prepare such pro forma financial statements for historical periods); (4) description of all or any portion of the Financing, including any description of notes and uses of funds received
from the Financing; (5) risk factors relating to all or any component of the Financing; or (6) other information customarily excluded from a Rule 144A offering memorandum, to consummate the offering(s) of debt securities described in the Financing
Letters.
(eeee)
Sanctioned Country
means, at any time, a country or territory that is itself the subject or target of
any Sanctions (including Cuba, Iran, North Korea, Sudan and Syria).
(ffff)
Sanctioned Person
means, at any time (i)
any Person listed on the OFAC Specially Designated Nationals and Blocked Persons List, Commerces Denied Persons List or Entity List, and the State Departments Debarred List or other similar lists maintained by applicable jurisdictions,
(ii) any Person located, organized or resident in a Sanctioned Country or (iii) any Person owned 50% or more or otherwise controlled by any such Person or Persons described in clause (i) and (ii).
(gggg)
Sanctions
means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to
time by the U.S. government (including those administered by OFAC), the European Union, Her Majestys Treasury or other relevant sanctions authority.
A-11
(hhhh)
Sarbanes-Oxley Act
means the Sarbanes-Oxley Act of 2002.
(iiii)
SEC
means the United States Securities and Exchange Commission or any successor thereto.
(jjjj)
Securities Act
means the Securities Act of 1933.
(kkkk)
Subsidiary
of any Person means (i) a corporation more than 50% of the combined voting power of the
outstanding voting stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person; (ii) a partnership of which such Person
or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the general partner and has the power to direct the policies, management and affairs of such partnership;
(iii) a limited liability company of which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries of such Person, directly or indirectly, is the managing member and has the power to direct
the policies, management and affairs of such company; or (iv) any other Person (other than a corporation, partnership or limited liability company) in which such Person or one or more other Subsidiaries of such Person or such Person and one or
more other Subsidiaries of such Person, directly or indirectly, has at least a majority ownership or the power to direct the policies, management and affairs thereof (including by contract).
(llll)
Superior Proposal
means any written Acquisition Proposal that was not solicited in breach of Section 5.3 for an
Acquisition Transaction on terms that the Company Board (or a committee thereof) has determined in good faith (after consultation with its financial advisor and outside legal counsel) would be more favorable, from a financial point of view, to the
Company Stockholders (in their capacity as such) than the Merger (taking into account (i) any revisions to this Agreement made or proposed in writing by Parent prior to the time of such determination; and (ii) those factors and matters
deemed relevant in good faith by the Company Board (or any committee thereof), including the (A) identity of the Person making the proposal; (B) likelihood of consummation in accordance with the terms of such proposal; and (C) legal,
financial (including the financing terms), regulatory, timing and other aspects of such proposal). For purposes of the reference to an Acquisition Proposal in this definition, all references to 15% and 85% in the
definition of Acquisition Transaction will be deemed to be references to 50%.
(mmmm)
Tax
means
any federal, state, local or foreign income, gross receipts, capital stock, franchise, profits, withholding, social security, payroll, employment, unemployment, disability, license, severance, alternative minimum, estimated or other tax, custom,
tariff, impost, levy, duty, fee or other like assessment or charge of any kind imposed by a Governmental Authority, together with all interest, penalties and additions imposed with respect to such amounts.
(nnnn)
Tax Returns
means all Tax returns, declarations, statements, reports, schedules, forms and information returns, any
amended Tax return and any other document filed or required to be filed with any Governmental Authority relating to Taxes.
(oooo)
Technology
means all tangible (including electronic) items related to, constituting, disclosing or embodying any or all of the following, including all versions thereof and all technology from which such items were derived,
including (i) works of authorship, including all written, audio and visual materials and computer programs (whether in source code or in executable code form) and the related architecture and documentation; (ii) inventions (whether or not
patentable), discoveries and improvements; (iii) proprietary and confidential information, trade secrets and know how; (iv) databases, data compilations, data feeds and data collections, and customer and technical data; (v) methods and
processes; and (vi) devices, prototypes, designs and schematics.
(pppp)
Transaction Litigation
means any Legal
Proceeding commenced or threatened against a Party or any of its Subsidiaries, Affiliates or directors or otherwise relating to, involving or affecting such Party
A-12
or any of its Subsidiaries or Affiliates, in each case in connection with, arising from or otherwise relating to the Merger or any other transaction contemplated by this Agreement, including any
Legal Proceeding alleging or asserting any misrepresentation or omission in the Proxy Statement, any Other Required Company Filing or any Other Required Parent Filing.
Section 1.2.
Additional Definitions
. The following capitalized terms have the respective meanings given to them in the respective
Sections of this Agreement set forth opposite each of the capitalized terms below:
|
|
|
Term
|
|
Section
Reference
|
Agreement
|
|
Preamble
|
Alternate Financing
|
|
Section 6.5(d)
|
Alternative Acquisition Agreement
|
|
Section 5.3(a)
|
Antitrust Required Action
|
|
Section 6.2(b)
|
Antitrust Restraint
|
|
Section 6.2(b)
|
Certificates
|
|
Section 2.9(c)(i)
|
Closing
|
|
Section 2.3
|
Closing Date
|
|
Section 2.3
|
Company
|
|
Preamble
|
Company Board Recommendation
|
|
Section 3.3
|
Company Board Recommendation Change
|
|
Section 5.3(c)(i)
|
Company Disclosure Letter
|
|
Article III
|
Company Plans
|
|
Section 6.11(c)
|
Company Privacy Policy
|
|
Section 3.16(n)
|
Company Proprietary Technology
|
|
Section 3.16(i)
|
Company PRSA
|
|
Section 2.8(e)
|
Company Related Parties
Company SEC Reports
|
|
Section 8.3(e)
Section 3.9
|
Company Securities
|
|
Section 3.7(c)
|
Company Stockholder Meeting
|
|
Section 6.4(a)
|
Company Vested RSU Consideration
|
|
Section 2.8(c)
|
Copyrights
|
|
Section 1.1(jjj)
|
Data and Privacy Laws
|
|
Section 3.16(n)
|
Director Option
|
|
Section 2.8(f)(i)
|
Director RSU
Dissenting Company Shares
|
|
Section 2.8(f)(ii)
Section 2.7(d)(i)
|
DTC Payment
|
|
Section 2.9(d)
|
Effect
|
|
Section 1.1(s)
|
Effective Time
|
|
Section 2.2
|
Electronic Delivery
|
|
Section 9.12
|
ERISA Affiliate
|
|
Section 1.1(n)
|
Exchange Fund
|
|
Section 2.9(b)
|
Fee Letter
|
|
Section 4.9(a)
|
Financing Letters
|
|
Section 4.9(a)
|
Financing Reduction Exception
FTC Order
|
|
Section 6.5(a)
Section 3.16(n)
|
Indemnified Persons
|
|
Section 6.10(a)
|
International Employee Plans
|
|
Section 3.19(a)
|
IP Contracts
|
|
Section 3.16(j)
|
Large Customer
|
|
Section 3.17(a)
|
Large Reseller
|
|
Section 3.17(c)
|
Large Supplier
|
|
Section 3.17(b)
|
Lease
|
|
Section 3.14(b)
|
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|
|
|
Term
|
|
Section
Reference
|
Leased Real Property
|
|
Section 3.14(b)
|
Marks
|
|
Section 1.1(jjj)
|
Maximum Annual Premium
|
|
Section 6.10(c)
|
Merger
|
|
Recitals
|
Merger Sub
|
|
Preamble
|
New Financing Letters
|
|
Section 6.5(d)
|
New Plans
|
|
Section 6.11(d)
|
Notice Period
|
|
Section 5.3(d)(ii)(3)
|
OFAC
|
|
Section 3.22(c)
|
Old Plans
|
|
Section 6.11(d)
|
Open Source Technology
|
|
Section 3.16(i)
|
Other Required Company Filing
|
|
Section 6.3(e)
|
Other Required Parent Filing
|
|
Section 6.3(f)
|
Owned Company Shares
|
|
Section 2.7(a)(ii)
|
Parent
|
|
Preamble
|
Parent Plans
|
|
Section 6.11(c)
|
Party
|
|
Preamble
|
Patents
|
|
Section 1.1(jjj)
|
Payment Agent
|
|
Section 2.9(a)
|
Per Share Price
|
|
Section 2.7(a)(iii)
|
Proxy Statement
|
|
Section 6.3(a)
|
Recent SEC Reports
|
|
Article III
|
Reimbursement Obligations
Replacement Financing Letter
Representatives
|
|
Section 6.6(f)
Section 5.3(a)
Section 5.3(a)
|
Required Amount
|
|
Section 4.9(c)
|
Requisite Stockholder Approval
|
|
Section 3.4
|
State Department
|
|
Section 3.22(c)
|
Sublease
|
|
Section 3.14(c)
|
Surviving Corporation
|
|
Section 2.1
|
Tail Policy
|
|
Section 6.10(c)
|
Terminated Service Provider
|
|
Section 1.1(hh)
|
Termination Date
|
|
Section 8.1(c)
|
Termination Fee
|
|
Section 8.3(b)(i)
|
Trade Secrets
|
|
Section 1.1(jjj)
|
Uncertificated Shares
|
|
Section 2.9(c)(ii)
|
Unvested Consideration
|
|
Section 2.7(c)
|
Vested Option Consideration
|
|
Section 2.8(a)
|
Section 1.3.
Certain Interpretations
.
(a)
References to this Agreement
.
Unless otherwise indicated, when a reference is made in this Agreement to an Article, Section,
Schedule or Exhibit, that reference is to an Article, Section, Schedule or Exhibit to this Agreement, as applicable.
(b)
Hereof,
Including, etc
. When used in this Agreement, (i) the words hereof, herein and herewith and words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not
to any particular provision of this Agreement; and (ii) the words include, includes and including will be deemed in each case to be followed by the words without limitation.
(c)
Neither, etc
. Unless the context otherwise requires, neither, nor, any, either and
or are not exclusive.
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(d)
Extent
. The word extent in the phrase to the extent means the
degree to which a subject or other thing extends, and does not simply mean if.
(e)
Dollars
.
When used in this
Agreement, references to $ or Dollars are references to U.S. dollars.
(f)
Gender and Number
.
The
meaning assigned to each capitalized term defined and used in this Agreement is equally applicable to both the singular and the plural forms of such term, and words denoting any gender include all genders. Where a word or phrase is defined in this
Agreement, each of its other grammatical forms has a corresponding meaning. All terms defined in this Agreement will have the defined meanings when used in any certificate or other document made or delivered pursuant to this Agreement unless
otherwise defined in such certificate or document.
(g)
References to Parties
. When reference is made to any party to this
Agreement or any other agreement or document, such reference includes that partys successors and permitted assigns. References to any Person include the successors and permitted assigns of that Person.
(h)
References to Subsidiaries
. Unless the context otherwise requires, all references in this Agreement to the Subsidiaries of a Person
will be deemed to include all direct and indirect Subsidiaries of such Person.
(i)
Legislation
.
A reference to any specific
legislation or to any provision of any legislation includes any amendment to, and any modification, re-enactment or successor thereof, any legislative provision substituted therefor and all rules, regulations and statutory instruments issued
thereunder or pursuant thereto, except that, for purposes of any representations and warranties in this Agreement that are made as a specific date, references to any specific legislation will be deemed to refer to such legislation or provision (and
all rules, regulations and statutory instruments issued thereunder or pursuant thereto) as of such date. References to any agreement or Contract are to that agreement or Contract as amended, modified or supplemented from time to time.
(j)
Accounting Matters
. Except as otherwise provided in this Agreement, all accounting terms used in this Agreement will be
interpreted, and all accounting determinations hereunder will be made, in accordance with GAAP. An item arising with respect to a specific representation or warranty will be deemed to be reflected on or set forth in a balance
sheet or financial statements, to the extent that any such phrase appears in such representation or warranty, if (i) there is a reserve, accrual or other similar item underlying a number on such balance sheet or financial statements that is related
to the subject matter of such representation; (ii) such item is otherwise specifically set forth on the balance sheet or financial statements; or (iii) such item is reflected on the balance sheet or financial statements and is specifically set forth
in the notes thereto.
(k)
Headings
. The table of contents and headings set forth in this Agreement are for convenience of
reference purposes only and will not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision of this Agreement.
(l)
Calculation of Time Periods
. When calculating the period of time before which, within which or following which any act is to be
done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period will be excluded. If the last day of such period is a non-Business Day, then the period in question will end on the next Business Day. The
measure of a period of one month or year for purposes of this Agreement will be the day of the following month or year corresponding to the starting date. If no corresponding date exists, then the end date of such period being measured will be the
next actual day of the following month or year (for example, one month following February 18 is March 18 and one month following March 31 is May 1). References to from or through any date mean, unless otherwise
specified, from and including or through and including such date, respectively.
(m)
Joint Drafting
. The Parties agree that they
have been represented by legal counsel during the negotiation and execution of this Agreement. Accordingly, they waive the application of any Law, regulation, holding or rule of construction providing that ambiguities in an agreement or other
document will be construed against the Party drafting such agreement or document.
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(n)
Summaries
. No summary of this Agreement or any Exhibit, Schedule or other document
delivered with this Agreement that is prepared by or on behalf of any Party will affect the meaning or interpretation of this Agreement or such Exhibit, Schedule or document.
(o)
No Admission
. The information contained in this Agreement and in the Company Disclosure Letter is disclosed solely for purposes of
this Agreement, and no information contained herein or therein will be deemed to be an admission by any Party to any third Person of any matter whatsoever, including (i) any violation of Law or breach of contract; or (ii) that such
information is material or that such information is required to be referred to or disclosed under this Agreement. Disclosure of any information or document in the Company Disclosure Letter is not a statement or admission that it is material or
required to be disclosed in the Company Disclosure Letter. Nothing in the Company Disclosure Letter constitutes an admission against the Companys interest or represents the Companys legal position or legal rights on the matter so
disclosed.
(p)
No Reliance on Representations
. The representations and warranties in this Agreement are the product of
negotiations among the Parties and are for the sole benefit of the Parties. Any inaccuracies in such representations and warranties are subject to waiver by the Parties in accordance with Section 8.5 without notice or liability to any other
Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the Parties of risks associated with particular matters regardless of the knowledge of any of the Parties. Consequently, Persons other
than the Parties may not rely on 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.
(q)
Made Available
.
Documents or other information or materials will be deemed to have been made available by the
Company if such documents, information or materials have been, at least 12 hours prior to the execution and delivery of this Agreement, (i) posted and available to Parent or its Representatives in the virtual data room managed by the Company at
www.rrdvenue.com; or (ii) delivered or provided to Parent or its Affiliates or Representatives.
Section 1.4.
Company
Disclosure Letter
. The information set forth in the disclosure letter delivered by the Company to Parent and Merger Sub on the date of this Agreement (the
Company Disclosure Letter
) is disclosed under separate and appropriate
Section and subsection references that correspond to the Sections and subsections of this Agreement to which such information relates. The information set forth in each Section or subsection of the Company Disclosure Letter will be deemed to be an
exception to (or, as applicable, a disclosure for purposes of) (a) the representations and warranties (or covenants, as applicable) of the Company that are set forth in the corresponding Section or subsection of this Agreement; and (b) any other
representations and warranties (or covenants, as applicable) of the Company that are set forth in this Agreement, but in the case of this clause (b) only if the relevance of that disclosure as an exception to (or a disclosure for purposes of) such
other representations and warranties (or covenants, as applicable) is reasonably apparent on the face of such disclosure.
ARTICLE II
THE
MERGER
Section 2.1.
The Merger
. Upon the terms and subject to the conditions set forth in this Agreement, and the
applicable provisions of the DGCL, at the Effective Time, (a) Merger Sub will be merged with and into the Company; (b) the separate corporate existence of Merger Sub will cease; and (c) the Company will continue as the surviving corporation of the
Merger and a Subsidiary of Parent. The Company, as the surviving corporation of the Merger, is sometimes referred to as the
Surviving Corporation
.
Section 2.2.
The Effective Time
. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date,
Parent, Merger Sub and the Company will cause the Merger to be consummated pursuant to
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the DGCL by filing the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the DGCL (the time of such filing and acceptance
with the Secretary of State of the State of Delaware, or such later time as may be agreed in writing by Parent, Merger Sub and the Company and specified in the Certificate of Merger in accordance with the DGCL, the
Effective
Time
).
Section 2.3.
Closing
. The consummation of the Merger will take place at a closing (the
Closing
) to occur at (a) 9:00 a.m., Pacific time, at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, CA 94304 (or remotely via the electronic exchange of
documents), on a date to be agreed upon by Parent, Merger Sub and the Company that is no later than the second Business Day after the satisfaction or waiver (to the extent permitted under this Agreement) of the last to be satisfied or waived of the
conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted under this Agreement) of such conditions); or (b) such
other time, location and date as Parent, Merger Sub and the Company mutually agree in writing;
provided
that, notwithstanding the foregoing, (x) in no event shall Parent be obligated to consummate the Closing prior to January 31, 2017 and (y)
if Parent has not timely received the Requested Information or the Requested Information is not Compliant, then Parent shall not be obligated to consummate the Closing until five Business Days after the date that Parent has received all information
required under clauses (i) and (ii) of the definition of Requested Information (assuming for the purpose of the definition of Requested Information as used in this clause (y) that the Closing Date referenced therein is the
date of receipt by Parent of such information) during which five Business Day-period such information is and remains Compliant (as such term is defined in clauses (ii) and (iii) of the definition thereof). The date on which the Closing actually
occurs is referred to as the
Closing Date
.
Section 2.4.
Effect of the Merger
. At the Effective Time, the
effect of the Merger will be as provided in this Agreement and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all (a) of the property, rights, privileges, powers
and franchises of the Company and Merger Sub will vest in the Surviving Corporation; and (b) debts, liabilities and duties of the Company and Merger Sub will become the debts, liabilities and duties of the Surviving Corporation.
Section 2.5.
Certificate of Incorporation and Bylaws
.
(a)
Certificate of Incorporation
. At the Effective Time, subject to the provisions of Section 6.10, the Charter will be amended
and restated in its entirety to read substantially identically to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, and such amended and restated certificate of incorporation will become the
certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of the DGCL and such certificate of incorporation, except that at the Effective Time the certificate of incorporation of
the Surviving Corporation will be amended so that the name of the Surviving Corporation will be LifeLock, Inc.
(b)
Bylaws
. At the Effective Time, subject to the provisions of Section 6.10, the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, will be the bylaws of the Surviving Corporation until thereafter amended in
accordance with the applicable provisions of the DGCL, the certificate of incorporation of the Surviving Corporation and such bylaws.
Section 2.6.
Directors and Officers
.
(a)
Directors
. The Parties will take all necessary actions so that at the Effective Time, the initial directors of the Surviving
Corporation will be the directors of Merger Sub as of immediately prior to the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their respective successors are duly
elected or appointed and qualified.
(b)
Officers
. The Parties will take all necessary actions so that at the Effective Time, the
initial officers of the Surviving Corporation will be the officers of the Company as of immediately prior to the Effective
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Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their respective successors are duly appointed.
Section 2.7.
Effect on Capital Stock
.
(a)
Capital Stock
. Upon the terms and subject to the conditions set forth in this Agreement (including Section 2.12), at the
Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the following securities, the following will occur:
(i) each share of common stock, par value $0.0001 per share, of Merger Sub that is outstanding as of immediately prior to the Effective Time
will be converted into one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation, and each certificate representing ownership of such shares of common stock of Merger Sub will thereafter represent ownership
of shares of common stock of the Surviving Corporation;
(ii) each share of Company Common Stock that is (A) held by the Company as
treasury stock; (B) owned by Parent or Merger Sub; or (C) owned by any direct or indirect wholly owned Subsidiary of the Company, Parent or Merger Sub as of immediately prior to the Effective Time (collectively, the
Owned Company
Shares
) will be cancelled and extinguished without any conversion thereof or consideration paid therefor; and
(iii) each share
of Company Common Stock that is issued and outstanding as of immediately prior to the Effective Time (other than Owned Company Shares and Dissenting Company Shares) will be cancelled and extinguished and automatically converted into the right to
receive cash in an amount equal to $24.00, without interest thereon (the
Per Share Price
), in accordance with the provisions of Section 2.9 (or in the case of a lost, stolen or destroyed certificate, upon delivery of an
affidavit (and bond, if required) in accordance with the provisions of Section 2.11).
(b)
Adjustment to the Per Share Price
.
The Per Share Price will be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into Company Common Stock), reorganization,
recapitalization, reclassification, combination, exchange of shares or other similar change with respect to the Company Common Stock occurring on or after the date of this Agreement and prior to the Effective Time.
(c)
Company Unvested Shares
. The payment of cash pursuant to Section 2.8(g) in exchange for Company Unvested Shares shall be
subject to the same restrictions and vesting arrangements that were applicable to such Company Unvested Shares immediately prior to the Effective Time. Accordingly, cash otherwise payable or issuable pursuant to Section 2.8(g) in exchange for
the Company Unvested Shares issued and outstanding immediately prior to the Effective Time (
Unvested Consideration
) shall be retained by Parent and shall not be payable by Parent at the Effective Time, and shall instead become
payable by Parent on, and only upon the occurrence of the date that such Company Unvested Shares would have become vested under the vesting schedule in place for such Company Unvested Shares immediately prior to or at the Effective Time (subject to
the restrictions and other terms of such vesting schedule and giving effect to any agreement between the applicable Continuing Employee and Parent). Parent will make all such required payments to holders of Unvested Consideration no later than the
last day of the calendar month in which such Unvested Consideration would have become vested under the original vesting schedule and in its discretion may make such payments through a paying agent authorized by Parent to administer such
payments on Parents behalf. All amounts payable pursuant to
Section 2.8(g) shall be subject to any required payroll and income tax withholding and shall be paid without interest. No Unvested Consideration, or right thereto, may be
pledged, encumbered, sold, assigned or transferred (including any transfer by operation of law), by any Person, other than Parent, or be taken or reached by any legal or equitable process in satisfaction of any liability of such Person, prior to the
distribution to such Person of such Unvested Consideration in accordance with this Agreement.
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(d)
Statutory Rights of Appraisal
.
(i)
Dissenting Company Shares
. Notwithstanding anything to the contrary set forth in this Agreement, all shares of Company Common
Stock that are issued and outstanding as of immediately prior to the Effective Time and held by Company Stockholders who have (A) neither voted in favor of the adoption of this Agreement nor consented thereto in writing and (B) properly
and validly exercised their statutory rights of appraisal in respect of such shares of Company Common Stock in accordance with Section 262 of the DGCL (the
Dissenting Company Shares
) will not be converted into, or represent
the right to receive, the Per Share Price pursuant to this Section 2.7. Such Company Stockholders will be entitled to receive payment of the appraised value of such Dissenting Company Shares in accordance with the provisions of Section 262
of the DGCL, except that all Dissenting Company Shares held by Company Stockholders who have failed to perfect or who have effectively withdrawn or lost their rights to appraisal of such Dissenting Company Shares pursuant to Section 262 of the
DGCL will be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive the Per Share Price, upon surrender of the Certificates or Uncertificated Shares that formerly evidenced such shares
of Company Common Stock in the manner provided in Section 2.9.
(ii)
Notification of Parent of Demands for Appraisal
. The
Company will give Parent (A) prompt notice of any demands for appraisal received by the Company, withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company in respect of Dissenting Company
Shares; and (B) the opportunity to participate in all negotiations and Legal Proceedings with respect to demands for appraisal pursuant to the DGCL in respect of Dissenting Company Shares. The Company may not, except with the prior written
consent of Parent (which consent will not be unreasonably withheld, conditioned or delayed), voluntarily make any payment with respect to any demands for appraisal or settle or offer to settle any such demands for payment in respect of Dissenting
Company Shares.
Section 2.8.
Equity Awards
.
(a)
Company Vested Stock Options
. Parent will not assume any Company Vested Stock Options. As of the Effective Time, each Company
Vested Stock Option outstanding immediately prior to the Effective Time will, without any action on the part of Parent, Merger Sub, the Company or the holder thereof, be cancelled and converted into the right to receive cash amount(s), without
interest, equal to the product obtained by multiplying: (i) the total number of shares of Company Common Stock issuable upon exercise in full of such Company Vested Stock Option by (ii) the excess, if any, of the Per Share Price over the
exercise or purchase price per share, if any attributable to such Company Vested Stock Option (the
Vested Option Consideration
). Notwithstanding the foregoing, with respect to any Company Vested Stock Options for which the
exercise price per share attributable to such Company Vested Stock Options is equal to or greater than the Per Share Price, such Company Vested Stock Options will be cancelled without any cash payment being made in respect thereof and Parent will
not assume any such Company Vested Stock Option. The payment of the Vested Option Consideration will be subject to withholding for all required Taxes.
(b)
Company Unvested Stock Options
. Except as set forth in Section 2.8(f) below, as of the Effective Time, each Company Unvested
Stock Option outstanding immediately prior to the Effective Time will, without any action on the part of Parent, Merger Sub, the Company or the holder thereof, be assumed by Parent and shall be converted into and become an option to acquire Parent
Common Stock, on the same terms and conditions as were applicable under the Company Unvested Stock Option immediately prior to the Effective Time, except as follows:
(i) (x) the number of shares of Parent Common Stock subject to each Company Unvested Stock Option assumed by Parent shall be determined by
multiplying the number of shares of Company Common Stock that were subject to such Company Unvested Stock Option immediately prior to the Effective Time by the Exchange Ratio, and rounding the resulting number down to the nearest whole number of
shares of Parent Common Stock; and (y) the per share exercise price for the Parent Common Stock issuable upon exercise of each
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Company Unvested Stock Option assumed by Parent shall be determined by dividing the applicable per share exercise price of such Company Unvested Stock Option, as in effect immediately prior to
the Effective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent.
(ii) Any restriction
on the exercise of any Company Unvested Stock Option assumed and converted by Parent shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Unvested Stock Option shall otherwise
remain unchanged as a result of the assumption of such Company Unvested Stock Option, in each case except to the extent otherwise provided in any Company Stock Plan, or any stock option, employment, change of control or other plan or agreement
between the holder of a Company Unvested Stock Option and the Company.
(c)
Company Vested RSUs
. Parent will not assume any Company
Vested RSUs. As of the Effective Time, each Company Vested RSU outstanding immediately prior to the Effective Time will, without any action on the part of Parent, Merger Sub, the Company or the holder thereof be cancelled and converted into the
right to receive cash amount(s), without interest, equal to the product obtained by multiplying: (i) the total number of shares of Company Common Stock subject to the Company RSU award by
(ii) the excess, if any, of the Per Share Price over
the exercise or purchase price per share, if any, attributable to such Company Stock-Based Award (the
Company Vested RSU Consideration
). The payment of the Company Vested RSU Consideration will be subject to withholding for all
required Taxes.
(d)
Company Unvested RSUs
. Except as set forth in Section 2.8(f) below, as of the Effective Time, each
Company Unvested RSU outstanding immediately prior to the Effective Time will, without any action on the part of Parent, Merger Sub, the Company or the holder thereof be assumed by Parent and shall be converted into a right to receive, on the same
terms and conditions as were applicable under the Company Unvested RSU immediately prior to the Effective Time, a number of shares of Parent Common Stock equal to the number of shares of Company Common Stock that were subject to such Company
Unvested RSU immediately prior to the Effective Time multiplied by the Exchange Ratio, and rounding the resulting number down to the nearest whole number of shares of Parent Common Stock. Any restriction on the settlement of any Company Unvested RSU
assumed by Parent shall continue in full force and effect and the term, settlement terms, vesting schedule and other provisions of such Company Unvested RSU shall otherwise remain unchanged as a result of the assumption and conversion of such
Company Unvested RSU, in each case except to the extent otherwise provided in any Company Stock Plan, or any restricted stock unit, employment, change of control or other plan or agreement between the holder of a Company Unvested RSU and the
Company.
(e)
Company Performance-Based Restricted Stock Awards
. Each Company Restricted Stock Award with performance-based vesting
(a
Company PRSA
) outstanding immediately prior to the Effective Time will be treated (x) in the same manner as Company Unvested Shares with respect to each share of Company Common Stock subject to the Company PRSA and (y) in
accordance with the Notice of Grant of Performance-Based Restricted Stock Award and the Performance-Based Restricted Stock Agreement governing such award and any employment, change of control or other plan or agreement between the holder of the
Company PRSA and the Company.
(f)
C
ompany Stock Options and Company RSUs Held By Non-Employee Directors
. Notwithstanding
anything to the contrary in this Section 2.8 or otherwise in this Agreement, Parent will not assume any Company Stock Options or Company RSUs that are held by any individual who is a non-employee director of the Company as of the Closing Date.
(i) As of the Effective Time, each Company Stock Option, whether vested or unvested, that is held by a non-employee director as of the
Closing Date (a
Director Option
), and that is outstanding immediately prior to the Effective Time will, without any action on the part of Parent, Merger Sub, the Company or the holder thereof, be cancelled and converted into the
right to receive cash amount(s), without interest, equal to the product obtained by multiplying: (i) the total number of shares of Company Common Stock issuable upon exercise in full
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of such Director Option by (ii) the excess, if any, of the Per Share Price over the exercise or purchase price per share, if any, attributable to such Director Option. For the avoidance of
doubt, with respect to any Director Options for which the exercise price per share attributable to such Director Options is equal to or greater than the Per Share Price, such Director Options will be cancelled without any cash payment being made in
respect thereof and Parent will not assume any such Director Options. The payment with respect to such Director Options will be subject to withholding for all required Taxes.
(ii) As of the Effective Time, each Company RSU, whether vested or unvested, that is held by a non-employee director of the Company as of the
Closing Date (a
Director RSU
) and that is outstanding immediately prior to the Effective Time will, without any action on the part of Parent, Merger Sub, the Company or the holder thereof be cancelled and converted into the right
to receive cash amount(s), without interest, equal to the product obtained by multiplying: (i) the total number of shares of Company Common Stock subject to the Director RSU award by (ii) the excess, if any, of the Per Share Price over the exercise
or purchase price per share, if any, attributable to such Director RSU. The payment with respect to such Director RSUs will be subject to withholding for all required Taxes.
(g)
Payment Procedures
. On the Closing Date or as soon as practicable thereafter (at the date of the Surviving Corporations
first regularly scheduled payroll after the Effective Time, if practicable, and in no event later than the date of the Surviving Corporations second regularly scheduled payroll after the Effective Time), Parent or the Surviving Corporation
shall cause the applicable former holders of Company Stock-Based Awards and Company Options to receive a payment from the Company or the Surviving Corporation, through its payroll system or payroll provider, of all amounts required to be paid to
such former holders in respect of Company Stock-Based Awards or Company Options that are cancelled and converted pursuant to Section 2.8(a) or Section 2.8(c), as applicable. Notwithstanding the foregoing, if any payment owed to a holder of
Company Stock-Based Awards or Company Options pursuant to Section 2.8(a) or Section 2.8(c), as applicable, cannot be made through the Companys or the Surviving Corporations payroll system or payroll provider, then the Surviving
Corporation will issue a check for such payment to such holder, which check will be sent by overnight courier to such holder promptly following the Closing Date (but in no event more than ten Business Days thereafter).
(h)
Further Actions
. At or prior to the Effective Time, the Company, the Company Board and the Compensation Committee of the Company
Board, as applicable, shall adopt any resolutions and take any actions which are necessary to effectuate the provisions of Section 2.8(a) through Section 2.8(e). The Company shall take all actions which are necessary to ensure that from
and after the Effective Time neither Parent nor the Surviving Corporation will be required to deliver Company Capital Stock to any Person pursuant to or in settlement of any Company Options or Company Stock-Based Awards.
(i)
Parent Actions Related to Assumed Awards
. Parent will take such actions as are reasonably necessary, if any, to reserve for
issuance a number of authorized but unissued shares of Parent Common Stock for delivery upon exercise or settlement of the assumed Company Unvested Stock Options and assumed Company Unvested RSUs. As soon as practicable after the Effective Time (but
in no event later than 10 Business Days after the Effective Time), to the extent the assumed Company Unvested Stock Options and assumed Company Unvested RSUs are not already registered by Parent under the Securities Act, Parent will cause to be
filed with the SEC a registration statement on an appropriate form, or a post-effective amendment to a registration statement previously filed under the Securities Act, with respect to the shares of Parent Common Stock subject to the assumed Company
Unvested Stock Options and assumed Company Unvested RSUs. Parent will use the same level of efforts that it uses to maintain the effectiveness of its other registration statements on Form S-8 to maintain the effectiveness of such registration
statement(s) for so long as any assumed Company Unvested Stock Options or assumed Company Unvested RSUs remain outstanding.
(j)
Treatment of Employee Stock Purchase Plan
. Prior to the date of this Agreement, the Company Board (or a committee thereof) will adopt resolutions or take other actions as may be required to provide that
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participation in the ESPP shall be limited to those employees who were participants on the date hereof and each individual participating in the Purchase Period (as defined in the ESPP) in
progress on the date of this Agreement will not be permitted to (i) increase his or her payroll contribution rate pursuant to the ESPP from the rate in effect immediately prior to the date of this Agreement; or (ii) make separate
non-payroll contributions to the ESPP that has the effect of increasing his or her contribution rate in effect immediately prior to the date of this Agreement, except, in each case, as may be required by applicable Law. Prior to the date of this
Agreement, the Company will take all action that may be necessary to, effective upon the consummation of the Merger, (A) cause any Purchase Period that would otherwise be outstanding at the Effective Time to be terminated no later than one
Business Day prior to the date on which the Effective Time occurs; (B) make any adjustments that are necessary or advisable to reflect the shortened Purchase Period, but otherwise treat such shortened Purchase Period as a fully effective and
completed Purchase Period for all purposes pursuant to the ESPP; (C) cause the exercise (as of no later than one Business Day prior to the date on which the Effective Time occurs) of each outstanding purchase right pursuant to the ESPP; and
(D) provide that no further Purchase Period or offer period will commence pursuant to the ESPP after the date of this Agreement. On such exercise date, the Company will apply the funds credited as of such date pursuant to the ESPP within each
participants payroll withholding account to the purchase of whole shares of Company Common Stock in accordance with the terms of the ESPP. Immediately prior to and effective as of the Effective Time (but subject to the consummation of the
Merger), the Company will terminate the ESPP.
Section 2.9.
Payment for Securities; Surrender of Certificates
.
(a)
Payment Agent
. Prior to the Closing, Parent will (i) select a bank or trust company reasonably acceptable to the Company to
act as the payment agent for the Merger (the
Payment Agent
); and (ii) enter into a payment agent agreement, in form and substance reasonably acceptable to the Company, with such Payment Agent.
(b)
Exchange Fund
. At or prior to the Closing, Parent will deposit (or cause to be deposited) with the Payment Agent, by wire transfer
of immediately available funds, for payment to the holders of shares of Company Common Stock pursuant to Section 2.7, an amount of cash equal to the aggregate consideration to which such holders of shares of Company Common Stock become entitled
pursuant to Section 2.7. Until disbursed in accordance with the terms and conditions of this Agreement, such cash will be invested by the Payment Agent, as directed by Parent or the Surviving Corporation, in (i) obligations of or fully
guaranteed by the United States or any agency or instrumentality thereof and backed by the full faith and credit of the United States with a maturity of no more than 30 days; (ii) commercial paper obligations rated
A-1
or
P-1
or better by Moodys Investors Service, Inc. or Standard & Poors Corporation, respectively; or (iii) certificates of deposit, bank repurchase
agreements or bankers acceptances of commercial banks with capital exceeding $1,000,000,000 (based on the most recent financial statements of such bank that are then publicly available) (such cash and any proceeds thereon, the
Exchange Fund
). To the extent that (A) there are any losses with respect to any investments of the Exchange Fund; (B) the Exchange Fund diminishes for any reason below the level required for the Payment Agent to promptly
pay the cash amounts contemplated by Section 2.7; or (C) all or any portion of the Exchange Fund is unavailable for Parent (or the Payment Agent on behalf of Parent) to promptly pay the cash amounts contemplated by Section 2.7 for any
reason, then Parent will, or will cause the Surviving Corporation to, promptly replace or restore the amount of cash in the Exchange Fund so as to ensure that the Exchange Fund is at all times fully available for distribution and maintained at a
level sufficient for the Payment Agent to make the payments contemplated by Section 2.7. Any interest or other income from investment of the Exchange Fund will be payable to Parent or the Surviving Corporation, as Parent directs.
(c)
Exchange and Payment Procedures
.
(i)
Certificates
. Promptly following the Effective Time, Parent and the Surviving Corporation will cause the Payment Agent to mail to
each holder of record (as of immediately prior to the Effective Time) of a certificate that immediately prior to the Effective Time represented outstanding shares of Company Common
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Stock (other than Dissenting Company Shares and Owned Company Shares) (the
Certificates
) whose shares of Company Common Stock were converted into the right to receive the
consideration payable in respect thereof pursuant to Section 2.7, (A) a letter of transmittal in customary form (which will specify that delivery will be effected, and risk of loss and title to the Certificates will pass, only upon
delivery of the Certificates to the Payment Agent); and (B) instructions for use in effecting the surrender of the Certificates in exchange for the consideration payable in respect thereof pursuant to Section 2.7. Upon surrender to the
Payment Agent of a Certificate (or affidavit of loss in lieu of a Certificate as provided in Section 2.11) for cancellation, together with such letter of transmittal, duly completed and validly executed, and such other documents as may be
reasonably required by the Payment Agent in accordance with the terms of such materials and instructions, the holder of such Certificate will be entitled to receive in exchange for the number of shares represented by such Certificate (and Parent
will cause the Payment Agent to pay and deliver in exchange therefor as promptly as practicable) an amount in cash equal to the product obtained by multiplying (1) the aggregate number of shares of Company Common Stock represented by such
Certificate by (2) the Per Share Price (less any applicable withholding Taxes payable in respect thereof). The Certificate so surrendered will be cancelled. The Payment Agent will accept Certificates upon compliance with such reasonable terms
and conditions as the Payment Agent may impose to cause an orderly exchange thereof in accordance with normal exchange practices. No interest will be paid or accrued for the benefit of any holder of the Certificates on the amount payable upon the
surrender of such Certificates pursuant to this Section 2.9(c)(i). Until so surrendered, the Certificates will be deemed from and after the Effective Time to evidence only the right to receive the consideration payable in respect thereof
pursuant to Section 2.7.
(ii)
Uncertificated Shares
. Notwithstanding anything to the contrary in this Agreement, any holder
of shares of Company Common Stock held in book-entry form (the
Uncertificated Shares
) will not be required to deliver a Certificate or an executed letter of transmittal to the Payment Agent to receive the consideration payable in
respect thereof pursuant to Section 2.7. In lieu thereof, each holder of record (as of immediately prior to the Effective Time) of an Uncertificated Share that immediately prior to the Effective Time represented an outstanding share of Company
Common Stock (other than Dissenting Company Shares and Owned Company Shares) whose shares of Company Common Stock were converted into the right to receive the consideration payable in respect thereof pursuant to Section 2.7 will, upon receipt
of an agents message in customary form (it being understood that the holders of Uncertificated Shares will be deemed to have surrendered such Uncertificated Shares upon receipt of an agents message or such other
evidence, if any, as the Payment Agent may reasonably request) at the Effective Time, be entitled to receive (and Parent will cause the Payment Agent to pay and deliver as promptly as practicable) an amount in cash equal to the product obtained by
multiplying (A) the aggregate number of shares of Company Common Stock represented by such holders transferred Uncertificated Shares by (B) the Per Share Price (less any applicable withholding Taxes payable in respect thereof). The
Uncertificated Shares so surrendered will be cancelled. The Payment Agent will accept transferred Uncertificated Shares upon compliance with such reasonable terms and conditions as the Payment Agent may impose to cause an orderly exchange thereof in
accordance with normal exchange practices. No interest will be paid or accrued for the benefit of any holder of the Uncertificated Shares on the amount payable upon the surrender of such Uncertificated Shares pursuant to this
Section 2.9(c)(ii). Until so surrendered, Uncertificated Shares will be deemed from and after the Effective Time to evidence only the right to receive the consideration payable in respect thereof pursuant to Section 2.7(a). Any Per Share
Price paid upon surrender of an Uncertificated Share will be deemed to have been paid in full satisfaction of all rights pertaining to such Uncertificated Share.
(d)
DTC Payment
. Prior to the Effective Time, Parent and the Company will cooperate to establish procedures with the Payment Agent and
DTC with the objective that (i) if the Closing occurs at or prior to 11:30 a.m., Eastern time, on the Closing Date, then the Payment Agent will transmit to DTC or its nominees on the Closing Date an amount in cash, by wire transfer of
immediately available funds, equal to the product obtained by multiplying (A) the number of shares of Company Common Stock (other than Owned Company Shares and Dissenting Company Shares) held of record by DTC or such nominee immediately prior
to the Effective Time by (B) the Per Share Price (such amount, the
DTC Payment
); and (ii) if the Closing occurs after
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11:30 a.m., Eastern time, on the Closing Date, then the Payment Agent will transmit the DTC Payment to DTC or its nominees on the first Business Day after the Closing Date.
(e)
Transfers of Ownership
. If a transfer of ownership of shares of Company Common Stock is not registered in the stock transfer books
or ledger of the Company, or if the consideration payable is to be paid in a name other than that in which the Certificates surrendered or transferred in exchange therefor are registered in the stock transfer books or ledger of the Company, then the
consideration payable pursuant to Section 2.7 may be paid to a Person other than the Person in whose name the Certificate so surrendered or transferred is registered in the stock transfer books or ledger of the Company only if such Certificate
is properly endorsed and otherwise in proper form for surrender and transfer and the Person requesting such payment has paid to Parent (or any agent designated by Parent) any transfer Taxes required by reason of the payment of the Per Share Price to
a Person other than the registered holder of such Certificate, or established to the satisfaction of Parent (or any agent designated by Parent) that such transfer Taxes have been paid or are otherwise not payable. Payment of the consideration
payable with respect to Uncertificated Shares will only be made to the Person in whose name such Uncertificated Shares are registered.
(f)
No Liability
. Notwithstanding anything to the contrary set forth in this Agreement, none of the Payment Agent, Parent, the
Surviving Corporation or any other Party will be liable to a holder of shares of Company Common Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificates or
Uncertificated Shares have not been surrendered immediately prior to the date on which any cash in respect of such Certificate or Uncertificated Share would otherwise escheat to or become the property of any Governmental Authority, then any such
cash in respect of such Certificate or Uncertificated Share will, to the extent permitted by applicable Law, become the property of Parent, free and clear of all claims or interest of any person previously entitled thereto.
(g)
Distribution of Exchange Fund to Parent
. Any portion of the Exchange Fund that remains undistributed to the holders of the
Certificates or Uncertificated Shares on the date that is one year after the Effective Time will be delivered to Parent upon demand, and any holders of shares of Company Common Stock that were issued and outstanding immediately prior to the Merger
who have not theretofore surrendered or transferred their Certificates or Uncertificated Shares representing such shares of Company Common Stock for exchange pursuant to this Section 2.9 will thereafter look for payment of the Per Share Price
payable in respect of the shares of Company Common Stock represented by such Certificates or Uncertificated Shares solely to Parent (subject to abandoned property, escheat or similar Laws), solely as general creditors thereof, for any claim to the
Per Share Price to which such holders may be entitled pursuant to Section 2.7.
Section 2.10.
No Further Ownership Rights in
Company Common Stock
. From and after the Effective Time, (a) all shares of Company Common Stock will no longer be outstanding and will automatically be cancelled and cease to exist; and (b) each holder of a Certificate or
Uncertificated Shares previously representing any shares of Company Common Stock will cease to have any rights with respect thereto, except the right to receive the consideration payable therefor in accordance with Section 2.7 (or in the case
of Dissenting Company Shares, the rights pursuant to Section 2.7(d)). The consideration paid in accordance with the terms of this Article II upon conversion of any shares of Company Common Stock will be deemed to have been paid in full
satisfaction of all rights pertaining to such shares of Company Common Stock. From and after the Effective Time, there will be no further registration of transfers on the records of the Surviving Corporation of shares of Company Common Stock that
were issued and outstanding immediately prior to the Effective Time, other than transfers to reflect, in accordance with customary settlement procedures, trades effected prior to the Effective Time. If, after the Effective Time, Certificates or
Uncertificated Shares are presented to the Surviving Corporation for any reason, they will (subject to compliance with the exchange procedures of Section 2.9(c)) be cancelled and exchanged as provided in this Article II.
Section 2.11.
Lost, Stolen or Destroyed Certificates
. In the event that any Certificates have been lost, stolen or destroyed, the
Payment Agent will issue in exchange therefor, upon the making of an affidavit of that fact by
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the holder thereof, the Per Share Price payable in respect thereof pursuant to Section 2.7. Parent or the Payment Agent may, in its discretion and as a condition precedent to the payment of
such Per Share Price, require the owners of such lost, stolen or destroyed Certificates to deliver a bond in such amount as it may direct as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Payment Agent
with respect to the Certificates alleged to have been lost, stolen or destroyed.
Section 2.12.
Required Withholding
. Each of
the Payment Agent, Parent, the Company and the Surviving Corporation, or any Subsidiary of Parent, the Company or the Surviving Corporation, will be entitled to deduct and withhold from any cash amounts payable pursuant to this Agreement to any
holder or former holder of shares of Company Common Stock, Company Stock-Based Awards or Company Options such amounts as are required to be deducted or withheld therefrom pursuant to any Tax Laws. To the extent that such amounts are so deducted or
withheld and paid over to the appropriate Governmental Authority, such amounts will be treated for all purposes of this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.
Section 2.13.
Necessary Further Actions
. If, at any time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, then the directors and officers of
the Company and Merger Sub as of immediately prior to the Effective Time will take all such lawful and necessary action.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
With respect to any Section of this Article III, except (a) as disclosed in the reports, statements and other documents filed by the
Company with the SEC or furnished by the Company to the SEC, in each case pursuant to the Exchange Act on or after January 1, 2016, and prior to the date of this Agreement (other than any disclosures contained or referenced therein under the
captions Risk Factors, Forward-Looking Statements, Quantitative and Qualitative Disclosures About Market Risk and any other disclosures contained or referenced therein of information, factors or risks that are
predictive, cautionary or forward-looking in nature) (the
Recent SEC Reports
) (it being understood that any matter disclosed in any Recent SEC Report will be deemed to be disclosed in a section of the Company Disclosure Letter
only to the extent that it is reasonably apparent on the face of such disclosure in such Recent SEC Report that it is applicable to such section of the Company Disclosure Letter;
provided
, that nothing disclosed in the Recent SEC Reports will
be deemed to modify or qualify the representations and warranties set forth in Section 3.7); or (b) as set forth in the Company Disclosure Letter, the Company hereby represents and warrants to Parent and Merger Sub as follows:
Section 3.1.
Organization; Good Standing
. The Company (a) is a corporation duly organized, validly existing and in good
standing pursuant to the DGCL; and (b) has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties and assets. The Company is duly qualified to do
business and is in good standing in each jurisdiction where the character of its properties and assets owned or leased or the nature of its activities make such qualification necessary (to the extent that the concept of good standing is
applicable in the case of any jurisdiction outside the United States), except where the failure to be so qualified or in good standing would not have a Company Material Adverse Effect. The Company has made available to Parent true, correct and
complete copies of the Charter and the Bylaws. The Company is not in violation of the Charter or the Bylaws.
Section 3.2.
Corporate Power; Enforceability
. The Company has the requisite corporate power and authority to (a) execute and deliver this Agreement; (b) perform its covenants and obligations hereunder; and (c)
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subject to receiving the Requisite Stockholder Approval, consummate the Merger. The execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and
obligations hereunder, and the consummation of the Merger have been duly authorized by all necessary corporate action on the part of the Company and no additional corporate actions on the part of the Company are necessary to authorize (i) the
execution and delivery of this Agreement by the Company; (ii) the performance by the Company of its covenants and obligations hereunder; or (iii) subject to the receipt of the Requisite Stockholder Approval, the consummation of the Merger.
This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting or relating to creditors rights generally; and
(B) is subject to general principles of equity.
Section 3.3.
Company Board Approval; Fairness Opinion; Anti-Takeover
Laws
.
(a)
Company Board Approval
. The Company Board has (i) determined that it is in the best interests of the Company
and its stockholders, and declared it advisable, to enter into this Agreement and consummate the Merger upon the terms and subject to the conditions set forth in this Agreement; (ii) approved the execution and delivery of this Agreement by the
Company, the performance by the Company of its covenants and other obligations in this Agreement, and the consummation of the Merger upon the terms and conditions set forth in this Agreement; (iii) directed that the adoption of this Agreement be
submitted to a vote at the Company Stockholder Meeting; and (iv) resolved to recommend that the Company Stockholders vote in favor of the adoption of this Agreement in accordance with the DGCL (collectively, the
Company Board
Recommendation
).
(b)
Fairness Opinion
. The Company Board received the written opinion (or an oral opinion to be
confirmed in writing) of the Company Financial Advisor to the effect that, as of the date of such opinion and based upon and subject to the various qualifications and assumptions set forth therein, the Per Share Price to be received by the holders
of shares of Company Common Stock (other than Parent or any Affiliate of Parent, if applicable) pursuant to this Agreement is fair from a financial point of view to such holders (it being understood and agreed that such opinion is for the benefit of
the Company Board and may not be relied upon by Parent or Merger Sub). A copy of such opinion shall be provided to Parent for informational purposes only promptly following the date of this Agreement.
(c)
Anti-Takeover Laws
. Assuming that the representations of Parent and Merger Sub set forth in Section 4.6 are true and correct,
the Company Board has taken all necessary actions so that the restrictions on business combinations set forth in Section 203 of the DGCL and any other similar applicable anti-takeover Law will not be applicable to the Merger.
Section 3.4.
Requisite Stockholder Approval
. The affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock entitled to vote to adopt this Agreement (the Requisite Stockholder Approval) is the only vote of the holders of any class or series of Company Capital Stock that is necessary pursuant to applicable Law, the Charter
or the Bylaws to consummate the Merger.
Section 3.5.
Non-Contravention
. The execution and delivery of this Agreement by the
Company, the performance by the Company of its covenants and obligations hereunder, and the consummation of the Merger do not (a) violate or conflict with any provision of the Charter or the Bylaws or the equivalent organizational or governing
documents of any Subsidiary of the Company; (b) violate, conflict with, result in the breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) pursuant to, result in the loss of any
benefit under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration pursuant to any Material Contract or Company Benefit Plan; (c) assuming compliance with the matters
referred to in Section 3.6 and, in the case of the consummation of the
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Merger, subject to obtaining the Requisite Stockholder Approval, violate or conflict with any Law applicable to the Company or any of its Subsidiaries or by which any of their respective
properties or assets are bound; or (d) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company or any of its Subsidiaries, except in the case of each of clauses (b), (c) and (d) for
such violations, conflicts, breaches, defaults, losses, terminations, accelerations or Liens that would not have or be reasonably expected to have a Company Material Adverse Effect.
Section 3.6.
Requisite Governmental Approvals
. No Consent, authorization of, filing or registration with, or notification to any
Governmental Authority is required on the part of the Company in connection with the (a) execution and delivery of this Agreement by the Company; (b) performance by the Company of its covenants and obligations pursuant to this Agreement; or
(c) consummation of the Merger, except (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and such filings with Governmental Authorities to satisfy the applicable Laws of states in which the
Company and its Subsidiaries are qualified to do business; (ii) such filings and approvals as may be required by any federal or state securities Laws, including compliance with any applicable requirements of the Exchange Act;
(iii) compliance with any applicable rules of the NYSE; (iv) compliance with any applicable requirements of the HSR Act and any applicable foreign Antitrust Law; and (v) such other Consents the failure of which to obtain would not have or
be reasonably expected to have a Company Material Adverse Effect.
Section 3.7.
Company Capitalization
.
(a)
Capital Stock
. The authorized capital stock of the Company consists of (i) 300,000,000 shares of Company Common Stock; and
(ii) 10,000,000 shares of Company Preferred Stock. As of the Capitalization Date, (A) 94,262,360 shares of Company Common Stock were issued and outstanding (including Company PRSAs assuming the maximum level of performance); (B) no
shares of Company Preferred Stock were issued and outstanding; and (C) 7,202,578 shares of Company Common Stock were held by the Company as treasury shares. All outstanding shares of Company Common Stock are validly issued, fully paid,
nonassessable and free of any preemptive rights. Since the close of business on the Capitalization Date until the date of this Agreement, the Company has not issued or granted any Company Securities other than pursuant to the exercise, vesting, or
settlement of Company Stock-Based Awards or Company Options included in the representation made in Section 3.7(b) and granted pursuant to the terms of such awards.
(b)
Stock Reservation
. As of the Capitalization Date, the Company has reserved 29,052,857 shares of Company Common Stock for issuance
pursuant to the Company Stock Plans. As of the Capitalization Date, there were outstanding (i) Company Stock-Based Awards representing the right to receive up to 3,160,881 shares of Company Common Stock (all of which are represented by Company
RSUs); (ii) Company Options to acquire 13,065,828 shares of Company Common Stock with an exercise price per share less than the Per Share Price; and (iii) 4,654,407 shares of Company Common Stock reserved pursuant to the ESPP.
(c)
Company Securities
. Except as specified in Section 3.7(a) and Section 3.7(b), as of the Capitalization Date there were
(i) no outstanding shares of capital stock of, or other equity or voting interest in, the Company; (ii) no outstanding securities of the Company convertible into or exchangeable for shares of capital stock of, or other equity or voting interest
in, the Company; (iii) no outstanding options, warrants or other rights or binding arrangements to acquire from the Company, or that obligate the Company to issue, any capital stock of, or other equity or voting interest in, or any securities
(including debt securities) convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, the Company; (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right,
convertible or exchangeable security, or other similar Contract relating to any capital stock of, or other equity or voting interest (including any voting debt) in, the Company; (v) no outstanding restricted shares, restricted share units,
stock appreciation rights, performance shares, contingent value rights, phantom stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any
capital stock of, or other securities or ownership interests in, the Company (the items in clauses (i), (ii), (iii), (iv) and (v),
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collectively with the Company Capital Stock, the
Company Securities
); (vi) no voting agreements, voting trusts, stockholder agreements, proxies or similar arrangements or
understandings to which the Company is a party or by which the Company is bound with respect to the voting of any shares of capital stock of, or other equity or voting interest in, the Company; (vii) no obligations or binding commitments of any
character restricting the transfer of any shares of capital stock of, or other equity or voting interest in, the Company to which the Company is a party or by which it is bound; and (viii) no other obligations by the Company to make any
payments based on the price or value of any Company Securities. The Company is not a party to any Contract that obligates it to repurchase, redeem or otherwise acquire any Company Securities. There are no accrued and unpaid dividends with respect to
any outstanding shares of Company Capital Stock. The Company does not have a stockholder rights plan in effect.
(d)
Other Rights
.
The Company is not a party to, and does not otherwise have any Knowledge of, any Contract relating to the voting of, requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or other similar
rights with respect to any Company Securities.
Section 3.8.
Subsidiaries
.
(a)
Subsidiaries
. Section 3.8(a) of the Company Disclosure Letter contains a true, correct and complete list of the name and
jurisdiction of organization of each Subsidiary of the Company. Each Subsidiary of the Company (i) is duly organized, validly existing and in good standing pursuant to the Laws of its jurisdiction of organization (to the extent that the concept
of good standing is applicable in the case of any jurisdiction outside the United States); and (ii) has the requisite corporate power and authority to carry on its respective business as it is presently being conducted and to own,
lease or operate its respective properties and assets, except where the failure to be in good standing would not have a Company Material Adverse Effect. Each Subsidiary of the Company is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification or license necessary (to the extent that the concept of good standing is applicable in the case
of any jurisdiction outside the United States), except where the failure to be so qualified or in good standing would not have a Company Material Adverse Effect. The Company has made available to Parent true, correct and complete copies of the
certificates of incorporation, bylaws and other similar organizational documents of each Company Subsidiary, each as amended to date. No Subsidiary of the Company is in violation of its charter, bylaws or other similar organizational documents,
except for such violations that would not have a Company Material Adverse Effect. Except for the Subsidiaries set forth on Section 3.8(a) of the Company Disclosure Letter, the Company does not directly or indirectly own shares of capital stock
of, or other membership, partnership, joint venture or other equity or voting interest in, any Person or any other interests convertible into or exchangeable for shares of capital stock of, or other membership, partnership, joint venture or equity
or voting interest in, any other Person.
(b)
Capital Stock of Subsidiaries
. All of the outstanding capital stock of, or other
equity or voting interest in, each Subsidiary of the Company (i) has been duly authorized, validly issued and is fully paid and nonassessable; and (ii) except for directors qualifying or similar shares, is owned, directly or
indirectly, by the Company, free and clear of all Liens (other than Permitted Liens) and any other restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity or voting interest) that
would prevent such Subsidiary from conducting its business as of the Effective Time in substantially the same manner that such business is conducted on the date of this Agreement.
(c)
Other Securities of Subsidiaries
. There are no outstanding (i) securities convertible into or exchangeable for shares of
capital stock of, or other equity or voting interest in, any Subsidiary of the Company; (ii) options, warrants or other rights or arrangements obligating the Company or any of its Subsidiaries to acquire from any Subsidiary of the Company, or
that obligate any Subsidiary of the Company to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for, shares of capital stock of, or other equity or voting interest in, any
Subsidiary of the Company; or (iii) obligations of any
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Subsidiary of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security, or other similar Contract relating to any capital stock of, or
other equity or voting interest (including any voting debt) in, such Subsidiary to any Person other than the Company or one of its Subsidiaries.
Section 3.9.
Company SEC Reports
. Since January 1, 2013, the Company has filed all forms, reports and documents with the SEC
that have been required to be filed by it pursuant to applicable Laws prior to the date of this Agreement (the
Company SEC Reports
). Each Company SEC Report complied as to form, as of its filing date, or, if amended or superseded
by a subsequent filing made prior to the date of this Agreement, as of the date of the last such amendment or superseding filing prior to the date of this Agreement, in all material respects with the applicable requirements of the Securities Act or
the Exchange Act, as the case may be, each as in effect on the date that such Company SEC Report was filed. True, correct and complete copies of all Company SEC Reports are publicly available in the Electronic Data Gathering, Analysis and Retrieval
database of the SEC. As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), each Company SEC Report did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of the Company is required to file any forms, reports or
documents with the SEC.
Section 3.10.
Company Financial Statements; Internal Controls; Indebtedness
.
(a)
Company Financial Statements
. The consolidated financial statements of the Company and its Subsidiaries filed with the Company SEC
Reports (i) were prepared in accordance with GAAP (except as otherwise permitted by Form 10-Q with respect to any financial statements filed on Form 10-Q); (ii) fairly present, in all material respects, the consolidated financial position
of the Company and its Subsidiaries as of the dates thereof and the consolidated results of operations and cash flows and stockholders equity for the periods referred to therein; and (iii) complied as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting requirements and of the published rules and regulations of the SEC with respect thereto. Except as have been described in the Company SEC Reports, there are no unconsolidated
Subsidiaries of the Company or any off-balance sheet arrangements of the type required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K promulgated by the SEC.
(b)
Disclosure Controls and Procedures
. The Company has established and maintains disclosure controls and procedures and
internal control over financial reporting (in each case as defined pursuant to Rule 13a-15 and Rule 15d-15 promulgated under the Exchange Act). The Companys disclosure controls and procedures are reasonably designed to
ensure that all (i) material information required to be disclosed by the Company in the reports that it files or furnishes pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
rules and forms of the SEC; and (ii) such material information is accumulated and communicated to the Companys management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required
pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. The Companys management has completed an assessment of the effectiveness of the Companys internal control over financial reporting in compliance with the requirements of
Section 404 of the Sarbanes-Oxley Act for the fiscal year ended December 31, 2015, and such assessment concluded that such system was effective. The Companys independent registered public accounting firm has issued (and not subsequently
withdrawn or qualified) an attestation report concluding that the Company maintained effective internal control over financial reporting as of December 31, 2015. Since December 31, 2015 and through the date of this Agreement, to the
Knowledge of the Company, no events have occurred such that management would not be able to complete its assessment of the effectiveness of the Companys internal control over financial reporting in compliance with the requirements of
Section 404 of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2016, and conclude, after such assessment, that such system was effective. Since January 1, 2013, the principal executive officer and principal financial
officer of the Company have made all certifications required by the Sarbanes-Oxley Act. Neither the Company nor its principal executive officer or principal financial officer has received notice from any Governmental Authority challenging or
questioning the accuracy, completeness, form or manner of filing of such certifications.
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(c)
Internal Controls
. The Company has established and maintains a system of internal
accounting controls that are effective in all material respects in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, including policies and procedures
that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with appropriate authorizations of the
Companys management and the Company Board; and (iii) provide assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries. Neither the Company nor, to
the Knowledge of the Company, the Companys independent registered public accounting firm has identified or been made aware of (A) any significant deficiency or material weakness (each as defined in Rule 13a-15(f) of the Exchange Act) in
the system of internal control over financial reporting utilized by the Company and its Subsidiaries that has not been subsequently remediated; or (B) any fraud, whether or not material, that involves the Companys management or other
employees who have a role in the preparation of financial statements or the internal control over financial reporting utilized by the Company and its Subsidiaries.
(d)
Indebtedness
. Section 3.10(d) of the Company Disclosure Letter contains a true, correct and complete list of all outstanding
Indebtedness of the Company and its Subsidiaries as of the date of this Agreement.
Section 3.11.
No Undisclosed Liabilities
.
Neither the Company nor any of its Subsidiaries has any liabilities of a nature required to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP or disclosed in the footnotes thereto, other
than liabilities (a) reflected or otherwise reserved against in the Most Recent Company Balance Sheet (including the notes thereto); (b) arising pursuant to this Agreement or incurred in connection with the Merger; (c) incurred in the
ordinary course of business consistent with past practice since the date of the Most Recent Company Balance Sheet; or (d) that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material
Adverse Effect.
Section 3.12.
Absence of Certain Changes
.
(a)
No Company Material Adverse Effect
. Since January 1, 2016, through the date of this Agreement, the business of the Company and its
Subsidiaries has been conducted, in all material respects, in the ordinary course of business. Since the date of the Audited Company Balance Sheet through the date of this Agreement, no Effect has occurred that, individually or in the aggregate, has
had, or would reasonably be expected to have, a Company Material Adverse Effect.
(b)
Forbearance
. Since January 1, 2016, through
the date of this Agreement, the Company has not taken any action that would be prohibited by Section 5.2(a) (except for Section 5.2(a)(iii), Section 5.2(a)(ix), Section 5.2(a)(xiii) (other than clause (G) thereunder),
Section 5.2(a)(xv) and, with respect to the foregoing sections, Section 5.2(a)(xvi)) if taken or proposed to be taken after the date of this Agreement. Since July 1, 2016, through the date of this Agreement, the Company has not taken
any action, other than pursuant to the standard provisions set forth in the Companys 2012 Incentive Compensation Plan, that would result in any severance, change in control or retention compensation, or acceleration, vesting or increase in
benefits, in each case, as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby, either alone or upon the occurrence of any additional or subsequent events.
Section 3.13.
Material Contracts
.
(a)
Material Contracts
. Section 3.13(a) of the Company Disclosure Letter contains a true, correct and complete list, specified by
the applicable clause of the definition of Material Contracts, of all Material Contracts
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to or by which the Company or any of its Subsidiaries is a party or is bound. The Company has made available to Parent true, correct and complete copies of all Material Contracts (including all
material modifications, amendments and supplements thereto).
(b)
Validity
. Each Material Contract is valid and binding on the
Company or each such Subsidiary of the Company party thereto and is in full force and effect, and none of the Company, any of its Subsidiaries party thereto or, to the Knowledge of the Company, any other party thereto, is in breach of or default
pursuant to any such Material Contract, except for such failures to be in full force and effect that, individually or in the aggregate, would not have a Company Material Adverse Effect. No event has occurred that, with notice or lapse of time or
both, would constitute such a breach or default pursuant to any Material Contract by the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any other party thereto, except for such breaches and defaults that, individually or in
the aggregate, would not have a Company Material Adverse Effect. As of the date of this Agreement, neither the Company nor any of its Subsidiaries have received written notice from any other party to a Material Contract that such other party intends
to terminate, not renew, or renegotiate in any material respects the terms of any such Material Contract, except for such notices to terminate, not renew, or renegotiate with respect to matters that, individually or in the aggregate, would not have
a Company Material Adverse Effect.
Section 3.14.
Real Property
.
(a)
Owned Real Property
. Neither the Company nor any of its Subsidiaries owns or has ever owned any real property.
(b)
Leased Real Property
. Section 3.14(b) of the Company Disclosure Letter contains a true, correct and complete list, as of the
date of this Agreement, of all of the existing leases, subleases, licenses or other agreements pursuant to which the Company or any of its Subsidiaries uses or occupies, or has the right to use or occupy, now or in the future, any real property in
excess of $50,000.00 base rent payable annually (such property, the
Leased Real Property
, and each such lease, sublease, license or other agreement, a
Lease
), including, with respect to each such Lease, the
identity of the landlord or sublandlord, the addresses, the date of such Lease and each material amendment thereto. The Company has made available to Parent true, correct and complete copies of all Leases (including all material modifications,
amendments and supplements thereto).The Company or one of its Subsidiaries has valid leasehold estates in the Leased Real Property, free and clear of all Liens (other than Permitted Liens). To the Knowledge of the Company, neither the Company nor
any of its Subsidiaries is in material breach of or default pursuant to any Lease.
(c)
Subleases
. Section 3.14(c) of the
Company Disclosure Letter contains a true, correct and complete list of all of the existing material subleases, licenses or similar agreements in excess of $50,000.00 base rent payable annually (each, a
Sublease
) granting to any
Person, other than the Company or any of its Subsidiaries, any right to use or occupy, now or in the future, of the Leased Real Property. With respect to each of the Subleases, the other party to such Sublease is not an Affiliate of, and otherwise
does not have any economic interest in, the Company or any of its Subsidiaries. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries is in material breach of or default under any Sublease.
Section 3.15.
Environmental Matters
. Except as would not have a Company Material Adverse Effect, neither the Company nor any of
its Subsidiaries (a) has received any written notice alleging that the Company or any Subsidiary has violated any applicable Environmental Law; (b) has transported, produced, processed, manufactured, generated, used, treated, handled,
stored, released or disposed of any Hazardous Substances in violation of any applicable Environmental Law; (c) has exposed any employee to Hazardous Substances in violation of any applicable Environmental Law; or (d) is a party to or is
the subject of any pending or, to the Knowledge of the Company, threatened Legal Proceeding that is (i) alleging the noncompliance by the Company or any of its Subsidiaries with any Environmental Law; or (ii) seeking to impose any
financial responsibility for any investigation, cleanup, removal or remediation pursuant to any Environmental Law.
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Section 3.16.
Intellectual Property
.
(a)
Registered Intellectual Property; Proceedings
. Section 3.16(a) of the Company Disclosure Letter sets forth a true, correct and
complete list as of the date of this Agreement of all material Company Registered Intellectual Property and, as applicable, for each item of Company Registered Intellectual Property (i) the application and registration number, filing and
registration/issuance date, and filing jurisdiction, and (ii) any proceedings or actions before any court or tribunal (including the United States Patent and Trademark Office or equivalent authority anywhere in the world) to which the Company
or any of its Subsidiaries is a party and in which claims are raised relating to the validity, enforceability, scope, ownership or infringement of any of the Company Registered Intellectual Property (other than ordinary course proceedings and
actions before the United States Patent and Trademark Office or equivalent authority related to the issuance and registration of Registered Intellectual Property). The Company has maintained all material Company Registered Intellectual Property in
the ordinary course consistent with reasonable business practices. Without limiting the generality of the foregoing, to the Knowledge of the Company, with respect to each item of material Company Registered Intellectual Property: (A) all
necessary application, registration, maintenance and renewal fees have been timely paid to, and, to the Knowledge of the Company, all necessary documents and certificates have been timely filed with, the relevant patent, copyright, trademark or
other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Company Registered Intellectual Property, (B) each such item is currently in compliance with formal legal requirements and
(C) each such item is sustaining, and except with respect to applications, to the Knowledge of the Company, valid and enforceable, other than as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a
whole.
(b)
No Order
. No material Company Intellectual Property is subject to any Legal Proceeding or outstanding order against the
Company, prohibiting or materially restricting the Company from using, transferring, or licensing thereof, except for any such prohibitions or restrictions that would not reasonably be expected to be material to the Company and its Subsidiaries,
taken as a whole.
(c)
Title to Intellectual Property
. The Company or any of its Subsidiaries is the sole and exclusive owner of
each item of Company Intellectual Property, free and clear of any Liens (other than Permitted Liens). Neither the Company nor any of its Subsidiaries has transferred to any third Person ownership of any material Company Intellectual Property that is
or, as of the time of such transfer, was material to the Company or any Subsidiary of the Company.
(d)
Effects of Transaction
.
Neither this Agreement nor the consummation of the Merger, will cause: (i) the Company or any of its Subsidiaries to grant to any third Person any right to or with respect to any material Company Intellectual Property, (ii) the Company or
any of its Subsidiaries to be bound by, or subject to, any non-compete or other similar restriction on the operation or scope of their respective businesses (excluding any non-compete or other similar restriction that arises from any agreement to
which Parent or its Affiliates is a party but none of the Company or its Subsidiaries are parties), (iii) the Company or any of its Subsidiaries to be obligated to pay any royalties or other fees or consideration with respect to Intellectual
Property Rights of any third Person in excess of those payable by the Company or any of its Subsidiaries in the absence of this Agreement or the Merger, or (iv) the forfeiture or termination of, or give rise to a right of forfeiture or termination
of, any material Company Intellectual Property, or material Intellectual Property of a third Person, in each case, that would be material to the Company and its Subsidiaries, taken as a whole.
(e)
Claims Against Third Parties
. Since January 1, 2014, neither the Company nor any of its Subsidiaries has brought any claims, suits,
arbitrations or other adversarial proceedings before any court, Governmental Authority, or arbitral tribunal against any Person with respect to any Company Intellectual Property that remain outstanding as of the date hereof or have been resolved
since the Most Recent Balance Sheet Date. Since January 1, 2014, to the Knowledge of the Company, no third Person has infringed or misappropriated any Company Intellectual Property other than as would not reasonably be expected to be material to the
Company and its Subsidiaries, taken as a whole.
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(f)
Proprietary Information Agreements
. The Company and its Subsidiaries have and enforce
a policy requiring each employee, consultant, and contractor who has been involved in the creation, invention or development of material Intellectual Property for or on behalf of the Company or any of its Subsidiaries to execute a valid and
enforceable written assignment of rights to the Company or one of its Subsidiaries. Without limiting the generality of the foregoing, all material Company Intellectual Property produced, created, invented or developed by the Companys current
and former employees, consultants and contractors, during the period of their employment or within the scope of their contracting or consulting relationship, as the case may be, with the Company or its Subsidiaries has been fully assigned and
transferred solely to the Company or its Subsidiaries.
(g)
Confidentiality Protection
. Except as would not reasonably be expected
to be material to the Company and its Subsidiaries, taken as a whole, each of the Company and its Subsidiaries has taken reasonable steps to protect the confidentiality of its material confidential information and material Trade Secrets that it
intends to maintain confidential (except for the disclosure, in the ordinary course of business, of information formerly held as trade secrets), and the confidential information provided to the Company or its Subsidiaries by a third Person that the
Company and its Subsidiaries have a contractual obligation to maintain confidential.
(h)
Government Funding
. No funding,
facilities or resources of any Governmental Authority or university, college or other educational institution or research center were used in the development of the Company Intellectual Property. Neither the Company nor any of its Subsidiaries is a
member or promoter of, or a contributor to, any industry standards body or similar organization that compels the Company or such Subsidiary to grant or offer to any third Person any license or right to material Company Intellectual Property. To the
Knowledge of the Company, no current or former employee, consultant or contractor of the Company or any of its Subsidiaries who created or developed any material Company Intellectual Property was performing services for any Governmental Authority,
or for a university, college or other educational institution or research center, during the period of time during which such employee, consultant or independent contractor was creating or developing such material Company Intellectual Property for
the Company or any of its Subsidiaries.
(i)
Open Source Technology
. The Company and its Subsidiaries have not incorporated into or
distributed with any Company Product or Company-Owned Technology any software or other Technology that is available under the GNU Affero General Public License (AGPL), GNU General Public License (GPL), GNU Lesser General Public License (LGPL),
Mozilla Public License (MPL), Apache License, BSD licenses, or any license that is approved by the Open Source Initiative (www.opensource.org/licenses) (collectively,
Open Source Technology
) in a manner that, with respect to
Company-Owned Technology that is, and the confidentiality of which is, material to the business of the Company and its Subsidiaries (
Company Proprietary Technology
), would (i) require disclosure or distribution of such
Company Proprietary Technology in source code form, (ii) require the licensing of such Company Proprietary Technology or associated Company-Owned Intellectual Property Rights for the purpose of making derivative works thereof or
(iii) impose any material restriction on the consideration to be charged for the distribution of such Company Proprietary Technology or Company-Owned Intellectual Property Rights. The Company and each of its Subsidiaries are in compliance in
all material respects with the applicable licenses for any such Open Source Technology, other than as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
(j)
IP Contracts
. Section 3.16(j) of the Company Disclosure Letter sets forth a complete and accurate list of material Contracts
in effect as of the date of this Agreement (i) pursuant to which the Company or any of its Subsidiaries has granted a license to a third Person under (A) any Patent or (B) any other material Company Intellectual Property, other than any
non-disclosure agreements, non-exclusive licenses granted by the Company in the ordinary course of business or in connection with the provision or sale of any Company Product, and other licenses entered in the ordinary course of business, in each
case that do not grant any rights with respect to material source code included in the Company-Owned Technology; or (ii) pursuant to which a third Person has licensed any Intellectual Property to the Company or any of its Subsidiaries that is
material to the operation of the business of the Company or its Subsidiaries taken as a whole, excluding any (A) non-disclosure agreements; (B) non-exclusive licenses or related services Contracts for commercially available Technology; (C) any
licenses
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to software and materials licensed as open-source, public-source or freeware; and (D) Contracts with employees or independent contractors for the assignment of, or license to, any Intellectual
Property, in each case entered into in the ordinary course of business (all such Contracts that are, or are required to be, listed under clauses (i) and (ii) of this Section 3.16(j), the
IP Contracts
).
(k)
Source Code Escrow
. Neither the Company or any of its Subsidiaries, nor any other Person acting on its or their behalf, has
disclosed, delivered or licensed to any third Person, or permitted the disclosure or delivery to any escrow agent of, any material source code for any Company Product or other material Company-Owned Technology, except for disclosures to employees,
contractors or consultants under binding written agreements that prohibit use or disclosure except in the performances of services for the Company or any Subsidiary. Except as would not reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole, the consummation of the Merger will not under any IP Contract result in the release from escrow of any material source code included in the Companys products or services or material Company-Owned
Technology.
(l)
No Infringement
. To the Knowledge of the Company, the conduct of the business of the Company and its Subsidiaries
does not infringe or misappropriate, and has not infringed or misappropriated, the Intellectual Property Rights of any third Person in a manner that has or would reasonably be expected to result in a material liability to the Company and its
Subsidiaries, taken as a whole.
(m)
No Notice of Infringement
. Since January 1, 2014, neither the Company nor any of its
Subsidiaries has received written notice from any third Person alleging that the conduct of the business of the Company or its Subsidiaries infringe or misappropriate the Intellectual Property of any third Person that has or could reasonably be
expected to result in a material liability to the Company and its Subsidiaries, taken as a whole.
(n)
Privacy and Data Security
.
The Company is currently in compliance with the injunctive provisions and obligations imposed on it by the February 23, 2010 order and the December 22, 2015 order entered by the United States District Court for the District of Arizona in the matter
of Federal Trade Commission v. LifeLock, Inc., as amended by the Courts January 4, 2016 order (together, the
FTC Order
), and has not since January 4, 2016 been informed by the FTC that it is not in compliance with the FTC
Order or received any correspondence from the FTC relating to any such noncompliance. Except as would not reasonably be expected to result in a material liability to the Company and its Subsidiaries, taken as a whole, the Company and each of its
Subsidiaries (i) has adopted and published from time to time privacy policies describing its collection, use and transfer of personal information about users of its products and services (each, a
Company Privacy Policy
); (ii) is
in compliance in all material respects with (A) each applicable Company Privacy Policy and (B) all applicable Laws and regulations pertaining to privacy and personally identifiable information of the users of its products and services (
Data
and Privacy Laws
); (iii) maintains a documented information security program designed to protect the security, confidentiality, and integrity of personal information collected from or about consumers; and (iv) takes commercially reasonable
steps to protect such personally identifiable information maintained on its systems from unauthorized third-party access and acquisition. Except as would not be reasonably expected to result in a material liability to the Company and its
Subsidiaries, taken as a whole, to the Knowledge of the Company as of the date of this Agreement, the Company and each of its Subsidiaries has not at any time since January 1, 2015, suffered any security breach of any of its systems resulting in any
third-party access to, or acquisition of any personally identifiable information of the users of its products and services stored on such systems. Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken
as a whole, the Merger will not result in the Company or any of its Subsidiaries being in breach of any Data and Privacy Laws.
Section 3.17.
Customers; Suppliers; Resellers
.
(a)
Large Customers
. Section 3.17(a) of the Company Disclosure Letter identifies the 20 largest customers of the Company by
revenue for the 9 months ended on the date of the Most Recent Company Balance
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Sheet (the
Large Customers
). Neither the Company nor any of its Subsidiaries has received written notice from any Large Customer indicating that any such Large Customer intends
to terminate or materially diminish its purchases from the Company and its Subsidiaries. As of the date hereof, there are no material disputes pending or threatened in writing under or relating to any Contract with any Large Customer.
(b)
Large Suppliers
. Section 3.17(b) of the Company Disclosure Letter identifies the 20 largest suppliers (including suppliers of
data) of the Company and its Subsidiaries by aggregate purchases for the 9 months ended on the date of the Most Recent Company Balance Sheet receiving fees in excess of $500,000 in the aggregate (the
Large Suppliers
). Neither the
Company nor any of its Subsidiaries has received written notice from any Large Supplier indicating that any such Large Supplier intends to terminate or materially diminish its business relationship with the Company and its Subsidiaries. As of the
date hereof, there are no material disputes pending or threatened in writing under or relating to any Contract with any Large Suppliers.
(c)
Large Resellers
. Section 3.17(c) of the Company Disclosure Letter identifies the 15 largest marketers, distributors or
resellers of Company Products for the 6 months ended on June 30, 2016 (the
Large Resellers
). Neither the Company nor any of its Subsidiaries has received written notice from any Large Reseller indicating that any such Large
Reseller intends to terminate or materially diminish its business relationship with the Company and its Subsidiaries. As of the date hereof, there are no material disputes pending or threatened in writing under or relating to any Contract with any
Large Reseller.
(d)
Conformance of Company Products
. To the Knowledge of the Company, the Company Products conform in all material
respects with the applicable contractual warranty commitments made by the Company or its Subsidiaries with respect thereto, other than as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. Without
limiting the generality of the foregoing, except as has not been or as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, there have been no failures, outages or unavailability of the hardware,
software, networks, interfaces, web sites or related systems used in the delivery or operation of the Company Products in the conduct of business in the last 12 months.
Section 3.18.
Tax Matters
.
(a)
Tax Returns, Payments and Reserves
. Except as would not be material, the Company and each of its Subsidiaries have (i) timely
filed (taking into account valid extensions) all material Tax Returns required to be filed by any of them; and (ii) paid, or have reserved in accordance with GAAP for the payment of, all material Taxes that are required to be paid. All material
Tax Returns filed by the Company and each of its Subsidiaries before the Closing are, or will be, accurate and complete in all material respects. The most recent financial statements contained in the Company SEC Reports reflect a reserve in
accordance with GAAP for all material Taxes accrued but not then payable by the Company and its Subsidiaries through the date of such financial statements. There are no Liens for material Taxes, other than Permitted Liens, on any assets of the
Company or its Subsidiaries.
(b)
No Waivers
. Neither the Company nor any of its Subsidiaries has executed any waiver, except in
connection with any ongoing Tax examination described in Section 3.18 of the Company Disclosure Letter, of any statute of limitations on, or extended the period for the assessment or collection of, any material Tax, in each case that has not
since expired.
(c)
Withholding Taxes
. Except as would not be material, the Company and each of its Subsidiaries has withheld with
respect to their employees, contractors and other third Persons all amounts of Taxes required to be withheld under applicable Law, including United States federal and state income taxes, Federal Insurance Contribution Act, Federal Unemployment Tax
Act and other similar U.S. or foreign Taxes required to be withheld, and has timely paid over any amounts so withheld to the appropriate Governmental Authority.
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(d)
No Audits
. Section 3.18(d) of the Company Disclosure Letter sets forth all audits
or other examinations with respect to Taxes of the Company or any of its Subsidiaries during the past three years, and no deficiency in any material tax has been asserted or proposed in writing that has not been resolved and paid in full. No written
claim has ever been made by a Governmental Authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the Company or such Subsidiary, as the case may be, is or may be subject to Tax in that jurisdiction.
(e)
Spin-offs
. Neither the Company nor any of its Subsidiaries has constituted either a distributing corporation or a
controlled corporation in a distribution of stock intended to qualify for tax-free treatment pursuant to Section 355 of the Code.
(f)
No Listed Transactions
. Neither the Company nor any of its Subsidiaries is or has been party to any reportable
transaction or listed transaction as defined in Section 6707A(c)(1) of the Code and Treasury Regulation § 1.6011-4(b)(2).
(g)
Tax Agreements
. Neither the Company nor any of its Subsidiaries (i) is a party to or bound by, or currently has any material
liability pursuant to, any Tax sharing, allocation or indemnification agreement or obligation, other than any such agreement or obligation (A) entered into in the ordinary course of business the primary purpose of which is unrelated to Taxes or (B)
solely by and among any of the Company and its Subsidiaries; or (ii) has any material liability for the Taxes of any Person other than the Company and its Subsidiaries pursuant to Treasury Regulation § 1.1502-6 (or any similar
provision of state, local or non-United States law) as a transferee or successor, or otherwise by operation of law.
(h)
Other
Matters
. None of the Company or 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) ending after the
Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of
state, local or non-U.S. income Tax Law) executed prior to the Closing; (iii) deferred intercompany gain or excess loss account described in Treasury Regulations under section 1502 of the Code (or any corresponding or similar provision or
administrative rule of federal, state, local or foreign law) arising from a transaction consummated prior to the Closing; (iv) installment sale or open transaction disposition made prior to the Closing; and (v) prepaid amount received outside the
ordinary course of business prior to the Closing.
Section 3.19.
Employee Plans
.
(a)
Company Benefit Plans
. Section 3.19(a) of the Company Disclosure Letter sets forth a true, correct and complete list, as of
the date of this Agreement, of each material Company Benefit Plan. With respect to each material Company Benefit Plan, to the extent applicable, the Company has made available to Parent true, correct and complete copies of (i) the most recent
annual report on Form 5500 required to have been filed with the IRS for each Company Benefit Plan, including all schedules thereto; (ii) the most recent determination letter, if any, from the IRS for any Company Benefit Plan that is intended to
qualify pursuant to Section 401(a) of the Code; (iii) the plan documents, summary plan descriptions and any summary of material modifications or amendments; (iv) any related trust agreements, insurance contract or other document
related to funding or payment of benefits under such Company Benefit Plan; and (v) any notices to or from the IRS or any office or representative of the United States Department of Labor or any Governmental Authority relating to any material
compliance issues in respect of any such Company Benefit Plan. In addition, with respect to each Company Benefit Plan that is maintained primarily for the benefit of any current or former employee or director of the Company or its Subsidiaries based
outside of the United States (the
International Employee Plans
), to the extent applicable, the Company has made available to Parent true, correct and complete copies of (1) the most recent annual report or similar compliance
documents required to be filed with any Governmental Authority with respect to such plan; and (2) any document comparable to the determination letter referenced pursuant to clause (B) above issued by a Governmental Authority relating to
the satisfaction of law necessary to obtain the most favorable tax treatment.
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(b)
Absence of Certain Plans
. Neither the Company nor any of its ERISA Affiliates has
previously maintained, sponsored or contributed to or currently maintains, sponsors or participates in, or contributes to, (i) a multiemployer plan (as defined in Section 3(37) of ERISA); (ii) a multiple employer
plan (as defined in Section 4063 or Section 4064 of ERISA); or (iii) a defined benefit pension plan or plan subject to Section 302 of Title I of ERISA, Section 412 of the Code or Title IV of ERISA. No
liability under Title IV or Section 302 of ERISA has been incurred by the Company or any of its Subsidiaries that has not been satisfied in full, and no condition exists that could reasonably be expected to present a material risk to the Company and
of its Subsidiaries in the aggregate of incurring any such material liability.
(c)
Compliance
. Each Company Benefit Plan has been
maintained, funded, operated and administered in material accordance with its terms and with all applicable Law, including the applicable provisions of ERISA, the Code and any applicable regulatory guidance issued by any Governmental Authority. Each
Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter or prototype opinion letter from the IRS that the Company Benefit Plan is so qualified, or an application for such a
letter is currently being processed by the IRS, and, to the Knowledge of the Company, no circumstance exists that would reasonably be expected to adversely affect the qualified status of such Company Benefit Plan.
(d)
Company Benefit Plan Legal Proceedings
. As of the date of this Agreement, there are no material Legal Proceedings pending or, to
the Knowledge of the Company, threatened on behalf of or against any Company Benefit Plan, the assets of any trust pursuant to any Company Benefit Plan, or the plan sponsor, plan administrator or any fiduciary or any Company Benefit Plan with
respect to the administration or operation of such plans, other than routine claims for benefits that have been or are being handled through an administrative claims procedure.
(e)
No Prohibited Transactions
. None of the Company, any of its Subsidiaries, or, to the Knowledge of the Company, any of their
respective directors, officers, employees or agents has, with respect to any Company Benefit Plan, engaged in or been a party to any non-exempt prohibited transaction (as defined in Section 4975 of the Code or Section 406 of
ERISA) that could reasonably be expected to result in the imposition of a material penalty assessed pursuant to Section 502(i) of ERISA or a material Tax imposed by Section 4975 of the Code, in each case applicable to the Company, any of
its Subsidiaries or any material Company Benefit Plan, or for which the Company or any of its Subsidiaries has any indemnification obligation.
(f)
No Welfare Benefit Plan
. No material Company Benefit Plan that is a welfare benefit plan (as defined in
Section 3(1) of ERISA) provides post-termination or retiree life insurance, health or other welfare benefits to any person, except as may be required by Section 4980B of the Code or any similar Law. No Company Benefit Plan provides, or has
any liability to provide, life insurance, medical or other employee welfare benefits to any Person upon or after his or her retirement or termination of employment for any reason, except as may be required Law.
(g)
Section 280G
. Neither the execution and delivery of this Agreement nor the consummation of the Merger (either alone or in
conjunction with any other event, such as termination of employment) will result in the payment of any amount pursuant to agreements or arrangements in existence as of the date of this Agreement that, individually or in combination with any other
such payment, would be characterized as a parachute payment within the meaning of Section 280G of the Code or not be deductible pursuant to Section 280G of the Code or result in an excise tax under 4999 of the Code. Neither the Company nor any
of its Subsidiaries has any obligation to gross up, indemnify or otherwise reimburse any individual for any taxes, interest or penalties incurred pursuant to Sections 409A, 280G or 4999 of the Code.
(h)
Section 409A
. Each nonqualified deferred compensation plan (within the meaning of Section 409A of the Code) to which
the Company or any Subsidiary is a party has been operated and maintained in all material respects in accordance with Section 409A of the Code and applicable guidance thereunder, including the
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final regulations promulgated with respect thereto. Each Company Option has an exercise price that equals or exceeds the fair market value of a share of Company Common Stock as of the date of
grant of such Company Option (and as of any later modification thereof within the meaning of Section 409A of the Code). With respect to each Company Option, each such grant was made in accordance with the terms of the applicable Company Stock Plan
and in all material respects with all Laws.
(i)
International Employee Plans
. Each International Employee Plan has been
established, maintained and administered in compliance in all material respects with its terms and conditions and with the requirements prescribed by any applicable Laws. Furthermore, no International Employee Plan has unfunded liabilities that as
of the Effective Time will not be offset by insurance or fully accrued. No condition exists that would prevent the Company or any of its Subsidiaries from terminating or amending any International Employee Plan at any time for any reason without
liability to the Company or its Subsidiaries (other than ordinary notice and administration requirements and expenses or routine claims for benefits).
(j)
Employee Terminations
. As of the date of this Agreement, neither the Company nor any of its Subsidiaries has received any
written notice that any employee at a level of vice president or above intends to terminate his or her employment with the Company or any of its Subsidiaries (either contingent or otherwise).
(k)
No New Company Benefit Plans
. Neither the Company nor any of its Subsidiaries has any plan or commitment to amend in any material
respect any Company Benefit Plan or establish any new employee benefit plan or to increase any benefits pursuant to any Company Benefit Plan.
Section 3.20.
Labor Matters
.
(a)
Union Activities
. Neither the Company nor any of its Subsidiaries is a party to, nor bound by, any collective bargaining agreement,
labor union contract or trade union agreement. To the Knowledge of the Company, there are no activities or proceedings of any labor or trade union to organize any employees of the Company or any of its Subsidiaries with regard to their employment
with the Company or any of its Subsidiaries. No collective bargaining agreement, labor union contract or trade union agreement is being negotiated by the Company or any of its Subsidiaries. There is no strike, lockout, slowdown, or work stoppage
against the Company or any of its Subsidiaries pending or, to the Knowledge of the Company, threatened directly against the Company or any of its Subsidiaries. There are no unfair labor practice claims or, to the Knowledge of the Company, complaints
or union or works council representation questions, involving any current or former employee of the Company or any of its Subsidiaries that are existing or pending against the Company or any of its Subsidiaries, except as would not be material. All
contractors, former individual contractors, leased employees, and individuals contracted through employment agencies who have provided services to the Company or any of its Subsidiaries have been correctly classified as independent contractors or
other non-employees of the Company, as applicable, and would not reasonably be expected to be reclassified by any Governmental Authority as employees of the Company or any of its Subsidiaries.
(b)
Wage and Hour Compliance
. The Company and its Subsidiaries have complied in all material respects with applicable Laws and orders
with respect to employment (including applicable Laws, rules and regulations regarding wage and hour requirements, immigration status, discrimination in employment, employee health and safety, and collective bargaining).
Section 3.21.
Permits
. Except as would not have a Company Material Adverse Effect, as of the date of this Agreement, the Company
and its Subsidiaries hold, to the extent legally required, all Permits that are required for the operation of the business of the Company and its Subsidiaries as currently conducted. As of the date of this Agreement, the Company and its Subsidiaries
are in compliance in all material respects with the terms of all Permits, and no suspension or cancellation of any of the Permits is pending or, to the Knowledge of the Company, threatened.
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Section 3.22.
Compliance with Laws
.
(a)
Generally
. Except as would not have a Company Material Adverse Effect, the Company and each of its Subsidiaries is in compliance
with, has not violated and, since January 1, 2014 to the date hereof, has not received any written notices of non-compliance or violation or alleged non-compliance or violation with respect to, all Laws that are applicable to the Company and its
Subsidiaries or to the conduct of the business or operations of the Company and its Subsidiaries. No representation or warranty is made in this Section 3.22(a) with respect to (a) compliance with Laws pertaining to privacy and personally
identifiable information, which is exclusively addressed by Section 3.16(n); (b) compliance with applicable Tax laws, which is exclusively addressed by Section 3.18; (c) compliance with ERISA and other applicable Laws relating to
employee benefits, which is exclusively addressed by Section 3.19; (d) compliance with labor law matters, which is exclusively addressed by Section 3.20; or (e) compliance with Laws pertaining to anti-corruption or sanctions, which is
exclusively addressed in Section 3.22(b) and Section 3.22(c), respectively.
(b)
Anti-Corruption
. Neither the Company,
any of its Subsidiaries nor any of their respective directors, officers, employees, nor, to the Knowledge of the Company, any predecessors, joint venture partners, consultants, agents, representatives or any other Person acting on their behalf, has,
directly or indirectly, (i) made, promised, offered, or authorized (A) any unlawful payment or the unlawful transfer of anything of value, directly or indirectly, to any government official, employee or agent, political party or any official of
such party, or political candidate or (B) any unlawful bribe, rebate, influence payment, kickback or similar unlawful payment; or (ii) violated the Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations thereunder or any
similar anti-corruption or anti-bribery Laws applicable to the Company or any of its Subsidiaries in any jurisdiction outside the United States.
(c)
Export Controls
. Each of the Company and its Subsidiaries and, to the Knowledge of the Company, their employees, agents,
representatives, consultants, distributors, resellers and subcontractors in their transactions conducted on behalf of the Company or any of its Subsidiaries, has complied with all applicable Laws relating to export and reexport control, including,
as applicable, the Export Administration Regulations maintained by the U.S. Department of Commerce, trade and economic sanctions maintained by the U.S. Department of the Treasury, Office of Foreign Assets Control (
OFAC
), and the
International Traffic in Arms Regulations maintained by the U.S. Department of State (the
State Department
), and any other applicable Sanctions. The Company represents that neither it or its Subsidiaries nor, to the Knowledge of
the Company, their employees, agents, representatives, consultants, distributors, resellers and subcontractors in their transactions conducted on behalf of the Company or any of its Subsidiaries has, directly or indirectly, sold, exported,
reexported, transferred, diverted, or otherwise disposed of any products, software, or technology (including products derived from or based on such technology) to any destination, entity, or person prohibited by applicable Laws of the United States,
without obtaining any authorization from the competent Government Authorities that is required by applicable Law. Neither the Company, nor any of its Subsidiaries, nor any employees of the Company or any of its Subsidiaries, nor to the Knowledge of
the Company, any agents or resellers acting on behalf of the Company or any of its Subsidiaries is designated as a Sanctioned Person.
Section 3.23.
Legal Proceedings; Orders
.
(a)
No Legal Proceedings
. There are no material Legal Proceedings pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries or, as of the date of this Agreement, against any present or former officer or director of the Company or any of its Subsidiaries in such individuals capacity as such.
(b)
No Orders
. Neither the Company nor any of its Subsidiaries is subject to any order of any kind or nature that materially impairs
the Companys or any of its Subsidiaries conduct of business or would prevent or materially delay the consummation of the Merger or the ability of the Company to fully perform its covenants and obligations pursuant to this Agreement.
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Section 3.24.
Insurance
.
(a)
Policies and Programs
. Except as would not be material to the Company, each of the Companys insurance policies and all
self-insurance programs and arrangements relating to the business, assets and operations of the Company and its Subsidiaries is in full force and effect. Within 15 Business Days of the Closing, the Company shall provide Parent a list of all
current insurance policies.
(b)
No Cancellation
. As of the date of this Agreement, except as would not have a Company Material
Adverse Effect, since January 1, 2014, neither the Company nor any of its Subsidiaries have received any written notice regarding any cancellation or invalidation of, or premium increase with respect to, any such insurance policy other than in
connection with ordinary renewals.
Section 3.25.
Related Person Transactions
. Except for compensation or other employment
arrangements in the ordinary course of business, there are no Contracts, transactions, arrangements or understandings between the Company or any of its Subsidiaries, on the one hand, and any Affiliate (including any director or officer, or any
ancestor, sibling, descendant or spouse of any of such Persons, or any trust, partnership or corporation in which any of such Persons has or has had an economic interest) thereof, but not including any wholly owned Subsidiary of the Company, on the
other hand, that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC in the Companys Form 10-K or proxy statement pertaining to an annual meeting of stockholders.
Section 3.26.
Brokers
. Except for the Company Financial Advisor, there is no financial advisor, investment banker, broker, finder,
agent, consultant or other Person that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries who is entitled to any financial advisor, investment banking, brokerage, finders or other fee or commission
in connection with the Merger.
Section 3.27.
Exclusivity of Representations and Warranties
.
(a)
No Other Representations and Warranties
.
The Company, on behalf of itself and its Subsidiaries, acknowledges and agrees
that, except for the representations and warranties expressly set forth in Article IV:
(i) None of Parent, Merger Sub or any of
their respective Subsidiaries (or any other Person) makes, or has made, any representation or warranty relating to Parent or Merger Sub, their Subsidiaries or any of their businesses, operations or otherwise in connection with this Agreement or the
Merger;
(ii) no Person has been authorized by Parent or Merger Sub, any of their Subsidiaries or any of their respective Affiliates or
Representatives to make any representation or warranty relating to Parent or Merger Sub, their respective Subsidiaries or any of their businesses or operations or otherwise in connection with this Agreement or the Merger, and if made, such
representation or warranty must not be relied upon by the Company or any of its Affiliates or Representatives as having been authorized by Parent or Merger Sub, any of their respective Subsidiaries or any of their Affiliates or Representatives (or
any other Person); and
(iii) the representations and warranties made by Parent or Merger Sub in this Agreement are in lieu of and are
exclusive of all other representations and warranties, including any express or implied or as to merchantability or fitness for a particular purpose, and each of Parent and Merger Sub hereby disclaims any other or implied representations or
warranties, notwithstanding the delivery or disclosure to the Company or any of its Affiliates or Representatives of any documentation or other information (including any financial information, supplemental data or financial projections or other
forward-looking statements).
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(b)
No Reliance
. The Company, on behalf of itself and its Subsidiaries, acknowledges and
agrees that, except for the representations and warranties expressly set forth in Article IV, it is not acting (including, as applicable, by entering into this Agreement or consummating the Merger) in reliance on:
(i) any representation or warranty, express or implied;
(ii) any estimate, projection, prediction, data, financial information, memorandum, presentation or other materials or information provided
or addressed to the Company or any of its Affiliates or Representatives, in connection with presentations by or discussions with Parents management whether prior to or after the date of this Agreement or in any other forum or setting; or the
accuracy or completeness of any other representation, warranty, estimate, projection, prediction, data, financial information, memorandum, presentation or other materials or information.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company as follows:
Section 4.1.
Organization; Good Standing
.
(a)
Parent
. Parent (i) is a corporation duly organized, validly existing and in good standing pursuant to the DGCL; and
(ii) has the requisite power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties and assets.
(b)
Merger Sub
. Merger Sub (i) is a corporation duly organized, validly existing and in good standing pursuant to the DGCL; and
(ii) has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties and assets. Merger Sub has been formed solely for the purpose of engaging in the Merger
and, prior to the Effective Time, Merger Sub will not have engaged in any other business activities and will have incurred no material liabilities or obligations other than as contemplated by this Agreement. Parent is the sole record and beneficial
stockholder of Merger Sub.
(c)
Organizational Documents
. Parent has made available to the Company true, correct and complete
copies of the certificate of incorporation and bylaws of Parent and Merger Sub, each as amended to date. Neither Parent nor Merger Sub is in violation of its certificate of incorporation or bylaws.
Section 4.2.
Power; Enforceability
. Each of Parent and Merger Sub has the requisite power and authority to (a) execute and
deliver this Agreement; (b) perform its covenants and obligations hereunder; and (c) consummate the Merger. The execution and delivery of this Agreement by each of Parent and Merger Sub, the performance by each of Parent and Merger Sub of
its respective covenants and obligations hereunder and the consummation of the Merger have been duly authorized by all necessary action on the part of each of Parent and Merger Sub and no additional actions on the part of Parent or Merger Sub are
necessary to authorize (i) the execution and delivery of this Agreement by each of Parent and Merger Sub; (ii) the performance by each of Parent and Merger Sub of its respective covenants and obligations hereunder; or (iii) the
consummation of the Merger. This Agreement has been duly executed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of
Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, except as such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws
affecting or relating to creditors rights generally; and (B) is subject to general principles of equity.
Section 4.3.
Non-Contravention
. The execution and delivery of this Agreement by each of Parent and Merger Sub, the performance by each of Parent and Merger Sub of their respective covenants and obligations
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hereunder, and the consummation of the Merger do not (a) violate or conflict with any provision of the certificate of incorporation or bylaws of Parent or Merger Sub; (b) violate,
conflict with, result in the breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) pursuant to, or result in the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration pursuant to any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent or Merger Sub is a party or by
which Parent, Merger Sub or any of their properties or assets may be bound; (c) assuming the consents, approvals and authorizations referred to in Section 4.4 have been obtained, violate or conflict with any Law applicable to Parent or
Merger Sub or by which any of their properties or assets are bound; or (d) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of Parent or Merger Sub, except in the case of each of clauses (b),
(c) and (d) for such violations, conflicts, breaches, defaults, terminations, accelerations or Liens that would not, individually or in the aggregate, have a Parent Material Adverse Effect.
Section 4.4.
Requisite Governmental Approvals
. No Consent of any Governmental Authority is required on the part of Parent, Merger
Sub or any of their Affiliates in connection with the (a) execution and delivery of this Agreement by each of Parent and Merger Sub; (b) performance by each of Parent and Merger Sub of their respective covenants and obligations pursuant to this
Agreement; or (c) consummation of the Merger, except (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and such filings with Governmental Authorities to satisfy the applicable Laws of states
in which the Company and its Subsidiaries are qualified to do business; (ii) such filings and approvals as may be required by any federal or state securities Laws, including compliance with any applicable requirements of the Exchange Act; (iii)
compliance with any applicable requirements of NASDAQ; (iv) compliance with any applicable requirements of the HSR Act and any applicable foreign Antitrust Law; and (v) such other Consents the failure of which to obtain would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
Section 4.5.
Legal Proceedings; Orders
.
(a)
No Legal Proceedings
. There are no Legal Proceedings pending or, to the Knowledge of Parent, threatened against Parent or Merger
Sub that would, individually or in the aggregate, have a Parent Material Adverse Effect.
(b)
No Orders
. Neither Parent nor Merger
Sub is subject to any order of any kind or nature that would have a Parent Material Adverse Effect.
Section 4.6.
Ownership of
Company Capital Stock
. None of Parent, Merger Sub or any of their respective directors, officers or Affiliates (a) has owned any shares of Company Capital Stock; or (b) has been an interested stockholder (as defined in
Section 203 of the DGCL) of the Company, in each case during the two years prior to the date of this Agreement.
Section 4.7.
Brokers
. Except for financial advisors and investment bankers whose fees and expenses shall be borne solely by Parent, there is no financial advisor, investment banker, broker, finder, agent or other Person that has been retained by or is
authorized to act on behalf of Parent, Merger Sub or any of their Affiliates who is entitled to any financial advisor, investment banking, brokerage, finders or other fee or commission in connection with the Merger.
Section 4.8.
No Parent Vote or Approval Required
. No vote or consent of the holders of any capital stock of, or other equity or
voting interest in, Parent is necessary to approve this Agreement or the Merger.
Section 4.9.
Financing
.
(a)
Financing Letters
. As of the date of this Agreement, Parent has delivered to the Company true, correct and complete copies
of executed commitment letters, dated as of the date of this Agreement, among Parent, Merger Sub and the lenders party thereto (together, as they may be amended, modified or replaced in
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accordance with Section 6.5(d) and together with all annexes, exhibits, schedules and other attachments thereto, the
Financing
Letters
) pursuant to which the
lenders party thereto have committed, subject to the terms and conditions thereof, to lend the amounts set forth therein for the purpose of funding the transactions contemplated by this Agreement. Parent has also delivered to the Company a true,
correct and complete copy of any fee letter (redacted in a customary manner only with respect to certain fees, flex terms and similar arrangements, so long as no redaction covers terms that would adversely affect the aggregate amount of net
proceeds, conditionality, availability or termination of the Financing) in connection with the Financing Letters (any such letter, a
Fee Letter
).
(b)
No Amendments
. As of the date of this Agreement, (i) the Financing Letters and the terms of the Financing have not been
amended or modified prior to the date of this Agreement; (ii) no such amendment or modification is contemplated (except (x) in connection with any amendments or modifications to effectuate any flex provisions contained in any Fee Letter as of
the date hereof and (y) to add additional lenders and arrangers in respect of the Financing in accordance with the terms of the Financing Letters as of the date hereof that would not reasonably be expected to delay or prevent the Closing or
Parents ability to consummate the Financing); and (iii) the respective commitments contained therein have not been withdrawn, terminated, repudiated, rescinded, amended, supplemented or modified in any respect (except in connection with
any amendments, supplements or modifications to add additional lenders and arrangers in respect of the Financing in accordance with the terms of the Financing Letters as of the date hereof that would not reasonably be expected to delay or prevent
the Closing or Parents ability to consummate the Financing). As of the date of this Agreement, there are no other Contracts, agreements, side letters or arrangements (except for customary fee credit letters and engagement letters that do not
impact the conditionality, amount or availability of the Financing) to which Parent or Merger Sub is a party relating to the funding of the full amount of the Financing, other than as expressly set forth in the Financing Letters and any Fee Letters.
(c)
Sufficiency of Funds
. Assuming the satisfaction of the conditions set forth in Section 7.1 and Section 7.2, the net
proceeds of the Financing, taken together with funds (including funds on hand) otherwise available to Parent, is sufficient to (i) make all cash payments contemplated by this Agreement in connection with the Merger (including the payment of all
amounts payable pursuant to Article II in connection with or as a result of the Merger); (ii) repay, prepay or discharge (after giving effect to the Merger) the principal of and interest on, and all other indebtedness, including, without
limitation, any fees, outstanding pursuant to the Credit Agreement, if any, and (iii) pay all fees and expenses required to be paid at the Closing by the Company, Parent or Merger Sub in connection with the Merger and the Financing (the amount
sufficient to make such payments, the
Required Amount
).
(d)
Validity
. As of the date of this Agreement, the
Financing Letters (in the forms delivered by Parent to the Company) are in full force and effect and constitute the legal, valid and binding obligations of Parent, Merger Sub and, to the Knowledge of Parent, the other parties thereto enforceable
against Parent, Merger Sub and, to the Knowledge of Parent, the other parties thereto, as applicable, in accordance with their terms, except, in each case, as enforcement may be limited by bankruptcy, insolvency, reorganization or similar Laws
affecting creditors rights generally and by general principles of equity. Other than as expressly set forth in the Financing Letters and any Fee Letter, there are no conditions precedent or other contingencies related to the funding of the
full proceeds of the Financing pursuant to any agreement relating to the Financing to which Parent, Merger Sub or any of their respective Affiliates is a party. As of the date of this Agreement, , neither Parent nor, to the Knowledge of Parent, any
counterparty to the Financing Letters has committed any breach of any of its covenants or other obligations set forth in, or is in default under, any provision of the Financing Letters. As of the date of this Agreement, to the Knowledge of Parent,
no event has occurred or circumstance exists that (with or without notice or lapse of time, or both) would, or would reasonably be expected to, (i) constitute or result in a breach or default on the part of any Person under any provision of the
Financing Letters; (ii) constitute or result in a failure to satisfy any of the conditions set forth in any of the Financing Letters; or (iii) otherwise result in any portion of the Financing not being available. As of the date of this Agreement,
Parent has no reason to believe that (A) it will be unable to satisfy on a timely basis any condition of the Financing to be satisfied by it, whether
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or not such condition is contained in the Financing Letters; or (B) the full amounts committed pursuant to the Financing Letters will not be available as of the Closing if the conditions
contained in the Financing Letters to be satisfied by it are satisfied. As of the date of this Agreement, Parent and Merger Sub have fully paid, or caused to be fully paid, all commitment or other fees that are due and payable on or prior to the
date of this Agreement pursuant to the terms of the Financing Letters.
(e)
No Exclusive Arrangements
. As of the date of this
Agreement, none of the Parent, Merger Sub or any of their respective Affiliates has entered into any Contract, arrangement or understanding prohibiting or seeking to prohibit any bank, investment bank or other potential provider of debt
financing from providing or seeking to provide debt financing in connection with a transaction relating to the Company or any of its Subsidiaries in connection with the Merger.
Section 4.10.
Exclusivity of Representations and Warranties
.
(a)
No Other Representations and Warranties
. Each of Parent and Merger Sub, on behalf of itself and its Subsidiaries, acknowledges and
agrees that, except for the representations and warranties expressly set forth in Article III:
(i) neither the Company nor any of
its Subsidiaries (or any other Person) makes, or has made, any representation or warranty relating to the Company, its Subsidiaries or any of their businesses, operations or otherwise in connection with this Agreement or the Merger;
(ii) no Person has been authorized by the Company, any of its Subsidiaries or any of its or their respective Affiliates or Representatives to
make any representation or warranty relating to the Company, its Subsidiaries or any of their businesses or operations or otherwise in connection with this Agreement, or the Merger, and if made, such representation or warranty must not be relied
upon by Parent, Merger Sub or any of their respective Affiliates or Representatives as having been authorized by the Company, any of its Subsidiaries or any of its or their respective Affiliates or Representatives (or any other Person); and
(iii) the representations and warranties made by the Company in this Agreement are in lieu of and are exclusive of all other representations
and warranties, including any express or implied or as to merchantability or fitness for a particular purpose, and the Company hereby disclaims any other or implied representations or warranties, notwithstanding the delivery or disclosure to Parent,
Merger Sub or any of their respective Affiliates or Representatives of any documentation or other information (including any financial information, supplemental data or financial projections or other forward-looking statements).
(b)
No Reliance
. Each of Parent and Merger Sub, on behalf of itself and its Subsidiaries, acknowledges and agrees that, except for the
representations and warranties expressly set forth in Article III, it is not acting (including, as applicable, by entering into this Agreement or consummating the Merger) in reliance on:
(i) any representation or warranty, express or implied;
(ii) any estimate, projection, prediction, data, financial information, memorandum, presentation or other materials or information provided
or addressed to Parent, Merger Sub or any of their respective Affiliates or Representatives, including (A) any materials or information made available in the virtual data room hosted by or on behalf of the Company in connection with the Merger; (B)
in connection with presentations by or discussion with the Companys management (whether prior to or after the date of this Agreement); or (C) in any other forum or setting; or
(iii) the accuracy or completeness of any other representation, warranty, estimate, projection, prediction, data, financial information,
memorandum, presentation or other materials or information.
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Section 4.11.
Absence of Stockholder and Management Arrangements
. As of the date of
this Agreement, none of Parent, Merger Sub or any of their respective Affiliates is a party to any Contract, or has authorized, made or entered into, or committed or agreed to enter into, any formal or informal arrangements or other understandings
(whether or not binding) with any stockholder, director, officer, employee or other Affiliate of the Company or any of its Subsidiaries (a) relating to (i) this Agreement or the Merger; or (ii) the Surviving Corporation or any of its Subsidiaries,
businesses or operations (including as to continuing employment) from and after the Effective Time; or (b) pursuant to which any (i) holder of Company Common Stock would be entitled to receive consideration of a different amount or nature than the
Per Share Price in respect of such holders shares of Company Common Stock; (ii) holder of Company Common Stock has agreed to approve this Agreement or vote against any Superior Proposal; or (iii) Person has agreed to provide, directly or
indirectly, an equity investment to Parent, Merger Sub or the Company to finance any portion of the Merger.
ARTICLE V
INTERIM OPERATIONS OF THE COMPANY
Section 5.1.
Affirmative Obligations
. Except (a) as expressly contemplated by this Agreement; (b) as set forth in
Section 5.1 or Section 5.2 of the Company Disclosure Letter; or (c) as approved in writing (including by email) by Parent (which approval will not be unreasonably withheld, conditioned or delayed), at all times during the period commencing
with the execution and delivery of this Agreement and continuing until the earlier to occur of the (1) termination of this Agreement pursuant to Article VIII and (2) Effective Time, the Company will, and will cause each of its Subsidiaries to,
(i) use its respective reasonable best efforts to maintain its existence in good standing pursuant to applicable Law; (ii) subject to the restrictions and exceptions set forth in Section 5.2 or elsewhere in this Agreement, conduct its
business and operations in the ordinary course of business; and (iii) use its reasonable best efforts to (A) preserve intact its material assets, properties, Contracts and business organizations; (B) keep available the services of its
current officers and key employees; and (C) preserve the current relationships with material customers, suppliers, distributors, lessors, licensors, licensees, creditors, contractors and other Persons with whom the Company or any of its
Subsidiaries has business relations, in each case solely to the extent that the Company has not, as of the date of this Agreement, already notified such third Person of its intent to terminate those relationships.
Section 5.2.
Forbearance Covenants
.
(a)
Restrictions on Activities
. Except (A) as set forth in Section 5.2 of the Company Disclosure Letter; (B) as approved
in writing (including by email) by Parent (which approval will not be unreasonably withheld, conditioned or delayed); or (C) as expressly contemplated by the terms of this Agreement, at all times during the period commencing with the execution
and delivery of this Agreement and continuing until the earlier to occur of the (1) termination of this Agreement pursuant to Article VIII and (2) Effective Time, the Company will not, and will not permit any of its Subsidiaries, to:
(i) amend the Charter, the Bylaws or any similar organizational document of the Company or its Subsidiaries;
(ii) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization;
(iii) issue, sell, or deliver, or agree or commit to issue, sell or deliver, any Company Securities (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), except (A) for the issuance, delivery or sale of shares of Company Common Stock pursuant to Company Stock-Based Awards or Company Options
outstanding as of the Capitalization Date or pursuant to the ESPP, in all cases in accordance with their terms; or (B) in connection with agreements in effect on the date of this Agreement; or (C) as contemplated by
Section 5.2(a)(ix);
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(iv) directly or indirectly acquire, repurchase or redeem any Company Securities or securities
of the Subsidiaries of the Company, except for (A) with respect to Company Securities pursuant to the terms and conditions of Company Stock-Based Awards or Company Options outstanding as of the date of this Agreement in accordance with their
terms; or (B) transactions between the Company and any of its direct or indirect Subsidiaries;
(v) acquire (A) (by merger,
consolidation or acquisition of stock or assets) any other Person or any equity interest therein or (B) other than in the ordinary course of business consistent with past practice, any assets;
(vi) acquire, or agree to acquire, fee ownership (or its jurisdictional equivalent) of any real property, or enter into any new lease or
sublease or other Contract for the use of any real property;
(vii) (A) adjust, split, subdivide, combine or reclassify any shares
of capital stock, or issue or authorize or propose the issuance of any other Company Securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity or voting interest; (B) declare, set aside or pay any
dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of
the shares of capital stock or other equity or voting interest, except for cash dividends made by any direct or indirect wholly owned Subsidiary of the Company to the Company or one of its other wholly owned Subsidiaries; (C) pledge or encumber
any shares of its capital stock or other equity or voting interest; or (D) modify the terms of any shares of its capital stock or other equity or voting interest;
(viii) (A) incur, assume, suffer or modify the terms of any Indebtedness or issue any debt securities, except (1) for trade
payables incurred in the ordinary course of business; and (2) for loans or advances to direct or indirect wholly owned Subsidiaries of the Company; (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, except with respect to obligations of wholly owned Subsidiaries of the Company; (C) make any loans, advances or capital contributions to, or investments in, any other Person,
except for (1) extensions of credit to customers in the ordinary course of business consistent with past practice; and (2) advances to directors, officers and other employees, in each case in the ordinary course of business; or
(D) mortgage, pledge or otherwise encumber any assets, tangible or intangible, or create or suffer to exist any Lien thereon (other than Permitted Liens);
(ix) except as may be required by any Company Benefit Plan, (A) enter into, adopt, amend (including accelerating the vesting of), modify
or terminate any material bonus, profit sharing, compensation, retention, severance, termination, option, restricted stock unit, appreciation right, performance unit, stock equivalent, share purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust, plan, fund or other arrangement for the compensation, benefit or welfare of any director, officer or employee in any manner; or (B) increase the compensation of any
director, officer or employee, pay any special bonus, retention or special remuneration to any director, officer or employee, except in the case of each of (A) and (B), (1) as may be required by applicable Law; (2) in connection with
any new employee hires permitted by Section 5.2(a)(xv); or (3) for increases in compensation for employees below the level of director to the extent that such increases are in the ordinary course of business and consistent with past
practices, including, as to the timing during the year of such increases, the Companys regular compensation review schedule;
(x)
settle, release, waive or compromise any pending or threatened Legal Proceeding, except for the settlement of any Legal Proceedings that is (A) reflected or reserved against in the Most Recent Company Balance Sheet (for amounts not in excess of
such reserve);
provided
, that such settlement, release, waiver or compromise does not require any actions or impose any restrictions on the business, operations or Intellectual Property of the Company or its Subsidiaries, or after the
Effective Time, Parent or its Subsidiaries, or include the admission of wrongdoing by the Company or its Subsidiaries; or (B) settled with Parents prior written consent in compliance with Section 6.15;
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(xi) except as required by applicable Law or GAAP, (A) other than in the ordinary course of
business, revalue in any material respect any of its properties or assets, including writing-off notes or accounts receivable; or (B) make any change in any of its accounting principles or practices;
(xii) (A) make or change any material Tax election; (B) settle, abandon, or compromise any material Tax claim, refund, or
assessment; (C) change any annual Tax accounting period or adopt or change any material method of Tax accounting; (D) consent to any extension or waiver of any limitation period with respect to any material Tax claim or assessment; (E) file any
income or other material Tax Return relating to the Company or any of its Subsidiaries that has been prepared in a manner that is materially inconsistent with the past practices of the Company or such Subsidiary, as applicable; or (F) enter into any
closing agreement with respect to any material Tax;
(xiii) (A) incur, authorize or commit to incur any material capital
expenditures other than (1) consistent with the capital expenditure budget set forth in Section 5.2(a)(xiii) of the Company Disclosure Letter; (2) pursuant to obligations imposed by Material Contracts; or (3) reflected or reserved for
in the Companys financial statements; (B) enter into, modify, amend, extend, fail to perform the terms of or terminate any (1) Contract that if so entered into, modified, amended, extended, failed to be performed or terminated would
reasonably be expected to have a Company Material Adverse Effect; or (2) Material Contract, or Contract that would be a Material Contract if it had been entered into prior to the date of this Agreement, except the Company may enter into
Contracts that would be a Large Customer Contract simply by virtue of the size of such Contract and would not constitute a Material Contract under any other category of the definition of Material Contract, if such entry is in the ordinary course of
business consistent with past practice; (C) maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice; (D) engage in any transaction with, or enter into any agreement, arrangement or
understanding with, any Affiliate of the Company or other Person covered by Item 404 of
Regulation S-K
promulgated by the SEC that would be required to be disclosed pursuant to Item 404;
(E) effectuate a plant closing, mass layoff (each as defined in the United States Worker Adjustment and Retraining Notification Act) or other employee layoff event affecting in whole or in part any site of employment,
facility, operating unit or employee; (F) grant any material refunds, credits, rebates or other allowances to any end user, customer, reseller or distributor, in each case other than in the ordinary course of business; or (G) waive,
release, grant, encumber or transfer any asset, Intellectual Property or other right material to the Company or its operations other than in the ordinary course of business;
(xiv) sell, lease, license or otherwise dispose of any assets or property of the Company or its Subsidiaries, other than the license of the
Company Products in the ordinary course of business;
(xv) hire any new employees at the director-level or above, or terminate the
employment of any employee at the director-level or above, other than for cause; or
(xvi) enter into, authorize any of, or agree or
commit to enter into a Contract to take any of the actions prohibited by this Section 5.2.
(b)
Consent Procedure
. Promptly
following the date of this Agreement, Parent will designate an appropriate individual to be responsible for reviewing and granting consent requests from the Company pursuant to Section 5.2(a).
Section 5.3.
No Solicitation
.
(a)
No Solicitation or Negotiation
. Subject to the terms of Section 5.3(b), from the date of this Agreement until the earlier to
occur of the (1) termination of this Agreement pursuant to Article VIII and (2) Effective Time, the Company will cease and cause to be terminated any discussions or negotiations with, and terminate any data room access (or other access to diligence)
of, any Person and its Affiliates, directors, officers, employees, consultants, agents, representatives and advisors (collectively,
Representatives
) relating to an
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Acquisition Transaction. Unless the Company has already so requested prior to the date of this Agreement, promptly following the date of this Agreement, the Company will request that each Person
(other than Parent and its Representatives) that has, prior to the date of this Agreement, executed a confidentiality agreement in connection with its consideration of an Acquisition Transaction, promptly return or destroy, in accordance with the
terms of such confidentiality agreement, all non-public information furnished to such Person by or on behalf of the Company or its Subsidiaries prior to the date of this Agreement. Subject to the terms of Section 5.3(b) and Section 5.3(d), from
the date of this Agreement until the earlier to occur of the (1) termination of this Agreement pursuant to Article VIII and (2) Effective Time, the Company and its Subsidiaries, and their respective directors and executive officers, will not, and
the Company will not authorize or direct any of its or its Subsidiaries employees, consultants or other Representatives to, directly or indirectly, (i) solicit, initiate, propose or induce the making, submission or announcement of, or
knowingly encourage, facilitate or assist, any proposal that constitutes, or is reasonably expected to lead to, an Acquisition Proposal; (ii) furnish to any Person (other than Parent, Merger Sub or any of their respective designees) any non-public
information relating to the Company or any of its Subsidiaries or afford to any Person access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company or any of its Subsidiaries (other
than Parent, Merger Sub or any of their respective designees), in any such case in connection with any Acquisition Proposal or with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, an
Acquisition Proposal or the making of any proposal that would reasonably be expected to lead to an Acquisition Proposal; (iii) participate, or engage in discussions or negotiations, with any Person with respect to an Acquisition Proposal or with
respect to any inquiries from third Persons relating to the making of an Acquisition Proposal (other than only informing such Persons of the provisions contained in this Section 5.3); (iv) approve, endorse or recommend any proposal that constitutes,
or is reasonably expected to lead to, an Acquisition Proposal; (v) enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other Contract relating to an Acquisition Transaction, other than an
Acceptable Confidentiality Agreement (any such letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other Contract relating to an Acquisition Transaction, an
Alternative Acquisition Agreement
);
or (vi) authorize or commit to do any of the foregoing. From the date of this Agreement until the earlier to occur of the (1) termination of this Agreement pursuant to Article VIII and (2) Effective Time, the Company will not be required
to enforce, and following prior notice to Parent including the identity of the Person requesting such waiver, will be permitted to waive, any provision of any standstill or confidentiality agreement to the extent that such provision prohibits or
purports to prohibit a confidential proposal being made to the Company Board (or any committee thereof).
(b)
Superior Proposals
.
Notwithstanding anything to contrary in this Section 5.3, from the date of this Agreement until the Companys receipt of the Requisite Stockholder Approval, the Company and the Company Board (or a committee thereof) may, directly or indirectly
through one or more of their Representatives (including the Company Financial Advisor), following the execution of an Acceptable Confidentiality Agreement, (i) participate or engage in discussions or negotiations with; (ii) furnish any non-public
information relating to the Company or any of its Subsidiaries to; or (iii) afford access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company or any of its Subsidiaries to, in each
case, any Person or its Representatives that has made or delivered to the Company a written Acquisition Proposal after the date of this Agreement that was not solicited in breach of Section 5.3(a), but only if the Company Board (or a committee
thereof) has determined in good faith (after consultation with its financial advisor and outside legal counsel) that (A) such Acquisition Proposal either constitutes a Superior Proposal or is reasonably likely to lead to a Superior Proposal; and (B)
the failure to take the actions contemplated by this Section 5.3(b) would be reasonably expected to be inconsistent with its fiduciary duties pursuant to applicable Law. In connection with the foregoing, the Company will (x) provide written notice
to Parent promptly (within one Business Day) following the Company Boards determination referred to in the prior sentence and (y) substantially contemporaneously make available to Parent any non-public information concerning the Company and
its Subsidiaries that is provided to any such Person or its Representatives that was not previously made available to Parent.
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(c)
No Change in Company Board Recommendation or Entry into an Alternative Acquisition
Agreement
. Except as provided by Section 5.3(d), at no time after the date of this Agreement may the Company Board (or a committee thereof):
(i) (A) withhold, withdraw, amend, qualify or modify, or publicly propose to withhold, withdraw, amend, qualify or modify, the Company Board
Recommendation in a manner adverse to Parent; (B) adopt, approve or recommend an Acquisition Proposal; (C) fail to publicly reaffirm the Company Board Recommendation within 10 Business Days of the occurrence of a material event or development and
after Parent so requests in writing (or, if the Company Stockholder Meeting is scheduled to be held within 10 Business Days, then within one Business Day after Parent so requests in writing); (D) take or fail to take any formal action or make or
fail to make any recommendation in connection with a tender or exchange offer, other than a recommendation against such offer or a stop, look and listen communication by the Company Board (or a committee thereof) to the Company
Stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any substantially similar communication) (it being understood that the Company Board (or a committee thereof) may refrain from taking a position with respect to an
Acquisition Proposal until 5:30 p.m., Eastern time, on the 10th Business Day after the commencement of a tender or exchange offer in connection with such Acquisition Proposal without such action being considered a violation of this Section 5.3); or
(E) fail to include the Company Board Recommendation in the Proxy Statement (any action described in clauses (A) through (E), a
Company Board Recommendation Change
), it being understood that neither (1) the
confidential determination in itself by the Company Board (or a committee thereof) that an Acquisition Proposal constitutes, or is reasonably likely to lead to, a Superior Proposal; nor (2) the delivery in itself by the Company to Parent of any
notice contemplated by Section 5.3(d) will constitute a Company Board Recommendation Change or violate this Section 5.3; or
(ii) cause or permit the Company or any of its Subsidiaries to enter into an Alternative Acquisition Agreement.
(d)
Company Board Recommendation Change; Entry into Alternative Acquisition Agreement
. Notwithstanding anything to the contrary set
forth in this Agreement, at any time prior to the Company obtaining the Requisite Stockholder Approval:
(i) other than in connection with
a written Acquisition Proposal that constitutes a Superior Proposal, the Company Board (or a committee thereof) may effect a Company Board Recommendation Change in response to an Intervening Event if the Company Board (or a committee thereof)
determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to do so would be reasonably expected to be inconsistent with its fiduciary duties pursuant to applicable Law if and only if:
(1) the Company has provided prior written notice to Parent at least five Business Days in advance to the effect that the Company Board (or a
committee thereof) has (A) so determined; and (B) resolved to effect a Company Board Recommendation Change pursuant to this Section 5.3(d)(i), which notice will describe the Intervening Event in reasonable detail; and
(2) prior to effecting such Company Board Recommendation Change, the Company and its Representatives, during such five Business Day period,
have (A) negotiated with Parent and its Representatives in good faith (to the extent that Parent desires to so negotiate) to make such adjustments to the terms and conditions of this Agreement so that the Company Board (or a committee thereof)
no longer determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to make a Company Board Recommendation Change in response to such Intervening Event would be reasonably expected to be
inconsistent with its fiduciary duties pursuant to applicable Law; and (B) permitted Parent and its Representatives to make a presentation to the Company Board regarding this Agreement and any adjustments with respect thereto (to the extent
that Parent requests to make such a presentation); or
(ii) if the Company has received a written Acquisition Proposal that the Company
Board (or a committee thereof) has concluded in good faith (after consultation with its financial advisor and outside legal
A-49
counsel) is a Superior Proposal, then the Company Board may (A) effect a Company Board Recommendation Change with respect to such Superior Proposal; or (B) authorize the Company to
terminate this Agreement pursuant to Section 8.1(h) to enter into an Alternative Acquisition Agreement with respect to such Superior Proposal, in each case if and only if:
(1) the Company Board (or a committee thereof) determines in good faith (after consultation with its financial advisor and outside legal
counsel) that the failure to do so would be reasonably expected to be inconsistent with its fiduciary duties pursuant to applicable Law;
(2) the Company has complied in all material respects with its obligations pursuant to this Section 5.3 with respect to such Acquisition
Proposal; and
(3) (i) the Company has provided prior written notice to Parent at least five Business Days in advance (the
Notice Period
) to the effect that the Company Board (or a committee thereof) has (A) received a written Acquisition Proposal that has not been withdrawn; (B) concluded in good faith (after consultation with its financial
advisor and outside legal counsel) that such Acquisition Proposal constitutes a Superior Proposal; and (C) resolved to effect a Company Board Recommendation Change or to terminate this Agreement pursuant to this Section 5.3(d)(ii), which
notice will describe the basis for such Company Board Recommendation Change or termination, including the identity of the Person or Group making such Acquisition Proposal, the material terms of such Acquisition Proposal and copies of all relevant
documents relating to such Acquisition Proposal; and (ii) prior to effecting such Company Board Recommendation Change or termination, the Company and its Representatives, during the Notice Period, have (1) negotiated with Parent and its
Representatives in good faith (to the extent that Parent desires to so negotiate) to make such adjustments to the terms and conditions of this Agreement so that such Acquisition Proposal would cease to constitute a Superior Proposal; and
(2) permitted Parent and its Representatives to make a presentation to the Company Board regarding this Agreement and any adjustments with respect thereto (to the extent that Parent requests to make such a presentation), it being understood
that (a) in the event of any material revisions to such Acquisition Proposal, the Company will be required to deliver a new written notice to Parent and to comply with the requirements of this Section 5.3(d)(ii)(3) with respect to such new
written notice (with the Notice Period in respect of such new written notice being three Business Days); and (b) at the end of the Notice Period, the Company Board (or a committee thereof) must have in good faith (after consultation
with its financial advisor and outside legal counsel) reaffirmed its determination that such Acquisition Proposal is a Superior Proposal.
(e)
Notice to Parent
. From the date of this Agreement until the earlier to occur of the (1) termination of this Agreement pursuant to
Article VIII and (2) Effective Time, the Company will promptly (and, in any event, by the later of (i) 24 hours from the receipt thereof or (ii) 12:00 noon, Pacific time, on the next Business Day) notify Parent if any Acquisition Proposal, or
inquiry from any Person or Group related to making a potential Acquisition Proposal, is, to the Knowledge of the Company (which, for all purposes of this clause (e), will be deemed to also include each member of the Company Board, the Companys
financial advisor and legal counsel and will not be deemed to be only as of the date of this Agreement), received by, any non-public information is requested from, or any discussions or negotiations are sought to be initiated or continued with, the
Company or any of its Representatives. Such notice must include (A) the identity of the Person or Group making such proposal, inquiry, request or offer; and (B) a summary of the material terms and conditions of such proposal, inquiry,
request or offer and, if writing, a copy thereof together with all material documents provided therewith. Thereafter, the Company must keep Parent reasonably informed, by providing notice by the later of (1) 24 hours from the receipt thereof or (2)
12:00 noon, Pacific time, on the next Business Day after obtaining Knowledge thereof, of any changes in the status and terms of any such offers or proposals (including any amendments thereto) and the status of any such discussions or negotiations.
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(f)
Permitted Disclosures
. So long as the Company Board (or a committee thereof) expressly
reaffirms the Company Board Recommendation in each such disclosure and public statement (other than in a customary stop, look and listen communication to the Company Stockholders pursuant to
Rule 14d-9
promulgated under the Exchange Act):
(i) nothing in this Agreement will prohibit
the Company or the Company Board (or a committee thereof) from (A) taking and disclosing to the Company Stockholders a position contemplated by
Rule 14e-2(a)
promulgated under the Exchange Act or
complying with
Rule 14d-9
promulgated under the Exchange Act, including making a stop, look and listen communication by the Company Board (or a committee thereof) to the Company Stockholders
pursuant to
Rule 14d-9(f)
promulgated under the Exchange Act (or any substantially similar communication); (B) complying with Item 1012(a) of
Regulation M-A
promulgated under the Exchange Act; (C) informing any Person of the existence of the provisions contained in this Section 5.3; or (D) making any disclosure to the Company
Stockholders (including regarding the business, financial condition or results of operations of the Company and its Subsidiaries) that the Company Board (or a committee thereof), after consultation with its outside legal counsel, has determined in
good faith is required by applicable Law; and
(ii) it is understood and agreed that, for purposes of this Agreement, a factually
accurate public statement by the Company or the Company Board (or a committee thereof) that (A) describes the Companys receipt of an Acquisition Proposal; (B) identifies the Person or Group making such Acquisition Proposal; (C) provides the
material terms of such Acquisition Proposal; or (D) describes the operation of this Agreement with respect thereto will not, in any case, be deemed to be (1) a withholding, withdrawal, amendment, qualification or modification, or proposal by
the Company Board (or a committee thereof) to withhold, withdraw, amend, qualify or modify, the Company Board Recommendation; (2) an adoption, approval or recommendation with respect to such Acquisition Proposal; or (3) a Company Board
Recommendation Change.
(g)
Breach by Representatives
. The Company agrees that any action taken by a Representative of the Company
(other than an employee or consultant of the Company who is not an officer of the Company) that, if taken by the Company, would constitute a breach of this Section 5.3 will be deemed to constitute a breach by the Company of this
Section 5.3.
Section 5.4.
No Control of the Other Party
s Business
. The Parties acknowledge and agree
that the restrictions set forth in this Agreement are not intended to give Parent or Merger Sub, on the one hand, or the Company, on the other hand, directly or indirectly, the right to control or direct the business or operations of the other at
any time prior to the Effective Time. Prior to the Effective Time, each of Parent and the Company will exercise, subject to the terms, conditions and restrictions of this Agreement, complete control and supervision over their respective businesses
and operations.
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1.
Efforts; Required Actions and Forbearance
.
(a)
Reasonable Best Efforts
. Upon the terms and subject to the conditions set forth in this Agreement (including the limitations set
forth in Section 6.2(b)), Parent and Merger Sub, on the one hand, and the Company, on the other hand, will use their respective reasonable best efforts to (A) take (or cause to be taken) all actions; (B) do (or cause to be done) all things; and
(C) assist and cooperate with the other Parties in doing (or causing to be done) all things, in each case as are necessary, proper or advisable pursuant to applicable Law or otherwise to consummate and make effective the Merger, including by using
reasonable best efforts to:
(i) cause the conditions to the Merger set forth in Article VII to be satisfied;
(ii) (1) seek to obtain all consents, waivers, approvals, orders and authorizations from Governmental Authorities; and (2) make all
registrations, declarations and filings with Governmental Authorities, in each case that are necessary or advisable to consummate the Merger; and
A-51
(iii) (1) seek to obtain all consents, waivers and approvals and (2) deliver all
notifications pursuant to any Material Contracts in connection with this Agreement and the consummation of the Merger so as to seek to maintain and preserve the benefits to the Surviving Corporation of such Material Contracts as of and following the
consummation of the Merger.
(b)
No Failure to Take Necessary Action
. In addition to the foregoing, subject to the terms and
conditions of this Agreement, neither Parent or Merger Sub, on the one hand, nor the Company, on the other hand, will take any action (or fail to take any action) that is intended to have or, to the Knowledge of such Party, would reasonably be
expected to have, the effect of preventing, impairing, materially delaying or otherwise materially and adversely affecting the (i) consummation of the Merger; or (ii) ability of such Party to fully perform its obligations pursuant to this
Agreement. For the avoidance of doubt, no action by the Company taken in compliance with Section 5.3 will be considered a violation of this Section 6.1.
(c)
No Consent Fee
. Notwithstanding anything to the contrary set forth in this Section 6.1 or elsewhere in this Agreement, neither
Parent, the Company nor any of their respective Subsidiaries will be required to agree to the payment of a consent fee, profit sharing payment or other consideration (including increased or accelerated payments), or the provision of
additional security (including a guaranty), in connection with the Merger, including in connection with obtaining any consent pursuant to any Material Contract.
Section 6.2.
Antitrust Filings
.
(a)
Filings Under the HSR Act and Other Applicable Antitrust Law
. Each of Parent and Merger Sub (and their respective Affiliates, if
applicable), on the one hand, and the Company (and its Affiliates, if applicable), on the other hand, will use their respective reasonable best efforts to promptly (within 15 Business Days following the date of this Agreement, if practicable), file
(i) a Notification and Report Form relating to this Agreement and the Merger as required by the HSR Act with the FTC and the Antitrust Division of the DOJ; and (ii) comparable pre-merger or post-merger notification filings, forms and
submissions with any Governmental Authority pursuant to other applicable Antitrust Law in connection with the Merger. Each of Parent and the Company will (A) cooperate and coordinate (and cause its respective Representatives to cooperate and
coordinate) with the other in the making of such filings; (B) use its respective reasonable best efforts to supply the other (or cause the other to be supplied) any information that may be required in order to make such filings; (C) use
its respective reasonable best efforts to supply (or cause the other to be supplied) with any additional information that reasonably may be required or requested by the FTC, the DOJ or the Governmental Authorities of any other applicable
jurisdiction in which any such filing is made; and (D) subject to the limitations in Section 6.2(b), use its respective reasonable best efforts to take all action necessary to, as soon as practicable, (1) cause the expiration or
termination of the applicable waiting periods pursuant to the HSR Act and any other Antitrust Law applicable to the Merger; and (2) obtain any required consents pursuant to any Antitrust Law applicable to the Merger. If any Party receives a
request for additional information or documentary material from any Governmental Authority with respect to the Merger pursuant to the HSR Act or any other Antitrust Law applicable to the Merger, then such Party will make (or cause to be made), as
soon as reasonably practicable and after consultation with the other Parties, an appropriate response in compliance with such request.
(b)
Divestitures
. If and to the extent necessary to obtain clearance of the Merger pursuant to the HSR Act and any other Antitrust Law
applicable to the Merger, each of Parent and Merger Sub (and their respective Affiliates, if applicable) will (i) offer, negotiate, commit to and effect, by consent decree, hold separate order or otherwise, (A) the sale, divestiture,
license or other disposition of any and all of the capital stock or other equity or voting interests, assets (whether tangible or intangible), rights, products or businesses of Parent and Merger Sub (and their respective Affiliates, if applicable),
on the one hand, and the Company and its Subsidiaries, on the other hand, in each case conditioned upon the consummation of the Merger; and (B) any other restrictions on the activities of Parent and Merger Sub (and their respective Affiliates,
if applicable), on the one hand, and the Company and its Subsidiaries, on the other hand; and (ii) contest, defend and appeal any Legal Proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the
Merger (an
Antitrust
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Required Action
), in each case unless taking such Antitrust Required Action would reasonably be expected to materially and adversely affect the benefits to be obtained by virtue of
the Merger (any of the foregoing having such an effect, an
Antitrust Restraint
).
(c)
Cooperation
. In
furtherance and not in limitation of the foregoing, the Company, Parent and Merger Sub will (and will cause their respective Subsidiaries to), subject to any restrictions under applicable Law, (i) promptly notify the other Parties of (and, if
in writing, furnish them with copies of (or, in the case of oral communications, advise them of the contents of)) any material communication received by such Person from a Governmental Authority in connection with the Merger and permit the other
Parties to review and discuss reasonably in advance (and to consider in good faith any comments made by the other Parties in relation to) any proposed draft notifications, formal notifications, filings, submissions or other written communications
(and any analyses, memoranda, white papers, presentations, correspondence or other documents submitted therewith) made in connection with the Merger to a Governmental Authority; (ii) keep the other Parties reasonably informed with respect to
the status of any such submissions and filings to any Governmental Authority in connection with the Merger and any developments, meetings or discussions with any Governmental Authority in respect thereof, including with respect to (A) the
receipt of any non-action, action, clearance, consent, approval or waiver; (B) the expiration of any waiting period; (C) the commencement or proposed or threatened commencement of any investigation, litigation or administrative or judicial
action or proceeding under applicable Law; and (D) the nature and status of any objections raised or proposed or threatened to be raised by any Governmental Authority with respect to the Merger; and (iii) not independently participate in
any meeting, hearing, proceeding or discussions with or before any Governmental Authority in respect of the Merger without giving the other Parties reasonable prior notice of such meeting, hearing, proceeding or discussion, and, unless prohibited by
such Governmental Authority, the opportunity to attend or participate. However, each of the Company, Parent and Merger Sub may designate any non-public information provided to any Governmental Authority as restricted to outside counsel
only and any such information will not be shared with the Representatives of the other Party without approval of the Party providing the non-public information. Each of the Company, Parent and Merger Sub may redact any valuation and related
information before sharing any information provided to any Governmental Authority with another Party on an outside counsel only basis. Notwithstanding anything to the contrary contained in this Agreement, but subject to the
Companys consultation and participation rights described above, Parent shall have the principal responsibility for devising and implementing the strategy for obtaining any necessary antitrust, competition or investment review clearances, and
shall take the lead in all meetings and communications with any Governmental Authority in connection with obtaining any necessary antitrust, competition or investment review clearances.
Section 6.3.
Proxy Statement and Other Required SEC Filings
.
(a)
Preparation
. Promptly after the execution of this Agreement (within 15 Business Days following the date of this Agreement, if
practicable), the Company will prepare (with Parents reasonable cooperation) and file with the SEC a preliminary proxy statement to be sent to the Company Stockholders in connection with the Company Stockholder Meeting (the proxy statement,
including any amendments or supplements, the
Proxy Statement
). The Company will not file the Proxy Statement with the SEC without first providing Parent and its counsel a reasonable opportunity to review and comment thereon, and
the Company will give due consideration to all reasonable additions, deletions or changes suggested by Parent or its counsel. Unless there has been a Company Board Recommendation Change in compliance with Section 5.3, the Company will (i)
include the Company Board Recommendation in the Proxy Statement; and (ii) use its reasonable best efforts to solicit proxies to obtain the Requisite Stockholder Approval. Promptly following the (A) confirmation by the SEC that it has no further
comments or (B) expiration of the 10-day waiting period contemplated by Rule
14a-6(a)
promulgated under the Exchange Act, the Company will cause the Proxy Statement in definitive form to be mailed to the
Company Stockholders.
(b)
Mutual Assistance
. Each of the Company, Parent and Merger Sub will furnish all information concerning
such Person and its Affiliates to the other, and provide such other assistance, as may be reasonably
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requested by such other Party to be included therein and will otherwise reasonably assist and cooperate with the other in the preparation, filing and distribution of the Proxy Statement and the
resolution of any comments to either received from the SEC.
(c)
SEC Correspondence
. The Parties will notify each other as promptly
as practicable of the receipt of any comments, whether written or oral, from the SEC and of any request by the SEC for amendments or supplements to the Proxy Statement, any Other Required Company Filing or any Other Required Parent Filing, or for
additional information, and will supply each other with copies of all correspondence between it or any of its Representatives, on the one hand, and the SEC, on the other hand, with respect to such filings. The Parties will use their respective
reasonable best efforts to resolve all SEC comments, if any, with respect to the Proxy Statement as promptly as practicable after the receipt thereof.
(d)
No Amendments to Proxy Statement
. Except in connection with a Company Board Recommendation Change or thereafter, no amendment or
supplement to the Proxy Statement will be made by the Company without the approval of Parent, which approval will not be unreasonably withheld, conditioned or delayed.
(e)
Other Required Company Filings
. If the Company determines that it is required to file any document other than the Proxy Statement
with the SEC in connection with the Merger pursuant to applicable Law (such document, as amended or supplemented, an
Other Required Company Filing
), then the Company will use its reasonable best efforts to promptly prepare and
file such Other Required Company Filing with the SEC. The Company will use its reasonable best efforts to cause the Proxy Statement and any Other Required Company Filing to comply as to form in all material respects with the applicable requirements
of the Exchange Act and the rules of the SEC and NYSE. Except in connection with a Company Board Recommendation Change or thereafter, the Company may not file any Other Required Company Filing with the SEC without first providing Parent and its
counsel a reasonable opportunity to review and comment thereon, and the Company will give due consideration to, and consider in good faith, all reasonable additions, deletions or changes suggested by Parent or its counsel.
(f)
Other Required Parent Filings
. If Parent or Merger Sub determines that it is required to file any document with the SEC as a result
of the Merger or the Company Stockholder Meeting pursuant to applicable Law (an
Other Required Parent Filing
), then Parent and Merger Sub will use their respective reasonable best efforts to promptly prepare and file such Other
Required Parent Filing with the SEC. Parent and Merger Sub will cause any Other Required Parent Filing to comply as to form in all material respects with the applicable requirements of the Exchange Act and the rules of the SEC. Neither Parent nor
Merger Sub may file any Other Required Parent Filing with the SEC without first providing the Company and its counsel a reasonable opportunity to review and comment thereon, and Parent will give due consideration to, and consider in good faith, all
reasonable additions, deletions or changes suggested by the Company or its counsel.
(g)
Accuracy; Supplied Information
.
(i)
Company
. On the date of filing, the date of mailing to the Company Stockholders (if applicable) and at the time of the Company
Stockholder Meeting, neither the Proxy Statement nor any Other Required Company Filing will 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 false or misleading. Notwithstanding the foregoing, no covenant is made by the Company with respect to any information supplied by Parent, Merger Sub or any of their Affiliates
for inclusion or incorporation by reference in the Proxy Statement or any Other Required Company Filing. The information supplied by the Company for inclusion or incorporation by reference in the Proxy Statement or any Other Required Parent Filings
will not, at the time that such Proxy Statement or Other Required Parent Filing is filed with the SEC, 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.
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(ii)
Parent
. On the date of filing, no Other Required Parent Filing will 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 false or misleading.
Notwithstanding the foregoing, no covenant is made by Parent or Merger Sub with respect to any information supplied by the Company for inclusion or incorporation by reference in any Other Required Parent Filing. The information supplied by Parent,
Merger Sub and their respective Affiliates for inclusion or incorporation by reference in the Proxy Statement or any Other Required Company Filing will not, at the time that the Proxy Statement or such Other Required Company Filing is filed with the
SEC, 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.
Section 6.4.
Company Stockholder Meeting
.
(a)
Call of Company Stockholder Meeting
. The Company will take all action necessary in accordance with applicable Law, the Charter and
the Bylaws to establish a record date for, duly call, give notice of, convene and hold a meeting of the Company Stockholders (including any adjournment, postponement or other delay thereof, the
Company Stockholder Meeting
) as
promptly as reasonably practicable following the mailing of the Proxy Statement to the Company Stockholders for the purpose of (i) seeking the Requisite Stockholder Approval; and (ii) in accordance with Regulation 14A under the Exchange Act, seeking
advisory approval of a proposal in connection with a non-binding, advisory vote to approve certain compensation that may become payable to the Companys named executive officers in connection with the consummation of the Merger. Notwithstanding
anything to the contrary in this Agreement, the Company will not be required to convene and hold the Company Stockholder Meeting at any time prior to the 25th Business Day following the mailing of the Proxy Statement to the Company Stockholders.
Unless the Company Board (or a committee thereof) has made a Company Board Recommendation Change, the Company will (A) submit this Agreement for adoption by the Company Stockholders at the Company Stockholder Meeting; and (B) use its
reasonable best efforts to solicit (or cause to be solicited) from the Company Stockholders proxies in favor of the matters to be considered at the Company Stockholder Meeting.
(b)
Adjournment of Company Stockholder Meeting
. Notwithstanding anything to the contrary in this Agreement, the Company shall, and
shall only, postpone or adjourn the Company Stockholder Meeting if (i) there are holders of an insufficient number of shares of Company Common Stock present or represented by proxy at the Company Stockholder Meeting to constitute a quorum and
to obtain the Requisite Stockholder Approval at the Company Stockholder Meeting; or (ii) the Company is required to postpone or adjourn the Company Stockholder Meeting by applicable Law, order or a request from the SEC, including in order to
give the Company Stockholders sufficient time to evaluate any information or disclosure that the Company has sent to the Company Stockholders or otherwise made available to the Company Stockholders by issuing a press release, filing materials with
the SEC or otherwise. Without the prior written consent of Parent, the Company Stockholder Meeting will not be postponed or adjourned (A) by more than 10 calendar days at a time; or (B) with respect to Section 6.4(b)(i), by more than
30 calendar days after the date on which the Company Stockholder Meeting was (or was required to be) originally scheduled. In no event will the record date of the Company Stockholder Meeting be changed without Parents prior written consent,
unless required by applicable Law.
Section 6.5.
Financing
.
(a)
No Amendments to Financing Letters
. Subject to the terms and conditions of this Agreement, each of Parent and Merger Sub will not
permit any amendment or modification to be made to, or any waiver of any provision or remedy pursuant to, the Financing Letters if such amendment, modification or waiver (i) reduces (or would reasonably be expected to have the effect of reducing)
the aggregate amount of the Financing, unless in the case of a reduction in the amount of the Financing, the Required Amount could still be paid with the aggregate net proceeds of any remaining portion of the Financing and any debt financing under
any new debt commitment letter (such letter, a
Replacement Financing Letter
) that, were it structured as an amendment to
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the Financing Letters, would otherwise satisfy this Section 6.5(a) and that would not reasonably be expected to delay or prevent the Closing or Parents ability to consummate the
Financing, together with cash on hand at Parent to be made available by Parent at Closing and cash on hand at the Company to be made available by the Company at Closing (such reduction, a
Financing Reduction Exception
); (ii)
imposes new or additional conditions or other terms or otherwise expands, amends or modifies any of the conditions to the receipt of the Financing or any other terms to the Financing in a manner that would reasonably be expected to (A) delay or
prevent the Closing Date; or (B) make the timely funding of the Financing, or the satisfaction of the conditions to obtaining the Financing, less likely to occur; or (iii) adversely impacts the ability of Parent, Merger Sub or the Company, as
applicable, to enforce its rights against the other parties to the Financing Letters or the definitive agreements with respect thereto (
provided
, that, for the avoidance of doubt, Parent and Merger Sub may amend any Financing Letter to add
lenders, lead arrangers, book-runners, syndication agents or similar entities who had not executed such Financing Letter as of the date of this Agreement so long as the addition of such parties, individually or in the aggregate, does not add new (or
adversely modify any existing) conditions to the consummation of the Financing and would not reasonably be expected to delay or prevent the Closing or Parents ability to consummate the Financing). Any reference in this Agreement to (1) the
Financing will include the financing contemplated by the Financing Letters as amended or modified in compliance with this Section 6.5; and (2) Financing Letters will include such documents as amended or modified in
compliance with this Section 6.5. Parent will not release or consent to the termination of any individual lender under the Financing Letters, except for (a) assignments and replacements of an individual lender under the terms of, and only in
connection with, the syndication of the Financing under the Financing Letters; (b) replacements of the Financing Letters with alternative financing commitments pursuant to Section 6.5(d); (c) a reduction of commitments in respect of the
facilities in an amount equal to the net cash proceeds received by Parent or any of its domestic subsidiaries from the issuance of Senior Notes or any Loan Financing (each as defined in the Financing Letters) to the extent contemplated by the
Financing Letters; or (d) a Financing Reduction Exception; or (e) the Financing Letters or definitive agreement are replaced at such time with a Replacement Financing Letter.
(b)
Taking of Necessary Actions
. Subject to the terms and conditions of this Agreement, each of Parent and Merger Sub will use its
respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to arrange and obtain the Financing on the terms and conditions described in the Financing Letters and any related Fee
Letter on or prior to the Closing Date in an amount sufficient to pay the Required Amount, including using its reasonable best efforts to (i) maintain in effect the Financing Letters in accordance with the terms and subject to the conditions
thereof; (ii) negotiate, execute and deliver definitive agreements with respect to the Financing contemplated by the Financing Letters on the terms and conditions contemplated by the Financing Letters and related Fee Letter or, if applicable, any
Replacement Financing Letter; (iii) satisfy on a timely basis all conditions to funding that are applicable to Parent and Merger Sub in the Financing Letters and such definitive agreements thereto; (iv) consummate the Financing at or prior to the
Closing; (v) comply with its obligations pursuant to the Financing Letters; and (vi) if all the conditions to the obligations of the Financing Sources contained in any Financing Letter have been satisfied (or upon funding will be satisfied) or
waived, enforce its rights pursuant to the Financing Letters to the extent that the failure to enforce would adversely impact the amount or timing of the Financing or the availability of the Financing at Closing. Parent and Merger Sub will fully
pay, or cause to be fully paid, all commitment or other fees arising pursuant to the Financing Letters and any Fee Letters as and when they become due. For the avoidance of doubt, the reasonable best efforts of Parent and Merger Sub
pursuant to this Section 6.5 includes an obligation on the part of Parent and Merger Sub, if the terms and conditions set forth in the Financing Letters have been satisfied and one or more of the Financing Sources fails to provide its
respective portion of the Financing and, as a result, the Closing does not occur when required pursuant to this Agreement, to promptly commence an appropriate Legal Proceeding against any such breaching Financing Source pursuant to which each of
Parent and Merger Sub will use its reasonable best efforts to compel such breaching Financing Source to provide its portion of the Financing.
(c)
Information
. Parent must (i) keep the Company reasonably informed on a reasonably current basis of the status of its efforts to
arrange the Financing (including any Alternate Financing under this Section 6.5); and (ii) provide the Company with copies of all executed definitive agreements related to the Financing. Without
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limiting the generality of the foregoing, Parent and Merger Sub must give the Company prompt notice (A) of any breach (or threatened breach of a provision) or default (or any event or
circumstance that, with or without notice or lapse of time, or both, would reasonably be expected to give rise to any breach or default) by any party to the Financing Letters or definitive agreements related to the Financing of which Parent has
Knowledge; (B) of the receipt by Parent or Merger Sub of any written notice or communication from any Financing Source with respect to any (1) actual or potential breach (or threatened breach), default, termination or repudiation by any party
to the Financing Letters or any definitive agreements related to the Financing or any provisions of the Financing Letters or such definitive agreements; or (2) material dispute or disagreement between or among Parent or Merger Sub on the one hand
and any parties to the Financing Letters or any definitive agreements related to the Financing on the other hand (but excluding, for the avoidance of doubt, any ordinary course negotiation with respect to the terms of the Financing); or (3) written
notification by any of the parties to the Financing Letters that they refuse to fund their commitments under the Financing Letters; and (C) if for any reason Parent at any time believes that it will not be able to obtain all or any portion of the
Financing on the terms, in the manner or from the sources contemplated by the Financing Letters or any definitive agreements related to the Financing;
provided
,
however
, that in no event will Parent be under any obligation to disclose
any information shared among Parent and its professional advisors in connection with matters contemplated by clause (ii) that is subject to attorney-client privilege if Parent shall have used its reasonable best efforts to disclose such information
in a way that would not waive such privilege. Parent must provide any information reasonably requested by the Company relating to any of the circumstances referred to in the previous sentence as soon as reasonably practical (but in any event with
two Business Days) after the date that the Company delivers a written request therefor to Parent.
(d)
Alternate Financing
. If any
portion of the Financing becomes unavailable on the terms and conditions (including any market flex provisions) contemplated in the Financing Letters, then Parent will use its reasonable best efforts to arrange, as promptly as practicable following
the occurrence of such event, (i) alternative financing from the same or alternative sources, on terms and conditions not materially less favorable in the aggregate to Parent and the Merger Sub than those contained in the Financing Letters
(including the flex provisions contained in the related fee letter) in an amount sufficient, together with other financial resources available to Parent, to pay the Required Amount (the
Alternate Financing
); and (ii) one or more
new financing commitment letters (or other agreements) with respect to such Alternate Financing (the
New Financing Letter
s
), which New Financing Letters will replace the existing Financing Letters in whole or in part.
Parent will promptly provide a copy of any New Financing Letters (and any fee letter in connection therewith, which may be delivered with the fee amounts redacted in a customary manner so long as no redaction covers terms that would adversely affect
the aggregate amount of net proceeds, conditionality, availability or termination of the Alternate Financing) to the Company. In the event that any New Financing Letters or Replacement Financing Letter are obtained, (A) any reference in this
Agreement to the Financing Letters will be deemed to include the Financing Letters to the extent not superseded by the New Financing Letters or Replacement Financing Letter, as applicable, at the time in question and any New Financing
Letters or Replacement Financing Letter, as applicable, to the extent then in effect; and (B) any reference in this Agreement to the Financing will mean the debt financing contemplated by the Financing Letters as modified pursuant to the
foregoing.
(e)
Certain Agreements
. Notwithstanding anything to the contrary contained in this Agreement, nothing contained in this
Section 6.5 shall require, and in no event shall the reasonable best efforts of Parent and/or Merger Sub be deemed or construed to require, any of Parent or Merger Sub to (i) pay any fees to the lenders or increase any interest rates or
original issue discounts applicable to the Financing in excess of those contemplated in the Financing Letters, including any related fee letters (including the flex provisions thereof), whether to secure waiver of any conditions contained therein or
otherwise, (ii) amend or waive any of the terms or conditions hereof or under the Financing Letters or (iii) consummate the Closing at any time prior to the date determined in accordance with Section 2.3.
Section 6.6.
Financing Cooperation
.
(a)
Cooperation
. The Company will use its reasonable best efforts to, and use reasonable best efforts to cause its Subsidiaries, and
its and its Subsidiaries respective Representatives to, provide to Parent and Merger
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Sub and their respective Affiliates such reasonable cooperation in connection with the Financing as may be reasonably requested by Parent and Merger Sub and their respective Affiliates by:
(i) making senior management and advisors of the Company and its Subsidiaries available to participate at reasonable times in a reasonable
number of meetings, presentations, agency presentations, road shows, drafting sessions and due diligence sessions that are requested a reasonable period of time in advance with proposed lenders, underwriters, initial purchasers or placement agents,
and in sessions with rating agencies;
(ii) reasonably assisting Parent and the Financing Sources in their preparation of pro forma
financial information and pro forma financial statements and materials for presentations, confidential information memoranda, bank information memoranda (including to the extent necessary, an additional bank information memorandum that does not
include material non-public information), offering memoranda, prospectuses, registration statements, rating agency presentations, lender and investor presentations and similar documents customary or required in connection with the Financing by
reviewing and commenting on, and providing information reasonably requested in connection with, such materials; it being agreed that the Company will not be required to provide any information or assistance relating to (A) the proposed aggregate
amount of Financing, together with assumed interest rates, dividends (if any) and fees and expenses relating to the incurrence of such debt or equity financing; (B) any post-Closing or pro forma cost savings, synergies, capitalization, ownership or
other pro forma adjustments desired to be incorporated into any information used in connection with the Financing (
provided
, that the Company shall reasonably assist in preparing forecasts of financial statements of the Surviving Corporation
for one or more periods following the Closing Date based on financial information and data derived from the Companys historical books and records); or (C) any financial information related to Parent or any of its Subsidiaries or any
adjustments that are not directly related to the acquisition of the Company;
(iii) furnishing Parent and its Affiliates and the
Financing Sources and their respective Representatives with the Requested Information that is Compliant as promptly as practicable and, upon any Requested Information ceasing to be Compliant, to supplement or update the Requested Information so
that it is Compliant;
(iv) requesting that the Companys independent accountants provide reasonable and customary assistance to
Parent in connection with the Financing (including to consent to the use of their audit reports on the consolidated financial statements of the Company in any materials relating to the Financing or in connection with any filings made with the SEC or
pursuant to the Securities Act or the Exchange Act, and to provide any customary comfort letters necessary and reasonably requested by Parent in connection with any capital markets transaction comprising a part of the Financing
(including as contemplated by the definition of Requested Information) and using reasonable best efforts to take such actions within the Companys ability to enable the Companys independent accountants to provide (and
facilitate the provision of) such assistance to Parent;
(v) if requested at least 10 Business Days prior to the Closing Date in writing
by a Financing Source, furnishing to such Financing Source all information regarding the Company and its Subsidiaries that is required in connection with the Financing by regulatory authorities under applicable know your customer and
anti-money laundering rules and regulations, including the Patriot Act, at least four Business Days prior to the Closing Date;
(vi)
providing customary authorization letters authorizing the distribution of information to prospective lenders and containing a customary representation to the Financing Sources for the Financing that such information does not contain a material
misstatement or omission and containing a representation to the Financing Sources that the public side versions of such documents, if any, do not include material non-public information about the Company and its Subsidiaries or its or their
securities;
(vii) executing and delivering as of (but not before) the Closing any definitive financing documents (including loan
agreements, indentures, pledge and security documents and guarantees) or other
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certificates, consents or documents and otherwise facilitating the pledging of collateral by the Company and its Subsidiaries effective as of (but not before) the Closing, as may be reasonably
requested by Parent and Merger Sub and their respective Affiliates;
(viii) using reasonable best efforts to take all corporate actions,
subject to the occurrence of the Closing, reasonably requested by Parent and Merger Sub and their respective Affiliates that are necessary to permit the consummation of the Financing in accordance with the terms of the Financing Letters;
(ix) use reasonable best efforts to provide such information as Parent may reasonably request to facilitate Parents efforts to obtain
or provide, as applicable customary and reasonable corporate and facilities ratings, landlord waivers and estoppels, non-disturbance agreements, noninvasive environmental assessments, legal opinions, surveys and title insurance as reasonably
requested by Parent;
(x) no later than three Business Days prior to the Closing Date, if requested by Parent, delivering to Parent
customary payoff letters and related documentation with respect to any Indebtedness of the Company or any of its Subsidiaries and the release and termination of any and all required Liens, to be executed no later than the Effective Time by the
applicable obligees and effective as of the Effective Time; and
(xi) in each case following Parents reasonable request, using
reasonable best efforts to provide Parent with customary due diligence information requested by Financing Sources in connection with the Financing (subject to customary confidentiality agreements).
(b)
Obligations of the Company
. Nothing in this Section 6.6 will require the Company or any of its Subsidiaries or their
respective Representatives to (i) pay any commitment or similar fees, incur any liability, or reimburse any expenses prior to the Effective Time for which it has not received prior reimbursement or is not otherwise indemnified by or on behalf of
Parent; (ii) enter into any definitive agreement with respect to the Financing prior to the Closing; or (iii) give any indemnities in connection with the Financing that are effective prior to the Effective Time. Furthermore, nothing in this
Section 6.6 shall require any cooperation by the Company or its Subsidiaries to the extent it would interfere unreasonably with the business or operations of the Company or any of its Subsidiaries or create an unreasonable risk of damage or
destruction to any property or assets of the Company or any of its Subsidiaries. Nothing in this Section 6.6 will require (1) any Representative of the Company or any of its Subsidiaries to deliver any certificate or opinion or take any other
action under this Section 6.6 that could reasonably be expected to result in personal liability to such Representative; (2) the Company Board or the board of directors of any Subsidiary of the Company to approve any financing or Contracts
related thereto; (3) the Company and its Subsidiaries to take any action that would conflict with or violate its organizational documents, any applicable Laws or result in, prior to the Closing, a violation or breach of, or default under, any
agreement to which the Company or any of its Subsidiaries is a party; (4) the Company and its Subsidiaries to provide any information (a) the disclosure of which is prohibited or restricted under applicable Law; or (b) where access to such
information would (i) give rise to a material risk of waiving any attorney-client privilege, work product doctrine or other privilege applicable to such information; or (ii) violate or cause a default pursuant to, or give a third Person the right
terminate or accelerate the rights pursuant to, any Contract to which the Company or any of its Subsidiaries is a party or otherwise bound;
provided
, that the Company shall inform Parent as to the general nature of what is being withheld as a
result of the foregoing and shall use its reasonable best efforts to disclose such information in a way that would not waive such privilege or contravene any applicable Law or binding agreement (including, if practicable, by obtaining consent for
the disclosure thereof); or (5) the Company and its Subsidiaries to change any fiscal period or prepare any financial statements or other information that are not available to it. Nothing contained in this Section 6.6 or otherwise shall
require the Company or any of its Subsidiaries, prior to Closing, to be an issuer or other obligor with respect to the Financing.
(c)
Use of Logos
. The Company hereby consents to the use of its and its Subsidiaries logos in connection with the Financing so long as such logos are used (i) solely in a manner that is not intended to or
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likely to harm or disparage the Company or any of its Subsidiaries or the reputation or goodwill of the Company or any of its Subsidiaries or any of their respective intellectual property rights;
(ii) solely in any disclosure documents used in connection with the syndication of the Financing or in connection with any description of the Company, its business and products, or the Merger; and (iii) otherwise in a manner consistent with the
other terms and conditions that the Company reasonably imposes.
(d)
Confidentiality
. Notwithstanding anything herein or in the
Confidentiality Agreement to the contrary, all non-public or other confidential information provided by the Company or any of its Representatives to Parent or Merger Sub or their respective Representatives pursuant to this Agreement will be kept
confidential in accordance with the Confidentiality Agreement, except that Parent and Merger Sub and their respective Representatives will be permitted to disclose such information to any Financing Sources, prospective Financing Sources that are or
may become parties to the Financing (and, in each case, to their respective counsel and auditors) or Financing Source Related Parties, and any Financing Sources, prospective Financing Sources or Financing Source Related Parties will be permitted to
disclose such information, in each case subject to customary confidentiality undertakings entered into by any Financing Sources, prospective Financing Sources or Financing Source Related Parties with Parent in connection with the Financing.
(e)
Reimbursement
. Promptly upon request by the Company, Parent will reimburse the Company for any documented and reasonable
out-of-pocket costs and expenses (including documented and reasonable out-of-pocket attorneys fees) incurred by the Company or its Subsidiaries in connection with the cooperation of the Company and its Subsidiaries contemplated by this
Section 6.6.
(f)
Indemnification
. The Company, its Subsidiaries and its and their respective Representatives will be
indemnified and held harmless by Parent from and against any and all liabilities, losses, damages, claims, costs, expenses (including documented and reasonable out-of-pocket attorneys fees), interest, awards, judgments, penalties and amounts
paid in settlement suffered or incurred by them in connection with their cooperation in arranging the Financing pursuant to this Agreement or the provision of information utilized in connection therewith (including any action taken in accordance
with this Section 6.6) and any information utilized in connection therewith (other than information provided specifically for use in connection with the Financing by or on behalf of the Company or its Subsidiaries), or any Taxes incurred as a
direct result of any the foregoing, in each case, except to the extent actually suffered or incurred as a result of the gross negligence or willful misconduct of, or material breach of this Agreement by, the Company or its Subsidiaries or, in each
case, their respective Representatives. Parents obligations pursuant to Section 6.6(e) and this Section 6.6(f) are referred to collectively as the
Reimbursement Obligations
(g)
No Exclusive Arrangements
. In no event will Parent, Merger Sub or any of their respective Affiliates (which for this purpose will
be deemed to include each direct investor in Parent or Merger Sub and the Financing Sources or potential financing sources of Parent, Merger Sub and such investors) enter into any Contract prohibiting or seeking to prohibit any bank, investment bank
or other potential provider of financing from providing or seeking to provide financing or financial advisory services to any Person, in each case in connection with a transaction relating to the Company or any of its Subsidiaries or in connection
with the Merger.
(h)
No Financing Condition
. Parent and Merger Sub each acknowledge and agree that obtaining the Financing is not
a condition to the Closing. If the Financing has not been obtained, Parent and Merger Sub will each continue to be obligated, subject to the satisfaction or waiver of the conditions set forth in Article VII, to consummate the Merger.
Section 6.7.
Anti-Takeover Laws
. The Company and the Company Board will (a) take all actions within their power to ensure
that no anti-takeover Law is or becomes applicable to the Merger; and (b) if any anti-takeover Law becomes applicable to the Merger, take all action within their power to ensure that the Merger may be consummated as
promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such Law on the Merger.
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Section 6.8.
Access
. At all times during the period commencing with the
execution and delivery of this Agreement and continuing until the earlier to occur of the (1) termination of this Agreement pursuant to Article VIII and (2) Effective Time, the Company will afford Parent and its Representatives
reasonable access during normal business hours, upon reasonable advance notice, to the properties, books and records and personnel of the Company, except that the Company may restrict or otherwise prohibit access to any documents or information to
the extent that (i) any applicable Law requires the Company to restrict or otherwise prohibit access to such documents or information; (ii) access to such documents or information would give rise to a material risk of waiving any
attorney-client privilege, work product doctrine or other privilege applicable to such documents or information;
provided
, that the Company shall inform Parent as to the general nature of what is being withheld as a result of the foregoing
and shall use its reasonable best efforts to disclose such information in a way that would not waive such privilege; (iii) access to a Contract to which the Company or any of its Subsidiaries is a party or otherwise bound would violate or cause
a default pursuant to, or give a third Person the right to terminate or accelerate the rights pursuant to, such Contract;
provided
, that the Company shall inform Parent as to the general nature of what is being withheld as a result of the
foregoing and shall use its reasonable best efforts to disclose such information in a way that would not contravene, cause a default under or give a third Person the right to terminate or accelerate the rights pursuant to any Contract (including, if
practicable, by obtaining consent for the disclosure thereof from the applicable third Person); (iv) access would result in the disclosure of any Trade Secrets of third Persons; or (v) such documents or information are reasonably pertinent
to any adverse Legal Proceeding between the Company and its Affiliates, on the one hand, and Parent and its Affiliates, on the other hand. Nothing in this Section 6.8 will be construed to require the Company, any of its Subsidiaries or any of
its or their respective Representatives to prepare any reports, analyses, appraisals, opinions or other information. Any investigation conducted pursuant to the access contemplated by this Section 6.8 will be conducted in a manner that does not
unreasonably interfere with the conduct of the business of the Company and its Subsidiaries or create a risk of damage or destruction to any property or assets of the Company or its Subsidiaries. Any access to the properties of the Company and its
Subsidiaries will be subject to the Companys reasonable security measures and insurance requirements and will not include the right to perform invasive testing. The terms and conditions of the Confidentiality Agreement will apply to any
information obtained by Parent or any of its Representatives in connection with any investigation conducted pursuant to the access contemplated by this Section 6.8. Promptly following the execution of this Agreement, Parent and the Company
shall agree on appropriate procedures concerning requests for access pursuant to this Section 6.8.
Section 6.9.
Section
16(b)
Exemption
. The Company will take all actions reasonably necessary to cause the Merger, and any dispositions of equity securities of the Company (including derivative securities) in connection with the
Merger by each individual who is a director or executive officer of the Company to be exempt pursuant to
Rule 16b-3
promulgated under the Exchange Act.
Section 6.10.
Directors
and Officers
Exculpation, Indemnification and Insurance
.
(a)
Indemnified Persons
. Subject to Section 6.10(d), the Surviving Corporation and its Subsidiaries will (and Parent will cause
the Surviving Corporation and its Subsidiaries to) honor and fulfill, in all respects to the extent permitted under applicable Law, the obligations of the Company and its Subsidiaries pursuant to any indemnification agreements between the Company
and any of its Subsidiaries, on the one hand, and any of their respective current or former directors, officers or employees (and any person who becomes a director, officer or employee of the Company or any of its Subsidiaries prior to the Effective
Time), on the other hand (collectively, the
Indemnified Persons
). In addition, during the period commencing at the Effective Time and ending on the sixth anniversary of the Effective Time, the Surviving Corporation and its
Subsidiaries will (and Parent will cause the Surviving Corporation and its Subsidiaries to) cause the certificates of incorporation, bylaws and other similar organizational documents of the Surviving Corporation and its Subsidiaries to contain
provisions with respect to indemnification, exculpation and the advancement of expenses that are at least as favorable as the indemnification, exculpation and advancement of expenses provisions set forth in the Charter, the Bylaws and the other
similar organizational documents of the Subsidiaries of the Company, as applicable, as of the date of this Agreement. During such six-year period or such period in which an Indemnified Person is asserting a claim for
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indemnification pursuant to Section 6.10(b), whichever is longer, such provisions may not be repealed, amended or otherwise modified in any manner except as required by applicable Law.
(b)
Indemnification Obligation
. Without limiting the generality of Section 6.10(a) and subject to Section 6.10(d), during the
period commencing at the Effective Time and ending on the sixth anniversary of the Effective Time, the Surviving Corporation will (and Parent will cause the Surviving Corporation to) indemnify and hold harmless, to the fullest extent permitted by
applicable Law or pursuant to any indemnification agreements with the Company and any of its Subsidiaries in effect as of the Effective Time, each Indemnified Person from and against any costs, fees and expenses (including attorneys fees and
investigation expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement or compromise in connection with any Legal Proceeding, whether civil, criminal, administrative or investigative, to the extent that such
Legal Proceeding arises, directly or indirectly, out of or pertains, directly or indirectly, to (i) any action or omission, or alleged action or omission, in such Indemnified Persons capacity as a director, officer, employee or agent of
the Company or any of its Subsidiaries or other Affiliates (regardless of whether such action or omission, or alleged action or omission, occurred prior to or at the Effective Time); and (ii) the Merger, as well as any actions taken by the
Company, Parent or Merger Sub with respect thereto (including any disposition of assets of the Surviving Corporation or any of its Subsidiaries that is alleged to have rendered the Surviving Corporation or any of its Subsidiaries insolvent).
Notwithstanding the foregoing, if, at any time prior to the sixth anniversary of the Effective Time, any Indemnified Person delivers to Parent a written notice asserting a claim for indemnification pursuant to this Section 6.10(b), then the
claim asserted in such notice will survive the sixth anniversary of the Effective Time until such claim is fully and finally resolved. In the event of any such Legal Proceeding, (A) the Surviving Corporation will have the right to control the
defense thereof after the Effective Time (it being understood that, by electing to control the defense thereof, the Surviving Corporation will be deemed to have waived any right to object to the Indemnified Persons entitlement to
indemnification hereunder with respect thereto); (B) the Indemnified Persons will be entitled to retain their own counsel selected by them (the fees and expenses of which will be paid by the Surviving Corporation), whether or not the Surviving
Corporation elects to control the defense of any such Legal Proceeding, which shall be limited to one counsel for all Indemnified Persons, unless in the reasonable judgment of such counsel a conflict exists which would prevent such counsel from
representing all Indemnified Persons, in which case the Indemnified Person(s) that are the subject of such conflict will be entitled to retain one (unless there are further conflicts in the reasonable judgment of such counsel) separate counsel (the
fees and expenses of which will be paid by the Surviving Corporation); (C) upon receipt of an undertaking by or on behalf of such Indemnified Person to repay any amount if it is ultimately determined by a court of appropriate jurisdiction after
exhausting all appeals that such Indemnified Person is not entitled to indemnification, the Surviving Corporation will advance all fees and expenses (including fees and expenses of any counsel) as incurred by an Indemnified Person in the defense of
such Legal Proceeding, whether or not the Surviving Corporation elects to control the defense of any such Legal Proceeding; and (D) no Indemnified Person will be liable for any settlement of such Legal Proceeding effected without his or her
prior written consent (unless such settlement relates only to monetary damages for which the Surviving Corporation is entirely responsible). Notwithstanding anything to the contrary in this Agreement, none of Parent, the Surviving Corporation or any
of their respective Affiliates will settle or otherwise compromise or consent to the entry of any judgment with respect to, or otherwise seek the termination of, any Legal Proceeding for which indemnification may be sought by an Indemnified Person
pursuant to this Agreement unless such settlement, compromise, consent or termination includes an unconditional release of all Indemnified Persons from all liability arising out of such Legal Proceeding. Any determination required to be made with
respect to whether the conduct of any Indemnified Person complies or complied with any applicable standard will be made by independent legal counsel selected by the Surviving Corporation (which counsel will be reasonably acceptable to such
Indemnified Person), the fees and expenses of which will be paid by the Surviving Corporation.
(c)
D&O Insurance
. During the
period commencing at the Effective Time and ending on the sixth anniversary of the Effective Time, the Surviving Corporation will (and Parent will cause the Surviving Corporation to) maintain in effect the D&O Insurance in respect of acts or
omissions occurring at or prior to the Effective Time on terms (including with respect to coverage, conditions, retentions, limits and amounts) that are
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equivalent to those of the D&O Insurance (
provided
, that Parent may substitute therefor policies with a carrier with comparable credit ratings to the existing carrier of at least the
same coverage and amounts containing terms and conditions that are no less favorable to the insured). In satisfying its obligations pursuant to this Section 6.10(c), the Surviving Corporation will not be obligated to pay annual premiums in
excess of 300% of the amount paid by the Company for coverage for its last full fiscal year (such 300% amount, the
Maximum Annual Premium
). If the annual premiums of such insurance coverage exceed the Maximum Annual Premium, then
the Surviving Corporation will be obligated to obtain a policy with the greatest coverage available for a cost not exceeding the Maximum Annual Premium from an insurance carrier with a comparable credit rating as the Companys current
directors and officers liability insurance carrier. Prior to the Effective Time, and in lieu of maintaining the D&O Insurance pursuant to this Section 6.10(c), the Company may (or, if the Parent requests, the Company will)
purchase a prepaid tail policy (a
Tail Policy
) with respect to the D&O Insurance from an insurance carrier with a comparable credit rating as the Companys current directors and officers liability
insurance carrier so long as the annual cost for a Tail Policy does not exceed the Maximum Annual Premium. If the Company purchases a Tail Policy prior to the Effective Time, then the Surviving Corporation will (and Parent will cause the Surviving
Corporation to) maintain such a Tail Policy in full force and effect and continue to honor its obligations thereunder for so long as such a Tail Policy is in full force and effect.
(d)
Successors and Assigns
. If Parent, the Surviving Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other Person and is not the continuing or surviving corporation or entity in such consolidation or merger; or (ii) transfers all or substantially all of its properties and assets to any Person, then, in each case, proper
provisions will be made so that the successors and assigns of Parent, the Surviving Corporation or any of their respective successors or assigns will assume all of the obligations of Parent and the Surviving Corporation set forth in this
Section 6.10.
(e)
No Impairment
. The obligations set forth in this Section 6.10 may not be terminated, amended or
otherwise modified in any manner that adversely affects any Indemnified Person (or any other person (and their heirs and representatives) who is a beneficiary pursuant to the D&O Insurance or a Tail Policy) without the prior written consent of
such affected Indemnified Person or other person. Each of the Indemnified Persons or other persons (and their heirs and representatives) who are beneficiaries pursuant to the D&O Insurance or a Tail Policy are intended to be third party
beneficiaries of this Section 6.10, with full rights of enforcement as if a Party. The rights of the Indemnified Persons (and other persons (and their heirs and representatives) who are beneficiaries pursuant to the D&O Insurance or a Tail
Policy) pursuant to this Section 6.10 will be in addition to, and not in substitution for, any other rights that such persons may have pursuant to (i) the Charter and Bylaws; (ii) the similar organizational documents of the
Subsidiaries of the Company; (iii) any and all indemnification agreements entered into with the Company or any of its Subsidiaries; or (iv) applicable Law.
(f)
Joint and Several Obligations
. The obligations of the Surviving Corporation, Parent and their respective Subsidiaries pursuant to
this Section 6.10 will be joint and several.
(g)
Other Claims
. Nothing in this Agreement is intended to, or will be construed
to, release, waive or impair any rights to directors and officers insurance claims pursuant to any applicable insurance policy or indemnification agreement that is or has been in existence with respect to the Company or any of its
Subsidiaries for any of their respective directors, officers or other employees, it being understood and agreed that the indemnification provided for in this Section 6.10 is not prior to or in substitution for any such claims pursuant to such
policies or agreements.
Section 6.11.
Employee Matters
.
(a)
Change of Control Acknowledgement
. Parent hereby acknowledges and agrees that a change of control (or similar phrase)
within the meaning of each of the Company Benefit Plans, as applicable, will occur as of the Effective Time.
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(b)
Existing Arrangements
. From and after the Effective Time, the Surviving Corporation
will (and Parent will cause the Surviving Corporation to) honor all of the Company Benefit Plans and compensation and severance arrangements in accordance with their terms as in effect immediately prior to the Effective Time. Notwithstanding the
foregoing, nothing will prohibit the Surviving Corporation from amending or terminating any such Company Benefit Plans or compensation or severance arrangements in accordance with their terms or if otherwise required pursuant to applicable Law.
(c)
Employment; Benefits
. For a period of one year following the Effective Time, the Surviving Corporation and its Subsidiaries will
(and Parent will cause the Surviving Corporation and its Subsidiaries to) either (i) maintain for the benefit of each Continuing Employee the Company Benefit Plans and any other employee benefit plans (other than the opportunity to participate
in equity-based benefits, cash incentive, bonus, severance and, subject to Section 6.11(b), individual employment agreements) of the Surviving Corporation or any of its Subsidiaries (the
Company Plans
) at benefit levels that
are substantially equivalent to those in effect at the Company or its Subsidiaries on the date of this Agreement, and provide compensation and benefits to each Continuing Employee pursuant to such Company Plans; (ii) provide benefits to each
Continuing Employee that, taken as a whole, are substantially equivalent to those benefits provided to similarly situated employees of Parent (
Parent Plans
); or (iii) provide some combination of Company Plans and Parent Plans
such that each Continuing Employee receives benefits that, taken as a whole, in any case with respect to clauses (i) through (iii), that are in the aggregate substantially equivalent to those benefits provided to similarly situated employees of
Parent. For a period of one year following the Effective Time for any Continuing Employee employed during that period, Parent shall not, and shall cause its Subsidiaries not to, reduce the aggregate cash compensation, including base salary/base
wages and target incentive compensation opportunity, payable to such Continuing Employee. For a period of one year following the Effective Time, the Surviving Corporation and its Subsidiaries will (and Parent will cause the Surviving
Corporation and its Subsidiaries to) provide severance benefits that are substantially equivalent to those benefits provided to similarly situated employees of Parent and its Affiliates;
provided
,
however
, that nothing contained herein
shall permit the Surviving Corporation or Parent at any time after the Effective Time to unilaterally amend, terminate or rescind any severance or retention benefits, including change of control acceleration of equity granted to an individual in a
written agreement signed by the Company and such individual prior to the Effective Time without such individuals written consent or as explicitly permitted under the terms of such written agreement. The Company will consult in good faith
with Parent regarding the content of broadly disseminated communications to Company employees regarding the Merger prior to the release of any such communications.
(d)
New Plans
. To the extent that a Company Plan or Comparable Plan is made available to any Continuing Employee at or after the
Effective Time, the Surviving Corporation and its Subsidiaries will (and Parent will cause the Surviving Corporation and its Subsidiaries to) cause to be granted to such Continuing Employee credit for all service with the Company and its
Subsidiaries prior to the Effective Time for purposes of eligibility to participate, and entitlement to benefits where length of service is relevant (including for purposes of vacation accrual and severance pay entitlement), except that such service
need not be credited to the extent that it would result in duplication of coverage or benefits. In addition, and without limiting the generality of the foregoing, (i) each Continuing Employee will be immediately eligible to participate, without
any waiting period, in any and all employee benefit plans sponsored by the Surviving Corporation and its Subsidiaries (other than the Company Plans) (such plans, the
New Plans
) to the extent that coverage pursuant to any New Plan
replaces coverage pursuant to a comparable Company Plan in which such Continuing Employee participates immediately before the Effective Time (such plans, the
Old Plans
); (ii) to the extent permitted by applicable Law and the
agreements with respect to the benefit providers and insurers, for purposes of each New Plan providing medical, dental, pharmaceutical, vision, disability or other welfare benefits to any Continuing Employee, the Surviving Corporation will cause all
waiting periods, pre-existing conditions or limitations, physical examination requirements, evidence of insurability requirements and actively-at-work or similar requirements of such New Plan to be waived for such Continuing Employee and his or her
covered dependents, and the Surviving Corporation will cause any eligible expenses incurred by such Continuing Employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date that such Continuing
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Employees participation in the corresponding New Plan begins to be given full credit pursuant to such New Plan for purposes of satisfying all deductible, co-payments, coinsurance and
maximum out-of-pocket requirements applicable to such Continuing Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan; and (iii) credit the accounts of such
Continuing Employees pursuant to any New Plan that is a flexible spending plan with any unused balance in the account of such Continuing Employee;
provided
that Parent is provided with sufficient information following the Effective Time to
comply with applicable Law and the agreements with respect to the benefit providers and insurers. Any vacation or paid time off accrued but unused by a Continuing Employee as of immediately prior to the Effective Time will be credited to such
Continuing Employee following the Effective Time, will not be subject to accrual limits or other forfeiture.
(e)
New Equity Awards
.
Prior to the Effective Time, the Company shall grant Company RSUs to certain of the Continuing Employees, in such amounts, and with such terms (including no acceleration in connection with the Merger or any subsequent event, such as termination of
employment) as specified by Parent, which grants shall only be effective immediately prior to the Effective Time. Such Company RSUs shall be assumed and converted in accordance with Section 2.8(d).
(f)
Termination of Benefit Plans
. Except as otherwise requested by Parent, effective as of the day immediately preceding the Closing
Date, the Company shall terminate the Company Benefit Plans that is intended to qualify pursuant to Section 401(a) of the Code (unless Parent provides written notice to the Company no later than 10 Business Days prior to the Closing Date that
such plans shall not be terminated). The Company shall provide Parent with evidence that such plans and the Company Stock Plans have been terminated (effective no later than the day immediately preceding the Closing Date) pursuant to resolutions of
the Board or any applicable committee thereof. The form and substance of such resolutions shall be subject to reasonable and good faith review and approval by Parent. The Company also shall (i) take such other actions in furtherance of terminating
such 401(k) plans as Parent may reasonably require, (ii) solely to the extent such 401(k) plans are terminated, satisfy and contribute the necessary amounts to satisfy any end-of-year true-up on employee contributions that the Company has not fully
matched pursuant to the Companys match obligations as if the Effective Time is the last date of such plan year; and (iii) cooperate with Parent with respect to the termination of any other Company Plans that are
employee benefit plans within the meaning of ERISA, to the extent terminable by the Company without any action or consent of any other Person and without cost to the Company, which are identified by Parent.
(g)
No Third Person Beneficiary Rights
. Notwithstanding anything to the contrary set forth in this Agreement, neither this
Section 6.11 nor any provisions of this Agreement relating to Company Benefit Plans will be deemed to (i) guarantee employment for any period of time for, or preclude the ability of Parent, the Surviving Corporation or any of their
respective Subsidiaries to terminate any Continuing Employee for any reason; (ii) subject to the limitations and requirements specifically set forth in this Section 6.11, require Parent, the Surviving Corporation or any of their respective
Subsidiaries to continue any Company Plan or prevent the amendment, modification or termination thereof after the Effective Time; or (iii) create any third party beneficiary rights in any Person.
Section 6.12.
Obligations of Merger Sub
. Parent will take all action necessary to cause Merger Sub and the Surviving Corporation
to perform their respective obligations pursuant to this Agreement and to consummate the Merger, upon the terms and subject to the conditions set forth in this Agreement. Parent and Merger Sub will be jointly and severally liable for the failure by
either of them to perform and discharge any of their respective covenants, agreements and obligations pursuant to this Agreement.
Section 6.13.
Notification of Certain Matters
.
(a)
Notification by the Company
. At all times during the period commencing with the execution and delivery of this Agreement and
continuing until the earlier to occur of the (1) termination of this Agreement
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pursuant to Article VIII and (2) Effective Time, the Company will give prompt notice to Parent upon becoming aware that any representation or warranty made by it in this Agreement has
become untrue or inaccurate in any material respect, or of any failure by the Company to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it pursuant to this Agreement, in each
case if and only to the extent that such untruth, inaccuracy, or failure would reasonably be expected to cause any of the conditions to the obligations of Parent and Merger Sub to consummate the Merger set forth in Section 7.2(a) or
Section 7.2(b) to fail to be satisfied at the Closing. No such notification will affect or be deemed to modify any representation or warranty of the Company set forth in this Agreement or the conditions to the obligations of Parent and Merger
Sub to consummate the Merger or the remedies available to the Parties under this Agreement. The terms and conditions of the Confidentiality Agreement apply to any information provided to Parent pursuant to this Section 6.13(a).
(b)
Notification by Parent
. At all times during the period commencing with the execution and delivery of this Agreement and continuing
until the earlier to occur of the (1) termination of this Agreement pursuant to Article VIII and (2) Effective Time, Parent will give prompt notice to the Company upon becoming aware that any representation or warranty made by Parent
or Merger Sub in this Agreement has become untrue or inaccurate in any material respect, or of any failure by Parent or Merger Sub to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or
satisfied by it pursuant to this Agreement, in each case if and only to the extent that such untruth, inaccuracy or failure would reasonably be expected to cause any of the conditions to the obligations of the Company to consummate the Merger set
forth in Section 7.3(a) or Section 7.3(b) to fail to be satisfied at the Closing. No such notification will affect or be deemed to modify any representation or warranty of Parent or Merger Sub set forth in this Agreement or the conditions
to the obligations of the Company to consummate the Merger or the remedies available to the Parties under this Agreement. The terms and conditions of the Confidentiality Agreement apply to any information provided to the Company pursuant to this
Section 6.13(b).
Section 6.14.
Public Statements and Disclosures
. The initial press release concerning this Agreement
and the Merger will be a joint press release reasonably acceptable to the Company and Parent. Thereafter, the Company (unless the Company Board (or a committee thereof) has made a Company Board Recommendation Change), will not issue any press
releases or other public written communications to the extent relating to this Agreement or the Merger without the consent of Parent (which consent will not be unreasonably withheld, conditioned or delayed), except that the Company will not be
obligated to obtain such consent with respect to communications that are (i) required by applicable Law; (ii) are consistent with previous press releases, public disclosures or public statements made jointly by the Parties (or individually
if approved by Parent); or (iii) principally related to a Superior Proposal or Company Board Recommendation Change, to the extent permitted by Section 5.3. The Company (unless the Company Board (or a committee thereof) has made a
Company Board Recommendation Change) will use its reasonable best efforts, to the extent practicable, to consult with Parent (and will consider in good faith the comments and suggestions of Parent) before (a) participating in any media
interviews; (b) engaging in any meetings or calls with analysts, institutional investors or other similar Persons; or (c) providing any non-written statements that are public or are reasonably likely to become public, in each case to the
extent relating to this Agreement or the Merger, except that the Company will not be obligated to engage in such consultation with respect to communications that are (i) required by applicable Law; (ii) are consistent with previous press
releases, public disclosures or public statements made jointly by the Parties (or individually if approved by Parent); or (iii) principally related to a Superior Proposal or Company Board Recommendation Change, to the extent permitted by
Section 5.3.
Section 6.15.
Transaction Litigation
. At all times during the period commencing with the execution and
delivery of this Agreement and continuing until the earlier to occur of the (1) termination of this Agreement pursuant to Article VIII and (2) Effective Time, the Company will provide Parent with prompt notice of all Transaction
Litigation (including by providing copies of all pleadings with respect thereto) and keep Parent reasonably informed with respect to the status thereof. The Company will (a) give Parent the opportunity to participate in the defense, settlement
or prosecution of any Transaction Litigation; (b) consult with Parent with
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respect to the defense, settlement and prosecution of any Transaction Litigation; and (c) consider in good faith Parents advice with respect to any Transaction Litigation. The Company may
not compromise, settle or come to an arrangement regarding, or agree to compromise, settle or come to an arrangement regarding, any Transaction Litigation unless Parent has consented thereto in writing (which consent will not be unreasonably
withheld, conditioned or delayed).
Section 6.16.
Stock Exchange Delisting; Deregistration
. Prior to the Effective Time, the
Company will cooperate with Parent and use its 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 pursuant to applicable Law to cause
(a) the delisting of the Company Common Stock from the NYSE as promptly as practicable after the Effective Time; and (b) the deregistration of the Company Common Stock pursuant to the Exchange Act as promptly as practicable after such
delisting.
Section 6.17.
Credit Agreement
. At or prior to the Effective Time, Parent will provide (or cause to be provided)
to the Company funds in an amount equal to the amount necessary for the Company to repay and discharge in full all amounts outstanding other than (i) contingent obligations not then due and payable and (ii) letters of credit (and terminate all
commitments) under the terms of the Credit Agreement. Promptly following the Effective Time, the Company will repay and discharge such indebtedness in a manner acceptable to the parties to the Credit Agreement and Parent.
Section 6.18.
Parent Vote
. Promptly following the execution and delivery of this Agreement, Parent, in its capacity as the sole
stockholder of Merger Sub, will execute and deliver to Merger Sub (with a copy also sent to the Company) a written consent adopting this Agreement in accordance with the DGCL.
Section 6.19.
Resignations
. The Company shall use its reasonable best efforts to cause to be delivered to Parent resignations
executed by each director of the Company, in his or her capacity as a director but not as an employee or officer of the Company, in office as of immediately prior to the Effective Time and effective upon the Effective Time.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1.
Conditions to Each Party
s Obligations to Effect the Merger
. The respective obligations of Parent,
Merger Sub and the Company to consummate the Merger are subject to the satisfaction or waiver (where permissible pursuant to applicable Law) at or prior to the Effective Time of each of the following conditions:
(a)
Requisite Stockholder Approval
. The Company obtaining the Requisite Stockholder Approval at the Company Stockholder Meeting.
(b)
HSR Act
. The waiting period (and any extensions thereof) applicable to the Merger pursuant to the HSR Act will have expired or
otherwise been terminated.
(c)
No Prohibitive Injunctions or Laws
. No temporary restraining order, preliminary or permanent
injunction or other judgment or order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation of the Merger will be in effect, nor will any action have been taken by any
Governmental Authority of competent jurisdiction, and no Law will have been enacted, entered, enforced or deemed applicable to the Merger, that, in each case, prohibits, makes illegal or enjoins the consummation of the Merger.
Section 7.2.
Conditions to the Obligations of Parent and Merger Sub to Effect the Merger
. The obligations of Parent and Merger Sub
to consummate the Merger will be subject to the satisfaction or waiver (where
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permissible pursuant to applicable Law) at or prior to the Effective Time of each of the following conditions, any of which may be waived exclusively by Parent:
(a)
Representations and Warranties
.
(i) Other than the representations and warranties listed in Section 7.2(a)(ii) and Section 7.2(a)(iii), the representations and
warranties of the Company set forth in this Agreement will be true and correct (without giving effect to any materiality or Company Material Adverse Effect qualifications set forth therein) as of the Closing Date as if made at and as of the Closing
Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct as of such earlier date), except for such failures to be true and
correct, individually or in the aggregate, as have not had and would not have a Company Material Adverse Effect.
(ii) The
representations and warranties set forth in Section 3.1, Section 3.2, Section 3.3, Section 3.4, the third sentence of Section 3.7(a), Section 3.7(c)(vi) and (vii), the second sentence of Section 3.12(a) and
Section 3.26 that (A) are not qualified by materiality or Company Material Adverse Effect will be true and correct in all material respects as of the Closing Date as if made at and as of the Closing Date (except to the extent that any such
representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct in all material respects as of such earlier date); and (B) that are qualified by materiality or Company
Material Adverse Effect will be true and correct in all respects (without disregarding such materiality or Company Material Adverse Effect qualifications) as of the Closing Date as if made at and as of the Closing Date (except to the extent that any
such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct in all respects (without disregarding such materiality or Company Material Adverse Effect
qualifications) as of such earlier date).
(iii) The representations and warranties set forth in the first, second and fourth sentence of
Section 3.7(a), Section 3.7(b), Section 3.7(c)(i)-(v) and Section 3.7(c)(viii) will be true and correct as of the Capitalization Date, except for such inaccuracies that are
de minimis
in the aggregate.
(b)
Performance of Obligations of the Company
. The Company will have performed and complied in all material respects with all covenants
and obligations of this Agreement required to be performed and complied with by it at or prior to the Closing.
(c)
Officer
s Certificate
. Parent and Merger Sub will have received a certificate of the Company, validly executed for and on behalf of the Company and in its name by a duly authorized executive officer thereof, certifying that
the conditions set forth in Section 7.2(a) and Section 7.2(b) have been satisfied.
(d)
Company Material Adverse Effect
.
Since the date of this Agreement, there shall not have occurred and be continuing a Company Material Adverse Effect.
Section 7.3.
Conditions to the Company
s Obligations to Effect the Merger
. The obligations of the Company to consummate the Merger are subject to the satisfaction or waiver (where permissible pursuant to applicable Law) at or prior to
the Effective Time of each of the following conditions, any of which may be waived exclusively by the Company:
(a)
Representations and
Warranties
. The representations and warranties of Parent and Merger Sub set forth in this Agreement will be true and correct (without giving effect to any materiality or Parent Material Adverse Effect qualifications set forth therein) as of the
Closing Date as if made at and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct as of such earlier
date), except for such failure to be true and correct, individually or in the aggregate, as have not had and would not have a Parent Material Adverse Effect.
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(b)
Performance of Obligations of Parent and Merger Sub
. Parent and Merger Sub will have
performed and complied in all material respects with all covenants and obligations of this Agreement required to be performed and complied with by Parent and Merger Sub at or prior to the Closing.
(c)
Officer
s Certificate
. The Company will have received a certificate of Parent and Merger Sub, validly executed
for and on behalf of Parent and Merger Sub and in their respective names by a duly authorized officer thereof, certifying that the conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied.
ARTICLE VIII
TERMINATION; AMENDMENT AND WAIVER
Section 8.1.
Termination
. This Agreement may be validly terminated at any time prior to the Effective Time, whether before or
after the receipt of the Requisite Stockholder Approval (except as provided in this Agreement), only as follows (it being understood and agreed that this Agreement may not be terminated for any other reason or on any other basis):
(a) by mutual written agreement of Parent and the Company;
(b) by either Parent or the Company if (i) any permanent injunction or other judgment or order issued by any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation of the Merger will be in effect, or any action has been taken by any Governmental Authority of competent jurisdiction, that, in each case, prohibits,
makes illegal or enjoins the consummation of the Merger and has become final and non-appealable; or (ii) any Law is enacted, entered, enforced or deemed applicable to the Merger that prohibits, makes illegal or enjoins the consummation of the
Merger;
(c) by either Parent or the Company if the Effective Time has not occurred by 11:59 p.m., Pacific time, on April 30, 2017
(such time and date, the
Termination Date
), except that (i) if as of the Termination Date, all conditions to this Agreement are satisfied (other than those conditions that by their terms are to be satisfied at the Closing,
each of which is capable of being satisfied at the Closing) or waived (where permissible pursuant to applicable Law), other than the conditions set forth in Section 7.1(b) or Section 7.1(c), either Parent or the Company, by written notice
to the other, may extend the Termination Date until 11:59 p.m., Pacific time, on August 21, 2017 (and such date and time shall thereafter constitute the Termination Date) or (ii) if as of the Termination Date, clause (y) of the proviso in Section
2.3 is triggered, then the Company, by written notice to Parent, may extend the Termination Date until 11:59 p.m., Pacific time, on the date that is five Business Days after the completion of the five Business Day period set forth in clause (y) of
the proviso in Section 2.3, but in no event later than 11:59 p.m., Pacific time, on August 21, 2017 (and such date and time shall thereafter constitute the Termination Date), it being understood in each case that the right to terminate this
Agreement pursuant to this Section 8.1(c) will not be available to any Party whose action or failure to act (which action or failure to act constitutes a breach by such Party of this Agreement) has been the primary cause of, or primarily
resulted in, either (A) the failure to satisfy the conditions to the obligations of the terminating Party to consummate the Merger set forth in Article VII prior to the Termination Date; or (B) the failure of the Effective Time to
have occurred prior to the Termination Date;
(d) by either Parent or the Company if the Company fails to obtain the Requisite Stockholder
Approval at the Company Stockholder Meeting at which a vote is taken on the adoption of this Agreement, except that the right to terminate this Agreement pursuant to this Section 8.1(d) will not be available to any Party whose action or failure
to act (which action or failure to act constitutes a breach by such Party of this Agreement) has been the primary cause of, or primarily resulted in, the failure to obtain the Requisite Stockholder Approval at the Company Stockholder Meeting;
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(e) by Parent if the Company has breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform would result in a failure of a condition set forth in Section 7.1 or Section 7.2, except that if such breach is
capable of being cured by the Termination Date, Parent will not be entitled to terminate this Agreement prior to the delivery by Parent to the Company of written notice of such breach, delivered at least 30 days prior to such termination, stating
Parents intention to terminate this Agreement pursuant to this Section 8.1(e) and the basis for such termination, it being understood that Parent will not be entitled to terminate this Agreement if such breach has been cured prior to
termination;
(f) by Parent if at any time the Company Board (or a committee thereof) has effected a Company Board Recommendation Change;
(g) by the Company if Parent or Merger Sub has breached or failed to perform in any material respect any of its respective
representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform would result in a failure of a condition set forth in Section 7.1 or Section 7.3, except that if such breach is
capable of being cured by the Termination Date, the Company will not be entitled to terminate this Agreement prior to the delivery by the Company to Parent of written notice of such breach, delivered at least 30 days prior to such termination,
stating the Companys intention to terminate this Agreement pursuant to this Section 8.1(g) and the basis for such termination, it being understood that the Company will not be entitled to terminate this Agreement if such breach has been
cured prior to termination; or
(h) by the Company (at any time prior to receiving the Requisite Stockholder Approval) if (i) the
Company has received a Superior Proposal; (ii) the Company Board (or a committee thereof) has authorized the Company to enter into an Alternative Acquisition Agreement to consummate the Acquisition Transaction contemplated by that Superior
Proposal; (iii) the Company pays, or causes to be paid, to Parent or its designee the Termination Fee pursuant to Section 8.3(b)(iii); and (iv) the Company has complied in all material respects with Section 5.3 with respect to such
Superior Proposal.
Section 8.2.
Manner and Notice of Termination; Effect of Termination
.
(a)
Manner of Termination
. The Party terminating this Agreement pursuant to Section 8.1 (other than pursuant to
Section 8.1(a)) must deliver prompt written notice thereof to the other Parties setting forth in reasonable detail the provision of Section 8.1 pursuant to which this Agreement is being terminated and the facts and circumstances forming
the basis for such termination pursuant to such provision.
(b)
Effect of Termination
. Any valid termination of this Agreement
pursuant to Section 8.1 will be effective immediately upon the mutual written agreement of Parent and the Company or the delivery of written notice by the terminating Party to the other Parties. Following the termination of this Agreement
pursuant to Section 8.1, this Agreement will be of no further force or effect without liability of any Party (or any equity holder, controlling person, partner, member, manager, stockholder, director, officer, employee, Affiliate, agent or
other representative of such Party) to the other Parties, as applicable, except that, and subject in all respects to this Section 8.2, Section 8.3, and Section 9.8 (in each case, including the limitations set forth herein or therein),
Section 6.6(e), Section 6.6(f), Section 6.14, this Section 8.2, Section 8.3, Section 8.4, Section 8.5 and Article IX will each survive the termination of this Agreement, in each case, in accordance with their
respective terms and conditions. Notwithstanding the previous sentence, nothing in this Agreement will relieve (i) any Party from any liability for any Intentional Breach of this Agreement; and (ii) the Company or (subject in all respects
to this Section 8.2, Section 8.3 and Section 9.8 (in each case, including the limitations set forth herein or therein)) Parent or Merger Sub from any liability for its fraud prior to the valid termination of this Agreement (in the
case of each of (i) and (ii), which the Parties acknowledge and agree (A) will not be limited to reimbursement of expenses or out-of-pocket costs; and (B) in the case of any damages sought by the non-breaching Party, such damages will
include the benefit of the bargain lost by the non-breaching Party, taking into consideration relevant matters, including opportunity costs and the time value of money). No valid termination of this
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Agreement will affect the rights or obligations of any Party pursuant to the Confidentiality Agreement, or the Financing Letters, which rights, obligations and agreements will survive the valid
termination of this Agreement in accordance with their respective terms.
Section 8.3.
Fees and Expenses
.
(a)
General
. Except as set forth in this Section 8.3, all fees and expenses incurred in connection with this Agreement and the
Merger will be paid by the Party incurring such fees and expenses whether or not the Merger is consummated. For the avoidance of doubt, Parent or the Surviving Corporation will be responsible for all fees and expenses of the Payment Agent. Except as
set forth in Section 2.9(e), Parent will pay or cause to be paid all (i) transfer, stamp and documentary Taxes or fees; and (ii) sales, use, gains, real property transfer and other similar Taxes or fees, in each case arising out of or
in connection with the consummation of the Merger.
(b)
Company Payments
.
(i)
Future Transactions
. If (A) this Agreement is validly terminated pursuant to Section 8.1(c), Section 8.1(d) or
Section 8.1(e); (B) at the time of such termination, the conditions set forth in Section 7.1(b) and Section 7.1(c) (to the extent relating to the matters set forth in Section 7.1(b)) have been satisfied or are capable of being
satisfied and the conditions set forth in Section 7.3(a) and Section 7.3(b) would be satisfied if the date of such termination was the Closing Date; (C) prior to the termination of this Agreement pursuant to Section 8.1(c),
Section 8.1(d) or Section 8.1(e), an Acquisition Proposal made or renewed after the date of this Agreement has been publicly announced or publicly disclosed and not publicly withdrawn or otherwise abandoned; and (D) within one year of the
termination of this Agreement, either an Acquisition Transaction is consummated or the Company enters into a definitive agreement providing for the consummation of an Acquisition Transaction and such Acquisition Transaction is subsequently
consummated (whether such consummation occurs before or after the one-year anniversary of such termination), then the Company will, concurrently with the consummation of such Acquisition Transaction, pay or cause to be paid to Parent or its designee
an amount equal to $87,500,000 in cash (the
Termination Fee
) by wire transfer of immediately available funds to an account or accounts designated in writing by Parent. For purposes of this Section 8.3(b), all references to
15% and 85% in the definition of Acquisition Transaction will be deemed to be references to 50%.
(ii)
Company Board Recommendation Change
. If this Agreement is validly terminated pursuant to Section 8.1(f), then the Company
must promptly (and in any event within two Business Days) following such termination pay or cause to be paid to Parent or its designee the Termination Fee by wire transfer of immediately available funds to an account or accounts designated in
writing by Parent.
(iii)
Superior Proposal
. If this Agreement is validly terminated pursuant to Section 8.1(h), then the
Company must concurrently with such termination pay or cause to be paid to Parent or its designee the Termination Fee by wire transfer of immediately available funds to an account or accounts designated in writing by Parent.
(c)
Single Payment Only
. The Parties acknowledge and agree that in no event will the Company be required to pay the Termination Fee on
more than one occasion, whether or not the Termination Fee may be payable pursuant to more than one provision of this Agreement at the same or at different times and upon the occurrence of different events.
(d)
Payments; Default
. The Parties acknowledge that the agreements contained in this Section 8.3 are an integral part of the
Merger and that, without these agreements, the Parties would not enter into this Agreement. Accordingly, if the Company fails to promptly pay any amount due pursuant to Section 8.3(b) and, in order to obtain such payment, Parent commences a
Legal Proceeding that results in a judgment against the Company for the amount set forth in Section 8.3(b) or any portion thereof then the Company will pay or cause to be paid to Parent its reasonable and documented out-of-pocket costs and
expenses (including reasonable and
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documented attorneys fees) in connection with such Legal Proceeding, together with interest on such amount or portion thereof at an annual rate equal to the prime rate (as published in The
Wall Street Journal in effect on the date that such payment or portion thereof was required to be made) plus 5% through the date that such payment or portion thereof was actually received, or a lesser rate that is the maximum permitted by applicable
Law.
(e)
Sole and Exclusive Remedy
. Parents receipt of the Termination Fee to the extent owed pursuant to
Section 8.3(b) will be the sole and exclusive remedy of Parent and Merger Sub and each of their respective Affiliates against (A) the Company, its Subsidiaries and each of their respective Affiliates; and (B) the former, current and future
holders of any equity, controlling persons, directors, officers, employees, agents, attorneys, Affiliates, members, managers, general or limited partners, stockholders and assignees of each of the Company, its Subsidiaries and each of their
respective Affiliates (the Persons in clauses (A) and (B) collectively, the
Company Related Parties
) in respect of this Agreement and the Merger, and upon payment of such amount, none of the Company Related Parties will have any
further monetary liability or obligation to Parent or Merger Sub relating to or arising out of this Agreement or the Merger (except that the Parties (or their Affiliates) will remain obligated with respect to, and the Parties may be entitled to
remedies with respect to, the Confidentiality Agreement, Section 8.3(a) and Section 8.3(d), as applicable).
Section 8.4.
Amendment
. Subject to applicable Law and the other provisions of this Agreement, this Agreement may be amended by the Parties at any time by execution of an instrument in writing signed on behalf of each of Parent, Merger Sub and the Company
(pursuant to authorized action by the Company Board (or a committee thereof), except that if the Company has received the Requisite Stockholder Approval, then no amendment may be made to this Agreement that requires the approval of the Company
Stockholders pursuant to the DGCL without receiving such approval. Notwithstanding anything to the contrary in this Agreement, the provisions expressly relating to the Financing Sources set forth in Section 6.6(a), Section 9.3, the last
sentence of Section 9.6, Section 9.10(b), Section 9.11 and this Section 8.4 (and the defined terms used therein) may not be amended, modified or altered in a manner that adversely impacts any Financing Source Related Party
without the prior written consent of such adversely impacted Financing Source Related Party.
Section 8.5.
Extension; Waiver
.
At any time and from time to time prior to the Effective Time, any Party may, to the extent legally allowed and except as otherwise set forth in this Agreement, (a) extend the time for the performance of any of the obligations or other acts of
the other Parties, as applicable; (b) waive any inaccuracies in the representations and warranties made to such Party in this Agreement; and (c) subject to the requirements of applicable Law, waive compliance with any of the agreements or
conditions for the benefit of such Party contained in this Agreement. Any agreement on the part of a Party to any such extension or waiver will be valid only if set forth in an instrument in writing signed by such Party. Any delay in exercising any
right pursuant to this Agreement will not constitute a waiver of such right.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1.
Survival of Representations, Warranties and Covenants
. The representations, warranties and covenants of the Company,
Parent and Merger Sub contained in this Agreement will terminate at the Effective Time, except that any covenants that by their terms survive the Effective Time will survive the Effective Time in accordance with their respective terms.
Section 9.2.
Notices
. All notices and other communications hereunder must be in writing and will be deemed to have been duly
delivered and received hereunder (a) four 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; or (c) immediately
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upon delivery by hand or by fax (with a written or electronic confirmation of delivery), in each case to the intended recipient as set forth below:
if to Parent, Merger Sub or the Surviving Corporation, to:
Symantec Corporation
350 Ellis
St.
Mountain View, CA 94043
Attn: General Counsel
Fax (650)
429-9137
with a copy (which will not constitute notice) to:
Fenwick & West LLP
555
California Street, 12
th
Floor
San Francisco, CA 94104
|
|
|
Attn:
|
|
Douglas N. Cogen
|
|
|
David K. Michaels
|
|
|
Bomi Lee
|
|
|
Michael Duignan
|
Fax:
|
|
(415) 281-1350
|
and
if to the Company (prior to the Effective Time), to:
LifeLock, Inc.
60 East Rio
Salado Parkway, Suite 400
Tempe, AZ 85281
Attn: General Counsel
Fax: (888)
244-9823
with a copy (which will not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650
Page Mill Road
Palo Alto, CA 94304-1050
|
|
|
Attn:
|
|
Martin W. Korman
|
|
|
Bradley L. Finkelstein
|
|
|
Douglas K. Schnell
|
Fax:
|
|
(650) 493-6811
|
Any notice received at the addressees location on any Business Day after 5:00 p.m., addressees local
time, or on any day that is not a Business Day will be deemed to have been received at 9:00 a.m., addressees local time, on the next Business Day. From time to time, any Party may provide notice to the other Parties of a change in its
address or fax number through a notice given in accordance with this Section 9.2, except that notice of any change to the address or any of the other details specified in or pursuant to this Section 9.2 will not be deemed to have been
received until, and will be deemed to have been received upon, the later of the date (i) specified in such notice; or (ii) that is five Business Days after such notice would otherwise be deemed to have been received pursuant to this
Section 9.2. Rejection or other refusal to accept, or the inability to deliver because of changed address of which no notice is given, will be deemed to be receipt of the notice as of the date of rejection, refusal or inability to deliver.
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Section 9.3.
Assignment
. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval of the other Parties, except that Parent and Merger Sub will have the right to assign all or any portion of their respective rights and obligations pursuant to this
Agreement from and after the Effective Time (a) in connection with a merger or consolidation involving Parent or Merger Sub or other disposition of all or substantially all of the assets of Parent, Merger Sub or the Surviving Corporation;
(b) to any of their respective Affiliates; or (c) to any Financing Source pursuant to the terms of the Financing for purposes of creating a security interest herein or otherwise assigning as collateral in respect of the Financing, it being
understood that, in each case, such assignment will not (i) affect the obligations of the parties (including Financing Sources) to the Financing Letters; or (ii) impede or delay the consummation of the Merger or otherwise materially impede the
rights of the holders of shares of Company Common Stock, Company Stock-Based Awards and Company Options pursuant to this Agreement. Subject to the preceding sentence, this Agreement will be binding upon and will inure to the benefit of the Parties
and their respective successors and permitted assigns. No assignment by any Party will relieve such Party of any of its obligations hereunder.
Section 9.4.
Confidentiality
. Parent, Merger Sub and the Company hereby acknowledge that Parent and the Company have previously
executed the Confidentiality Agreement, which will continue in full force and effect in accordance with its terms. Each of Parent, Merger Sub, the Company and their respective Representatives will hold and treat all documents and information
concerning the Merger in accordance with the Confidentiality Agreement.
Section 9.5.
Entire Agreement
. This Agreement and the
documents and instruments and other agreements among the Parties as contemplated by or referred to herein, including the Confidentiality Agreement, the Company Disclosure Letter and the Financing Letters, constitute the entire agreement among the
Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof. Notwithstanding anything to the contrary in this Agreement,
the Confidentiality Agreement will (a) not be superseded; (b) survive any termination of this Agreement; and (c) continue in full force and effect until the earlier to occur of the (i) Effective Time and (ii) date on which the
Confidentiality Agreement expires in accordance with its terms or is validly terminated by the parties thereto.
Section 9.6.
Third Party Beneficiaries
. Except as set forth in Section 6.10 and this Section 9.6, the Parties agree that their respective representations, warranties and covenants set forth in this Agreement are solely for the benefit of the
other Parties in accordance with and subject to the terms of this Agreement. This Agreement is not intended to, and will not, confer upon any other Person any rights or remedies hereunder, except (a) as set forth in or contemplated by
Section 6.10; (b) if Parent or Merger Sub wrongfully terminates or willfully breaches this Agreement, then, following the termination of this Agreement, the Company, to the extent permitted by this Agreement, may seek damages and other
relief (including equitable relief) on behalf of the holders of shares of Company Common Stock, Company Stock-Based Awards and Company Options (which Parent and Merger Sub acknowledge and agree may include damages based on a decrease in share value
or lost premium); and (c) from and after the Effective Time, the rights of the holders of shares of Company Common Stock, Company Stock-Based Awards and Company Options to receive the merger consideration set forth in Article II. The
rights granted pursuant to clause (b) of the second sentence of this Section 9.6 will only be enforceable on behalf of the holders of shares of Company Common Stock, Company Stock-Based Awards and Company Options by the Company, in its
sole and absolute discretion, as agent for such holders, and it is understood and agreed that any and all interests in such claims will attach to such shares of the Company Common Stock, Company Stock-Based Awards or Company Options and subsequently
transfer therewith and, consequently, any damages, settlements or other amounts recovered or received by the Company with respect to such claims (net of expenses incurred by the Company in connection therewith) may, in the Companys sole and
absolute discretion, be (A) distributed, in whole or in part, by the Company to such holders as of any date determined by the Company; or (B) retained by the Company for the use and benefit of the Company in any manner that the Company
deems fit. The provisions expressly relating to the Financing Sources set forth in Section 6.6(a), Section 8.4, Section 9.3, Section 9.10(b), Section 9.11 and this sentence will inure to the benefit of the Financing Source
Related Parties, each of whom are
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intended to be third-party beneficiaries thereof (it being understood and agreed that the provisions expressly relating to the Financing Sources set forth in Section 6.6(a),
Section 8.4, Section 9.3, Section 9.10(b), Section 9.11 and this sentence will be enforceable by the Financing Source Related Parties).
Section 9.7.
Severability
. In the event that any provision of this Agreement, or the application thereof, becomes or is declared
by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as
reasonably to effect the intent of the Parties. The Parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and
other purposes of such void or unenforceable provision.
Section 9.8.
Remedies
.
(a)
Remedies Cumulative
. Except as otherwise provided in this Agreement, any and all remedies expressly conferred upon a Party will be
deemed cumulative with and not exclusive of any other remedy conferred by this Agreement or by applicable Law on such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy.
(b)
Specific Performance
.
(i)
Irreparable Damage
. The Parties agree that irreparable damage for which monetary damages, even if available, would not be an
adequate remedy would occur in the event that the Parties do not perform the provisions of this Agreement (including any Party failing to take such actions as are required of it by this Agreement in order to consummate the Merger) in accordance with
its specified terms or otherwise breach such provisions. The Parties acknowledge and agree that (A) the Parties will be entitled, in addition to any other remedy to which they are entitled at law or in equity, to seek an injunction, specific
performance and other equitable relief to prevent breaches (or threatened breaches) of this Agreement and to enforce specifically the terms and provisions of this Agreement; (B) the provisions of Section 8.3 are not intended to and do not
adequately compensate the Company, on the one hand, or Parent and Merger Sub, on the other hand, for the harm that would result from a breach of this Agreement, and will not be construed to diminish or otherwise impair in any respect any
Partys right to an injunction, specific performance and other equitable relief; and (C) the right of specific enforcement is an integral part of the Merger and without that right, neither the Company nor Parent would have entered into
this Agreement.
(ii)
No Objections
. The Parties agree not to raise any objections to (A) the granting of an injunction,
specific performance or other equitable relief to prevent or restrain breaches or threatened breaches of this Agreement by the Company, on the one hand, or Parent and Merger Sub, on the other hand; and (B) the specific performance of the terms
and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants, obligations and agreements of the Parties pursuant to this Agreement. Any Party seeking an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement will not be required to provide any bond or other security in connection with such injunction or enforcement, and each Party irrevocably waives
any right that it may have to require the obtaining, furnishing or posting of any such bond or other security.
Section 9.9.
Governing Law
. This Agreement is governed by and construed in accordance with the Laws of the State of Delaware.
Section 9.10.
Consent to Jurisdiction
.
(a)
General Jurisdiction
. Each of the Parties (i) irrevocably consents to the service of the summons and complaint and any other
process (whether inside or outside the territorial jurisdiction of the Chosen Courts) in
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any Legal Proceeding relating to the Merger, for and on behalf of itself or any of its properties or assets, in accordance with Section 9.2 or in such other manner as may be permitted by
applicable Law, but nothing in this Section 9.10 will affect the right of any Party to serve legal process in any other manner permitted by applicable Law; (ii) irrevocably and unconditionally consents and submits itself and its properties
and assets in any Legal Proceeding to the exclusive general jurisdiction of the Chosen Courts in the event that any dispute or controversy arises out of this Agreement or the Merger; (iii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any Chosen Court; (iv) agrees that any Legal Proceeding arising in connection with this Agreement or the Merger will be brought, tried and determined only in the Chosen Courts;
(v) waives any objection that it may now or hereafter have to the venue of any such Legal Proceeding in the Chosen Courts or that such Legal Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and
(vi) agrees that it will not bring any Legal Proceeding relating to this Agreement or the Merger in any court other than the Chosen Courts. Each of Parent, Merger Sub and the Company agrees that a final judgment in any Legal Proceeding in the
Chosen Courts will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law. Parent (A) irrevocably designates Corporation Trust Company as its agent and attorney-in-fact for
the acceptance of service of process and making an appearance on its behalf in any Legal Proceeding and for the taking of all such acts as may be necessary, proper or advisable in order to confer jurisdiction over it; and (B) stipulates that such
consent and appointment are irrevocable and coupled with an interest.
(b)
Jurisdiction for Financing Sources
. Notwithstanding
anything in this Agreement to the contrary, each of the Parties acknowledges and irrevocably agrees (i) that any Legal Proceeding, whether at law or in equity, whether in contract or in tort or otherwise, involving the Financing Sources or any
Financing Source Related Party arising out of, or relating to, the Merger, the Financing, the Financing Letters, or the performance of services thereunder or related will be subject to the exclusive jurisdiction of any state or federal court sitting
in the State of New York in the borough of Manhattan and any appellate court thereof, and each Party hereto submits for itself and its property with respect to any such Legal Proceeding to the exclusive jurisdiction of such court; (ii) not to bring
or permit any of their Affiliates to bring or support anyone else in bringing any such Legal Proceeding in any other court; (iii) that service of process, summons, notice or document by registered mail addressed to them at their respective addresses
provided in the Financing Letters will be effective service of process against them for any such Legal Proceeding brought in any such court; (iv) to waive and hereby waive, to the fullest extent permitted by applicable Law, any objection which any
of them may now or hereafter have to the laying of venue of, and the defense of an inconvenient forum to the maintenance of, any such Legal Proceeding in any such court; and (v) any such Legal Proceeding will be governed and construed in accordance
with the Laws of the State of New York. Without limiting the obligations of the Financing Sources under the Financing Letters and the rights of Parent and Merger Sub under the Financing Letters, the Company acknowledges and agrees that no Financing
Source Related Party shall have any liability or obligation to the Company (or any of its Representatives) in connection with this Agreement or any transactions contemplated by this Agreement if such Financing Source Related Party breaches or fails
to perform (whether willfully, intentionally, unintentionally or otherwise) any of its obligations under the Financing Letters and the Company (on behalf of itself and its Representatives) hereby waives any rights or claims against each Financing
Source Related Party in connection with this Agreement and the Financing, whether at law or equity, in contract, in tort or otherwise, and the Company (on behalf of itself and its Representatives) agrees not to commence (and if commenced agrees to
dismiss or otherwise terminate) any action or proceeding against any Financing Source Related Party in connection with this Agreement or any transactions contemplated by this Agreement (including any action or proceeding relating to the Financing).
Notwithstanding anything to the contrary in this Agreement, (A) the interpretation of the definition of Company Material Adverse Effect and whether or not a Company Material Adverse Effect has occurred; (B) the determination of the accuracy of any
Specified Acquisition Agreement Representations (as defined in the Financing Letters) and whether as a result of any inaccuracy thereof Parent, Merger Sub or their respective Affiliates has the right to terminate its obligations under this
Agreement, or to decline to consummate the Merger; and (C) the determination of whether the Merger has been consummated in accordance with the terms of this Agreement, in each case, will be governed and construed in accordance with the Laws of the
State of Delaware.
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Section 9.11.
Waiver of Jury Trial
. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE PURSUANT TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THAT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL PROCEEDING (WHETHER FOR BREACH OF CONTRACT, TORTIOUS CONDUCT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE MERGER, THE FINANCING LETTERS OR THE FINANCING (INCLUDING ANY SUCH LEGAL PROCEEDING
INVOLVING OR AGAINST ANY FINANCING SOURCE RELATED PARTY). EACH PARTY ACKNOWLEDGES AND AGREES 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) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (c) IT MAKES THIS WAIVER VOLUNTARILY; AND (d) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
Section 9.12.
Counterparts
. This Agreement and any
amendments hereto may be executed in one or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the Parties and delivered to the other
Parties, it being understood that all Parties need not sign the same counterpart. Any such counterpart, to the extent delivered by fax or .pdf, .tif, .gif, .jpg or similar attachment to electronic mail (any such delivery, an
Electronic
Delivery
), will be treated in all manner and respects as an original executed counterpart and will be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No Party may
raise the use of an Electronic Delivery to deliver a signature, or the fact that any signature or agreement or instrument was transmitted or communicated through the use of an Electronic Delivery, as a defense to the formation of a contract, and
each Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.
Section 9.13.
No
Limitation
. It is the intention of the Parties that, to the extent possible, unless provisions are mutually exclusive and effect cannot be given to both or all such provisions, (a) the representations, warranties, covenants and closing
conditions in this Agreement will be construed to be cumulative; (b) each representation, warranty, covenant and closing condition in this Agreement will be given full, separate and independent effect; and (c) nothing set forth in any
provision in this Agreement will (except to the extent expressly stated) in any way be deemed to limit the scope, applicability or effect of any other provision of this Agreement.
[
Signature page follows
.]
A-77
The Parties are signing this Agreement on the date stated in the introductory clause.
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SYMANTEC CORPORATION
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By:
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/s/ Scott C. Taylor
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Name: Scott C. Taylor
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Title: Executive Vice President, General Counsel and Secretary
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L1116 MERGER SUB, INC.
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By:
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/s/ Scott C. Taylor
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Name: Scott C. Taylor
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Title: President
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LIFELOCK, INC.
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By:
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/s/ Hilary Schneider
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Name: Hilary Schneider
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Title: Chief Executive Officer
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[Signature Page to Agreement and Plan of Merger]
A-78
ANNEX B
Fairness Opinion of Goldman, Sachs & Co.
November 20, 2016
Board of Directors
LifeLock, Inc.
60 East Rio Salado Parkway, Suite 400
Tempe, AZ 85281
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of view to the holders (other than Symantec Corporation (
Parent
)
and its affiliates) of the outstanding shares of common stock, par value $0.001 per share (the
Shares
), of LifeLock, Inc. (the
Company
) of the $24.00 in cash per Share to be paid to such holders
pursuant to the Agreement and Plan of Merger, dated as of November 20, 2016 (the
Agreement
), by and among Parent, L1116 Merger Sub, Inc., a wholly owned subsidiary of Parent, and the Company.
Goldman, Sachs & Co. and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment
management and other financial and non-financial activities and services for various persons and entities. Goldman, Sachs & Co. and its affiliates and employees, and funds or other entities they manage or in which they invest or have other
economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of
the Company, Parent, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transaction contemplated by the Agreement (the
Transaction
). We have acted as financial advisor to
the Company in connection with, and have participated in certain of the negotiations leading to, the Transaction. We expect to receive fees for our services in connection with the Transaction, the principal portion of which is contingent upon
consummation of the Transaction, and the Company has agreed to reimburse certain of our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. We may also in the future provide financial advisory and/or
underwriting services to the Company, Parent and their respective affiliates for which our Investment Banking Division may receive compensation.
In
connection with this opinion, we have reviewed, among other things, the Agreement; annual reports to stockholders and Annual Reports on Form 10-K of the Company for the four fiscal years ended December 31, 2015; the Companys Registration
Statement on Form S-1, including the prospectus contained therein dated September 27, 2012 relating to the Companys initial public offering of Shares; certain interim reports to stockholders and Quarterly Reports on
Form 10-Q
of the Company; certain other communications from the Company to its stockholders; certain publicly available research analyst reports for the Company; and certain internal financial analyses and
forecasts for the Company prepared by its management, as approved for our use by the Company (the
Forecasts
). We have also held discussions with members of the senior management of the Company regarding their assessment of the
past and current business operations, financial condition and future prospects of the Company; reviewed the reported price and trading activity for the Shares; compared certain financial and stock market information for the Company with similar
information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations; and performed such other studies and analyses, and considered such other factors, as we deemed
appropriate.
For purposes of rendering this opinion, we have, with your consent, relied upon and assumed the accuracy and completeness of all of the
financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, us, without assuming any responsibility for independent verification thereof. In that regard, we have assumed with your consent that the
Forecasts have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. We have not
B-1
made an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company or any of its
subsidiaries and we have not been furnished with any such evaluation or appraisal. We have assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be obtained without any
adverse effect on the expected benefits of the Transaction in any way meaningful to our analysis. We have assumed that the Transaction will be consummated on the terms set forth in the Agreement, without the waiver or modification of any term or
condition the effect of which would be in any way meaningful to our analysis.
Our opinion does not address the underlying business decision of the
Company to engage in the Transaction, or the relative merits of the Transaction as compared to any strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. This opinion
addresses only the fairness from a financial point of view to the holders (other than Parent and its affiliates) of Shares, as of the date hereof, of the $24.00 in cash per Share to be paid to such holders pursuant to the Agreement. We do not
express any view on, and our opinion does not address, any other term or aspect of the Agreement or Transaction or any term or aspect of any other agreement or instrument contemplated by the Agreement or entered into or amended in connection with
the Transaction, including, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the
amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company, or class of such persons, in connection with the Transaction, whether relative to the $24.00 in cash per Share to be paid to
the holders (other than Parent and its affiliates) of Shares pursuant to the Agreement or otherwise. We are not expressing any opinion as to the impact of the Transaction on the solvency or viability of the Company or Parent or the ability of the
Company or Parent to pay their respective obligations when they come due. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof and we
assume no responsibility for updating, revising or reaffirming this opinion based on circumstances, developments or events occurring after the date hereof. Our advisory services and the opinion expressed herein are provided for the information and
assistance of the Board of Directors of the Company in connection with its consideration of the Transaction and such opinion does not constitute a recommendation as to how any holder of Shares should vote with respect to such Transaction or any
other matter. This opinion has been approved by a fairness committee of Goldman, Sachs & Co.
Based upon and subject to the foregoing, it is our
opinion that, as of the date hereof, the $24.00 in cash per Share to be paid to the holders (other than Parent and its affiliates) of Shares pursuant to the Agreement is fair from a financial point of view to such holders.
Very truly yours,
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/s/ Goldman, Sachs & Co.
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(GOLDMAN, SACHS & CO.)
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B-2
ANNEX C
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
§ 262 Appraisal rights
(a) Any stockholder of a
corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or
consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of the stockholders shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word stockholder means a
holder of record of stock in a corporation; the words stock and share mean and include what is ordinarily meant by those words; and the words depository receipt mean a receipt or other instrument issued by a
depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title and, subject to paragraph (b)(3) of this section, § 251(h) of this title), § 252, § 254, § 255, § 256, § 257, §
258, § 263 or § 264 of this title:
(1) Provided, however, that, except as expressly provided in § 363(b) of this title, no
appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the
meeting of stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall
be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section;
or
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing paragraphs (b)(2)a., b. and c. of this section.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 251(h), § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(4) In the event of an amendment to a corporations certificate of incorporation contemplated by § 363(a) of this title,
appraisal rights shall be available as contemplated by § 363(b) of this title, and the procedures of
C-1
this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as practicable, with the word amendment substituted for the
words merger or consolidation, and the word corporation substituted for the words constituent corporation and/or surviving or resulting corporation.
(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or
series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the
certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d), (e) and (g) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with §
255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholders shares shall
deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholders shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has
complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a
constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy
of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice or, in the case of a merger approved pursuant to § 251(h) of this
title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such
holders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holders shares. If such notice did not
notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to §
C-2
251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holders shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent
of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either
notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation,
the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all
such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have
the right to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number
of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholders written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this
section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such persons
own name, file a petition or request from the corporation the statement described in this subsection.
(f) Upon the filing of any such petition by a
stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders who have
complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock
to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately before the merger
or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of such
shares who are otherwise entitled to appraisal rights unless
C-3
(1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger
or consolidation for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this title.
(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the
Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of
the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion
determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal
Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the
surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair
value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant
to subsection (f) of this section and who has submitted such stockholders certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together with
interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Courts decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as
the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation,
reasonable attorneys fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the
effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or
resulting corporation a written withdrawal of such stockholders demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection
(e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or
consolidation, as set forth in subsection (e) of this section.
C-4
(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would
have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
C-5
Annex D
S
UPPORT
A
GREEMENT
This S
UPPORT
A
GREEMENT
(this
Agreement
) is entered into as of the Agreement Date (as defined
below) by and among Symantec Corporation, a Delaware corporation (
Parent
), and the stockholders listed on
Annex A
(each such stockholder, as to himself, herself or itself,
Stockholder
) of LifeLock, Inc.,
a Delaware corporation (the
Company
).
Agreement Date
means, as to any Stockholder, the date set forth on the signature page hereto executed by such Stockholder. Terms not otherwise defined herein shall have
the respective meanings ascribed to them in the Merger Agreement (as defined below). If the terms of this Agreement conflict in any way with the provisions of the Merger Agreement, then the provisions of the Merger Agreement shall control.
R
ECITALS
A. Each Stockholder has executed and delivered this Agreement in connection with, and concurrently with the execution
and delivery of, that certain Agreement and Plan of Merger, dated as of November 20, 2016 (the
Merger Agreement
), by and among Parent, L1116 Merger Sub, Inc., a Delaware corporation and a direct or indirect, wholly owned
subsidiary of Parent (
Merger Sub
), and the Company, pursuant to which Merger Sub will, on the terms and subject to the conditions set forth therein, merge with and into the Company (collectively with the other transactions
contemplated by the Merger Agreement, the
Merger
), with the Company to survive the Merger and become a direct or indirect, wholly owned subsidiary of Parent.
B. Each Stockholder has agreed to enter into this Agreement as an inducement to and in consideration for the
willingness of Parent and Merger Sub to enter into the Merger Agreement.
NOW, THEREFORE, in consideration of the premises,
representations, warranties, covenants and other agreements contained in the Merger Agreement and herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1.
Restrictions on Shares
.
1.1 Each Stockholder, as to himself, herself or itself (severally and not jointly), agrees that, from the Agreement Date
until the Expiration Time (as defined below), he, she or it shall not, directly or indirectly, transfer (except as may be specifically required by a final, non-appealable order of a court of competent jurisdiction or by operation of applicable Law
or pursuant to the express terms of the Merger Agreement), directly or indirectly, sell, exchange, pledge or otherwise dispose of (other than pursuant to Rule 10b5-1 trading plans in effect on the date of this Agreement) or subject to any Lien
(collectively,
Transfer
) any Shares (as defined in
Section 2
) or enter into any agreement or other arrangement relating to any Transfer of Shares;
provided
that such Stockholder may (a) if such Stockholder is a
partnership, limited liability company or corporation, distribute Shares to its partners, members, equity holders or affiliated entities (as applicable), (b) if such Stockholder is an individual, Transfer any Shares to any member of such
Stockholders immediate family, or to a trust for the benefit of such Stockholder or any member of such Stockholders immediate family, (c) Transfer any Shares for charitable purposes as charitable gifts or donations, and (d) Transfer any
Shares upon the death of such Stockholder (each, a
Permitted Transfer
);
provided
,
further
, that any such Permitted Transfer shall be permitted only if, as a condition to the effectiveness of such Permitted Transfer,
(i) the transferee agrees in writing to be bound by all of the terms of this Agreement with respect to the Shares subject to such Permitted Transfer to the same extent as such transferring Stockholder is bound thereunder and (ii) such Permitted
Transfer would not require registration pursuant to any applicable federal or state securities Laws or result in the Company being required to register any class of its equity securities with the SEC. As used herein, the term
Expiration Time
as it applies to any Stockholder shall mean the earlier of (A) the Effective Time and (B) the termination of the Merger Agreement in accordance with its terms. Any Transfer in violation of this
Section 1.1
shall be null and void
ab
initio
with respect to Shares so transferred.
D-1
1.2 From the Agreement Date until the Expiration Time and except pursuant
to the terms of this Agreement, each Stockholder, as to himself, herself or itself (severally and not jointly), agrees he, she or it shall not, directly or indirectly, grant any proxies or powers of attorney with respect to any of the Shares,
deposit any of the Shares into a voting trust, or enter into a voting agreement with respect to any of the Shares.
1.3 Any shares of Company Capital Stock that a Stockholder purchases or with respect to which such Stockholder
otherwise acquires beneficial ownership on or after the Agreement Date and prior to the Expiration Time, including, without limitation, by reason of any (a) exercise of Company Options or vesting and conversion of Company RSUs or Company PRSAs or
(b) stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into capital stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other similar
transaction (collectively, the
New Shares
), shall be subject to the terms and conditions of this Agreement to the same extent as if they constituted Shares and shall be deemed to be Shares for the purposes hereof;
provided
,
however
, that a Stockholder shall be permitted to sell or net settle a sufficient number of Shares or New Shares to cover the tax withholding obligations resulting from the vesting and conversion of Company RSUs or Company PRSAs or the
exercise of Company Options and to cover the payment of the exercise price related to the exercise of Company Options.
2.
Agreement to Vote Shares
. From the Agreement Date until the Expiration Time, at every meeting of the Company
Stockholders called with respect to any of the following, and at every adjournment or postponement thereof, each Stockholder shall (as to himself, herself or itself (severally and not jointly)) or shall cause the holder of record of any applicable
record date to, be present (in person or by proxy) and irrevocably and unconditionally vote (or consent to be voted) the shares of Company Capital Stock beneficially owned by such Stockholder (the
Shares
) in respect of which such
Stockholder is entitled to vote at any such meeting (a) in favor of (i) the adoption of the Merger Agreement; and (ii) approval of any proposal to adjourn or postpone the meeting to a later date, if there are not sufficient votes for the adoption of
the Merger Agreement; (b) in favor of any other matter considered at any such meeting of the Company Stockholders that the Company Board has (A) determined is necessary or desirable for the consummation of the Merger; (B) disclosed in the Proxy
Statement or other written materials distributed to all Company Stockholders and (C) recommended that the Company Stockholders adopt; and (c) against any Acquisition Proposal.
2.1
Proxy
. Solely in the event of a failure by any Stockholder to act in accordance with such Stockholders
obligations as to voting pursuant to
Section 2
, such Stockholder hereby irrevocably (until the Expiration Time) grants to and appoints Parent as such Stockholders proxy and attorney-in-fact (with full power of substitution), for and in
the name, place and stead of such Stockholder, to represent, vote and otherwise act (by voting at any meeting of the Company Stockholders, by written consent in lieu thereof or otherwise) with respect to the Shares owned or held by such Stockholder
regarding the matters referred to in
Section 2
until the Expiration Time, to the same extent and with the same effect as such Stockholder might or could do under applicable law, rules and regulations. The proxy granted pursuant to this
Section 2.1
is coupled with an interest and shall be irrevocable until the Expiration Time. Until the Expiration Time, such Stockholder will take such further action and will execute such other instruments as may be necessary to effectuate
the intent of this proxy. Such Stockholder hereby revokes any and all previous proxies or powers of attorney granted with respect to any of such Stockholders Shares that may have heretofore been appointed or granted with respect to the matters
referred to in this
Section 2.1
, and prior to the Expiration Time no subsequent proxy (whether revocable or irrevocable) or power of attorney shall be given by such Stockholder, except as required by any election form or letter of transmittal
in connection with the Merger, or in connection with such Stockholder voting by proxy at the meeting of the Company Stockholders as contemplated by
Section 2
. Notwithstanding the foregoing, this proxy shall terminate upon termination of this
Agreement in accordance with its terms.
3.
Representations and Warranties of Stockholder
. Each Stockholder
hereby represents and warrants, as to himself, herself or itself (severally and not jointly), to Parent as follows:
3.1
Securities
. No person who is not a signatory to this Agreement (or such signatorys spouse for purposes
of applicable community property Laws) has a beneficial interest in or a right to acquire or vote any of
D-2
the Shares (other than, if such Stockholder is a partnership or a limited liability company, the rights and interests of Persons that own partnership interests or limited liability company
membership interests or units in such Stockholder under the partnership agreement or operating agreement governing Stockholder and applicable partnership or limited liability company law, or if such Stockholder is a trust, the beneficiaries
thereof). The Shares are not, and at the Expiration Time will not be, subject to any Liens (other than Liens created pursuant to this Agreement).
3.2
Power, Authorization and Validity
. If such Stockholder is an entity, such Stockholder is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization. Such Stockholder has all requisite power and authority (if such Stockholder is an entity) or legal capacity (if such Stockholder is a natural person) to
enter into this Agreement and to perform his, her or its obligations under this Agreement. The execution and delivery of this Agreement by such Stockholder and the consummation by such Stockholder of the transactions contemplated hereby have been
duly authorized by all necessary action, if any, on the part of such Stockholder. This Agreement has been duly executed and delivered by such Stockholder and constitutes a valid and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms, subject only to the effect, if any, of (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar law now or hereafter in effect relating to creditors rights generally and (b)
rules of law and equity governing specific performance, injunctive relief and other equitable remedies.
3.3
No
Consents
. No consent, approval, order, authorization, release or waiver of, or registration, declaration or filing with, any Governmental Authority or other Person by or on behalf of such Stockholder is necessary or required to be made or
obtained by such Stockholder to enable such Stockholder to lawfully execute and deliver, enter into, and perform its, his or her obligations under this Agreement except as has been made or obtained prior to the date of this Agreement.
3.4
No Conflict
. The execution and delivery by such Stockholder of this Agreement and the consummation of the
transactions contemplated by this Agreement will not (a) if such Stockholder is an entity, violate or conflict with any provision of the certificate of incorporation or bylaws or other equivalent organizational or governing documents of such
Stockholder, in each case as amended to date, (b) violate, conflict with, result in the breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) pursuant to, result in the loss of any benefit
under, result in the termination of, accelerate the performance required by, or result in a plan of termination or acceleration pursuant to any material Contract of such Stockholder applicable to any of the Shares, (c) violate or conflict with any
Law applicable to such Stockholder or by which the Shares are bound, or (d) result in the creation of any Lien upon any of the Shares, in the case of clauses (a), (b), (c) and (d), in a manner that would adversely affect the ability of such
Stockholder, individually or in the aggregate, to perform his, her or its obligations under or otherwise comply with this Agreement.
3.5
Legal Proceedings
. There is no claim, action, charge, lawsuit, litigation or other similarly formal legal
proceeding brought by or pending before any Governmental Authority, arbitrator, mediator or other tribunal or, to such Stockholders knowledge, investigation, in each case whether civil, criminal, administrative, judicial or investigative, or
any appeal therefrom (each of the foregoing, a
Legal Proceeding
) against such Stockholder that relates in any way to this Agreement, the Merger Agreement, the Merger or any of the transactions contemplated hereby or thereby. To
the knowledge of such Stockholder, no such Legal Proceeding has been threatened and there is no reasonable basis for any such Legal Proceeding.
4.
Covenants of Stockholder
. Each Stockholder hereby covenants, as to himself, herself or itself (severally and
not jointly), to Parent as follows:
4.1
Compliance
. From the date of this Agreement and until the Expiration
Time, such Stockholder shall not (a) knowingly fail to act or take any action that would reasonably be expected to result in a breach of a representation or warranty contained herein, (b) take any action that would reasonably be expected to impair
the ability of Stockholder to perform his, her or its obligations under this Agreement in any material respect or prevent or materially delay the consummation of the Merger or this Agreement;
provided
that nothing contained
D-3
in this
Section 4.1
shall be construed to prohibit such Stockholder (or its representatives) as a director of the Company (if applicable) from exercising his or her fiduciary duties to
stockholders under applicable Law.
4.2
No Voting Agreements
. From the date of this Agreement and until the
Expiration Time, such Stockholder shall not enter into any agreement or understanding with any Person to vote or give instructions in any manner inconsistent with the terms of
Section 2
.
4.3
Appraisal Rights
. Such Stockholder hereby irrevocably and unconditionally waives and agrees not to exercise
any rights of appraisal rights that such Stockholder may have (whether under Section 262 of the DGCL or other applicable Law or otherwise) or could potentially have or acquire in connection with the execution and delivery of the Merger Agreement or
the consummation of the Merger.
4.4
Stop Transfer Instructions
. From the date of this Agreement and until
the Expiration Time, in furtherance of this Agreement, such Stockholder hereby authorizes Parent or its counsel to notify the Companys transfer agent that there is a stop transfer order with respect to all of the Shares of such Stockholder
(and that this Agreement places limits on the voting and transfer of such Shares).
5.
Miscellaneous
.
5.1
Fiduciary Duties
. Notwithstanding anything in this Agreement to the contrary: (a) Stockholder makes no
agreement or understanding herein in any capacity other than in Stockholders capacity as a record holder and beneficial owner of the Shares and the New Shares, and not in such Stockholders capacity as a director, officer or employee of
the Company or any of the Companys Subsidiaries or in such Stockholders capacity as a trustee or fiduciary of any Company Employee Plan, and (b) nothing herein will be construed to limit or affect any action or inaction by Stockholder or
any representative of Stockholder, as applicable, serving on the Company Board or on the board of directors of any Subsidiary of the Company or as an officer or fiduciary of the Company or any Subsidiary of the Company, acting in such persons
capacity as a director, officer, employee or fiduciary of the Company or any Subsidiary of the Company.
5.2
Notices
. All notices and other communications hereunder must be in writing and will be deemed to have been
duly delivered and received hereunder (a) four 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; or (c) immediately upon delivery by hand or by fax (with a written or electronic confirmation of delivery), in each case to the intended recipient as set forth below:
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(i)
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If to Parent, to:
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Symantec Corporation
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350 Ellis St.
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Mountain View, CA 94043
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Attention:
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General Counsel
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Facsimile No.: (650) 429-9137
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Telephone No.: (650) 527-6634
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with a copy (which shall not constitute notice) to:
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Fenwick & West LLP
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555 California Street
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San Francisco, CA 94104
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Attention:
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Douglas N. Cogen
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David K. Michaels
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Facsimile No.: (650) 938-5200
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Telephone No.: (650) 988-8500
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(ii) If to any Stockholder, at the address set forth below such Stockholders signature on
the signature page executed by such Stockholder.
5.3
Specific Performance; Injunctive Relief
. The parties
hereto acknowledge that Parent will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreements of any Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation of this Agreement, Parent shall have the right to enforce such covenants and agreements by injunctive relief, specific performance, or by any other means available to Parent at
law or in equity and each Stockholder hereby waives any and all defenses that could exist in its favor in connection with such injunction or enforcement and waives any requirement for the security or posting of any bond in connection with such
injunction or enforcement.
5.4
Counterparts
. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto; it being understood that all parties
hereto need not sign the same counterpart.
5.5
Entire Agreement; Nonassignability; Parties in Interest;
Assignment
. This Agreement and the documents, instruments and other agreements among the parties as contemplated by, referred to herein or delivered pursuant hereto (a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and (b) are not intended to confer, and shall not be construed as conferring, upon any
Person other than the parties hereto any rights or remedies hereunder. The representations and warranties and covenants of each Stockholder contained herein shall not survive the Closing, and no claim may be brought with respect to any breach of any
representation, warranty or covenant hereunder following the Closing. 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 Stockholder without the prior written consent of Parent, and any such assignment or delegation that is not consented to shall be null and void. Parent may assign this Agreement to any direct or indirect wholly owned subsidiary of Parent without
the prior written consent of any Stockholder. Subject to the preceding two sentences, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against, the parties hereto and their respective successors and assigns
(including any Person to whom any Shares are Transferred).
5.6
Amendment; Waiver
. Subject to applicable
Law, the parties hereto may amend this Agreement as it applies to each Stockholder at any time by execution of an instrument in writing signed on behalf of each of Parent and Stockholder. At any time, either Parent or any Stockholder (as to himself,
herself or itself) may, to the extent legally allowed, extend the time for the performance of any of the obligations or other acts of the other parties, as applicable, waive any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any agreement on the part of Parent or any Stockholder to any such waiver
shall be valid only if set forth in an instrument in writing signed on behalf of the other. Without limiting the generality or effect of the preceding sentence, no delay in exercising any right under this Agreement shall constitute a waiver of such
right, and no waiver of any breach or default shall be deemed a waiver of any other breach or default of the same or any other provision herein.
5.7
Severability
. In the event that any provision of this Agreement, or the application thereof, becomes or is
declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement shall continue in full force and effect and shall be interpreted so as reasonably to effect the intent of the parties hereto. The
parties hereto further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that shall achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable
provision.
D-5
5.8
Remedies Cumulative
. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party hereto shall be deemed cumulative with and not exclusive of any other remedy conferred by this Agreement, or by applicable Law on such party, and the exercise by a party of any one remedy will
not preclude the exercise of any other remedy.
5.9
Governing Law
. The internal laws of the State of
Delaware, irrespective of its conflicts of law principles, shall govern the validity of this Agreement, the construction of its terms, and the interpretation and enforcement of the rights and duties of the parties hereto. The parties hereto hereby
irrevocably submit to the exclusive jurisdiction of the Chosen Courts solely in respect of the interpretation and enforcement of this Agreement and of the documents referred to herein, and in respect of the Merger, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or thereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and
determined in such Chosen Courts. The parties hereto hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in
Section 5.2
or in such other manner as may be permitted by any applicable Law shall be valid and sufficient service thereof.
5.10
WAIVER OF JURY TRIAL
. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE PURSUANT TO
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THAT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING (WHETHER FOR BREACH
OF CONTRACT, TORTIOUS CONDUCT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTION OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF. EACH PARTY ACKNOWLEDGES AND AGREES
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) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER; (c) IT MAKES THIS WAIVER VOLUNTARILY; AND (d) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 5.10
.
[S
IGNATURE
P
AGE
N
EXT
]
D-6
IN WITNESS WHEREOF, the parties hereto have caused this Support Agreement to be executed as of
the date first above written.
SYMANTEC CORPORATION:
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By:
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/s/ Scott C. Taylor
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Name: Scott C. Taylor
Title: Executive Vice President,
General Counsel
and Secretary
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[S
IGNATURE
P
AGE
TO
S
UPPORT
A
GREEMENT
]
D-7
IN WITNESS WHEREOF, the parties hereto have caused this Support Agreement to be executed as of
the date first above written.
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TOCKHOLDER
:
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Bessemer Venture Partners
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(Print Name of Stockholder)
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/s/ David Cowan
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(Signature)
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David Cowan, Partner
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(Print name and title if signing on behalf of an entity)
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(Print Address)
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(Print Address)
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(Print Telephone Number)
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11/20/2016
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(Agreement Date)
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[S
IGNATURE
P
AGE
TO
S
UPPORT
A
GREEMENT
]
D-8
IN WITNESS WHEREOF, the parties hereto have caused this Support Agreement to be executed as of
the date first above written.
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TOCKHOLDER
:
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David Cowan
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(Print Name of Stockholder)
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/s/ David Cowan
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(Signature)
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(Print name and title if signing on behalf of an entity)
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(Print Address)
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(Print Address)
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(Print Telephone Number)
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11/20/2016
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(Agreement Date)
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[S
IGNATURE
P
AGE
TO
S
UPPORT
A
GREEMENT
]
D-9
IN WITNESS WHEREOF, the parties hereto have caused this Support Agreement to be executed as of
the date first above written.
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TOCKHOLDER
:
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Todd Davis
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(Print Name of Stockholder)
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/s/ Todd Davis
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(Signature)
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(Print name and title if signing on behalf of an entity)
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(Print Address)
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(Print Address)
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(Print Telephone Number)
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11/20/2016
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(Agreement Date)
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[S
IGNATURE
P
AGE
TO
S
UPPORT
A
GREEMENT
]
D-10
IN WITNESS WHEREOF, the parties hereto have caused this Support Agreement to be executed as of
the date first above written.
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TOCKHOLDER
:
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Hilary A. Schneider
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(Print Name of Stockholder)
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/s/ Hilary A. Schneider
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(Signature)
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(Print name and title if signing on behalf of an entity)
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(Print Address)
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(Print Address)
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(Print Telephone Number)
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11/20/2016
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(Agreement Date)
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[S
IGNATURE
P
AGE
TO
S
UPPORT
A
GREEMENT
]
D-11
ANNEX A
Bessemer Venture Partners
David
Cowan
Todd Davis
Hilary A.
Schneider
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LIFELOCK, INC.
60 EAST RIO SALADO PARKWAY
SUITE 400
TEMPE, AZ 85281
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VOTE BY INTERNET - www.proxyvote.com
Use the
Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or special meeting date. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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