Section 3.5
Capitalization
.
(a) The authorized capital stock of the Company consists solely of 1,000,000,000 shares of Company Stock and
300,000,000 shares of preferred stock, par value $0.01 per share (the
Company Preferred Stock
). As of the close of business on February 8, 2018, (
i
) there were issued and outstanding (
A
) 97,727,755
shares of Company Stock (including 363,934 shares of Company Restricted Stock under the Company Equity Plan), (
B
) no shares of Company Preferred Stock, (
C
) Company RSUs with respect to an aggregate of 1,730,632 shares of
Company Stock, all of which were issued under the Company Equity Plan, and (
ii
) 5,259,285 shares of Company Stock were available for issuance of future awards under the Company Equity Plan and no other shares of Company Stock were
available for issuance of future awards under any other Company equity compensation plan or arrangement. No shares of Company Stock are held by any Subsidiary of the Company.
(b) Except (
x
) as set forth in
Section
3.5(a)
, (
y
) for any Company RSUs and Company
Restricted Stock that are granted under a Company Equity Plan or otherwise after the date of this Agreement in accordance with the terms of this Agreement and (
z
) for any shares of Company Stock issued upon the settlement of Company RSUs
or vesting of Company Restricted Stock that were outstanding on February 8, 2018 or subsequently granted under the Company Equity Plan or otherwise in accordance with the terms of this Agreement, there are no outstanding (
i
) shares
of capital stock or other voting securities of or other ownership interests in the Company, (
ii
) securities of the Company convertible into or exchangeable for shares of capital stock or other voting securities of or other ownership
interests in the Company, (
iii
) options or other rights or agreements, commitments or understandings to acquire from the Company, or other obligation of the Company to issue, any shares of capital stock or other voting securities of or
other ownership interests in the Company, or securities convertible into or exchangeable for shares of capital stock or other voting securities of or other ownership interests in the Company or (
iv
) restricted shares, stock appreciation
rights, performance units, restricted stock units, contingent value rights, phantom stock or similar securities or rights issued or granted by the Company or any of its Subsidiaries that are derivative of, or provide economic benefits
based, directly or indirectly, on the value or price of, any shares of capital stock or other voting securities of or other ownership interests in the Company (the items in clauses (i) through (iv) being referred to collectively as the
Company Securities
).
(c) There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities. Other than the Stockholders Agreement, neither the Company nor any of its Subsidiaries is a party to any voting trust, proxy, voting agreement or other similar agreement with respect to the voting
of any Company Securities. All outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable, are not subject to any preemptive rights and were issued in compliance with all
applicable securities Laws. No Subsidiary of the Company owns any shares of capital stock of the Company or any Company Securities. There are no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote
(whether on an
as-converted
basis or otherwise) (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote.
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Section 3.6
Subsidiaries
.
(a) Each Subsidiary of the Company is duly incorporated or otherwise duly organized, validly existing and (where such concept is recognized)
in good standing under the laws of its jurisdiction of incorporation or organization, except, in the case of any such Subsidiary, where the failure to be so incorporated, organized, existing or in good standing would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. Each Subsidiary of the Company has all corporate, limited liability company or comparable powers required to carry on its business as now conducted, except as would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Each such Subsidiary is duly qualified to do business as a foreign entity and (where such concept is recognized) is in good standing in each
jurisdiction in which it is required to be so qualified or in good standing, except where failure to be so qualified or in good standing would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) The outstanding capital stock or other voting securities of or other ownership interests in each Subsidiary of the Company are owned,
directly or indirectly, by the Company free and clear of any Lien other than Permitted Liens.
Section
3.6(b)
of the Company Disclosure Letter contains a complete and accurate list of the Subsidiaries of the Company,
including, for each of the Subsidiaries, (
x
) its name and (
y
) its jurisdiction of organization. Except as set forth on
Section
3.6(b)
of the Company Disclosure Letter, each Subsidiary is directly or
indirectly wholly owned by the Company. There are no issued, reserved for issuance or outstanding (
i
) securities of the Company or any of its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities of or other ownership interests in any Subsidiary of the Company, (
ii
) options or other rights or agreements, commitments or understandings to acquire from the Company or any of its Subsidiaries, or other
obligations of the Company or any of its Subsidiaries to issue, any shares of capital stock or other voting securities of or other ownership interests in, or any securities convertible into or exchangeable or exercisable for, any shares of capital
stock or other voting securities of or other ownership interests in any Subsidiary of the Company or (
iii
) restricted shares, stock appreciation rights, performance units, contingent value rights, phantom stock or similar
securities or rights issued or granted by the Company or any of its Subsidiaries that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock or other voting securities of or other
ownership interests in any Subsidiary of the Company (the items in clauses (i) through (iii) being referred to collectively as the
Company Subsidiary Securities
). There are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Subsidiary Securities.
Section 3.7
SEC
Filings and the Sarbanes-Oxley Act
.
(a) The Company has filed with or furnished to the SEC on a timely basis (including following any
extensions of time for filing provided by
Rule 12b-25
promulgated under the Exchange Act) all reports, schedules, forms and documents (including exhibits and other information incorporated therein)
required to be filed or furnished, as the case may be, by the Company since December 31, 2015 (collectively, the
Company SEC Documents
). As of its filing date (or, if amended or supplemented, as of the date of the most recent
amendment or supplement and giving effect to such amendment or supplement), each Company SEC Document complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, and any
rules and regulations promulgated thereunder, as the case may be, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.
(b) The Company has established and
maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in
Rule 13a-15
under the Exchange Act) as required by Rule
13a-15
under the Exchange Act. Such disclosure controls and procedures are reasonably designed to ensure that material information required to be disclosed by the Company in the reports and other documents that it
files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods
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specified in the rules and forms of the SEC, and that all 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. Since December 31, 2015, the Companys principal executive officer and its principal financial officer
have disclosed to the Companys auditors and audit committee (
i
) any significant deficiencies and material weaknesses in the design or operation of the Companys internal controls over financial reporting and
(
ii
) any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal controls over financial reporting.
Section 3.8
Financial Statements
. The consolidated financial statements of the Company included or incorporated by reference in
the Company SEC Documents (including all related notes and schedules thereto) when filed complied as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto
in effect at the time of such filing and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as of the respective dates thereof, and the consolidated results of their
operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal
year-end
audit adjustments and to any other adjustments described
therein, including the notes thereto) and were prepared in accordance with GAAP (except, in the case of the unaudited statements, for normal
year-end
adjustments and for the absence of notes) applied on a
consistent basis during the periods involved (except as may be indicated therein or in the notes thereto). Such consolidated financial statements have been prepared from, and are in accordance with, the books and records of the Company and its
Subsidiaries.
Section 3.9
Information Supplied
. The information relating to the Company and its Subsidiaries to be contained
in, or incorporated by reference in, the Registration Statement, in which the Proxy Statement will be included, including any amendments or supplements thereto and any other document incorporated or referenced therein, will not, on the date the
Registration Statement is declared effective, the date on which the Proxy Statement is first mailed to stockholders of the Company or at the time of the Company Meeting, contain any untrue statement of any material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements therein, at the time and in light of the circumstances under which they were made, not false or misleading. Notwithstanding the foregoing provisions of this
Section
3.9
, no representation or warranty is made by the Company with respect to information or statements made or incorporated by reference in the Registration Statement or the Proxy Statement that were not supplied by or
on behalf of the Company for use therein.
Section 3.10
Absence of Certain Changes
.
(a) Since December 31, 2016, there has not been any event, change, development or occurrence that has had or would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) (
i
) From December 31, 2016 through the date
of this Agreement, except as for events giving rise to and the discussion and negotiation of this Agreement, the business of the Company and its Subsidiaries has been conducted in the ordinary course of business consistent with past practices in all
material respects and (
ii
) from September 30, 2017 through the date of this Agreement, except as for events giving rise to and the discussion and negotiation of this Agreement, there has not been any action taken by the Company or
any of its Subsidiaries that, if taken during the period from the date of this Agreement through the Effective Time without Parents consent, would constitute a breach of, or require consent of Parent under, clauses (a), (b), (d), (e),
(f), (g), (i), (l), (m) and (n) of
Section
5.1
.
Section 3.11
No Undisclosed Material
Liabilities
. There are no liabilities or obligations of the Company or any of its Subsidiaries that would be required by GAAP, as in effect on the date hereof, to be reflected on the consolidated balance sheet of the Company (including the notes
thereto), other than (
a
) liabilities or obligations disclosed, reflected, reserved against or otherwise provided for in the Company Balance Sheet or in the notes thereto, (
b
) liabilities or obligations incurred in the
ordinary course of business since September 30, 2017,
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(
c
) liabilities or obligations arising out of the preparation, negotiation and consummation of the transactions contemplated by this Agreement and (
d
) liabilities or
obligations that have not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.12
Compliance with Laws and Court Orders; Governmental Authorizations
.
(a) Except as set forth on
Section
3.12(a)
of the Company Disclosure Letter or for matters that have not been, and
would not reasonably be expected to be, material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries (
i
) are and have been since December 31, 2015 in compliance with all Laws and Orders applicable
to the Company or any of its Subsidiaries and (
ii
) to the Knowledge of the Company, are not under investigation by any Governmental Authority with respect to any material violation by the Company or its Subsidiaries of any applicable Law
or Order.
(b) Without limiting the generality of
Section
3.12(a)
, since December 31, 2012, neither the
Company nor any of its Subsidiaries, nor any director, officer, employee, agent, or other Person acting on behalf or for the benefit of the Company or any of its Subsidiaries is a Sanctioned Person nor has engaged in, nor is it now engaged in, any
dealings or transactions with or for the benefit of any Sanctioned Person, nor has otherwise violated Sanctions.
(c) Neither the Company
nor any of its Subsidiaries has, since December 31, 2012, violated or is in violation of any Anti-Money Laundering Law.
(d) The
Company and its Subsidiaries have in place and have adhered to policies and procedures designed to prevent their officers, employees, contractors,
sub-contractors,
service providers, agents and intermediaries
from undertaking any activity, practice or conduct relating to the business of the Company or its Subsidiaries that would constitute an offence under the Anti-Bribery Laws or Sanctions.
(e) Except as set forth on
Section
3.12(e)
of the Company Disclosure Letter or for matters that are not, and would
not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole, (
i
) the Company and its Subsidiaries have all Governmental Authorizations necessary for the ownership and
operation of their business as presently conducted, and each such Governmental Authorization is in full force and effect, (
ii
) the Company and its Subsidiaries are and have been since December 31, 2015 in compliance with the terms
of all Governmental Authorizations necessary for the ownership and operation of their businesses, (
iii
) since December 31, 2015 through the date of this Agreement, neither the Company nor any of its Subsidiaries has received written
notice or, to the Knowledge of the Company, any other communication from any Governmental Authority alleging any conflict with or breach of any such Governmental Authorization, (
iv
) since December 31, 2015, neither the Company nor
any of its Subsidiaries has received written notice or, to the Knowledge of the Company, any other communication from any Governmental Authority regarding any actual or possible revocation, withdrawal, suspension, cancellation or termination of any
such Governmental Authorization and (
v
) to the Knowledge of the Company, no event has occurred which could be grounds for revocation, withdrawal, suspension, cancellation, termination or modification of any such Governmental
Authorization.
(f)
Section 3.12(f)
of the Company Disclosure Letter sets forth, as of the date hereof, a true and complete list of
all material Governmental Authorizations held by the Company or any its Subsidiaries and used for the conduct of their business as presently conducted. Except as set forth on
Section
3.12(f)
of the Company Disclosure
Letter, no Subsidiary of the Company other than Nationstar is required to be licensed or registered with any Governmental Authority as an originator, owner or servicer of Mortgage Loans.
Section 3.13
Litigation
. Except as set forth on
Section
3.13
of the Company Disclosure Letter or for
matters that have not had and would not be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect, there is no (
a
) Proceeding pending (or, to the Knowledge of the Company, threatened) with
respect to or against the Company or any of its Subsidiaries by or before any Governmental Authority or (
b
) Order against the Company or any of its Subsidiaries.
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Section 3.14
Properties
.
(a) Neither the Company nor any of its Subsidiaries owns any real property (other than any interest in real property pursuant to Mortgage
Loans).
(b)
Section 3.14(b)
of the Company Disclosure Letter sets forth, as of the date of this Agreement, a list of the leases,
subleases or other occupancies to which the Company or any of its Subsidiaries is a party as tenant for real property and for which annual rent payments exceed $500,000 (the
Real Property Leases
).
(c) The Company or one of its Subsidiaries has valid leasehold title to each parcel of real property subject to a Real Property Lease,
sufficient to allow each of the Company and its Subsidiaries to conduct their business as currently conducted, and has good and valid title to, or otherwise has the right to use, all material tangible personal property necessary for the conduct of
the business of the Company and its Subsidiaries as currently conducted reflected on the Company Balance Sheet or acquired after September 30, 2017, in each case, free and clear of all Liens, except (
i
) for Permitted Liens,
(
ii
) for the property that has been disposed of or leased in the ordinary course of business or (
iii
) as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect,
(
i
) each Real Property Lease under which the Company or any of its Subsidiaries leases, subleases or otherwise occupies any real property is valid, binding and in full force and effect, subject to the Enforceability Exceptions, and
(
ii
) neither the Company nor any of its Subsidiaries or, to the Knowledge of the Company, any other party to such Real Property Lease has violated any provision of, or taken or failed to take any act which, with or without notice, lapse
of time, or both, would constitute a default under the provisions of such Real Property Lease.
Section 3.15
Intellectual
Property
.
(a)
Section 3.15(a)
of the Company Disclosure Letter lists, as of the date hereof, the Marks, Copyrights and Patents
that are registered, issued or subject to an application for registration or issuance that are owned by and material to the conduct of the business of the Company and its Subsidiaries (collectively, the
Registered Intellectual
Property
). Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (
i
) all of the items on
Section
3.15(a)
of the Company Disclosure
Letter are valid, subsisting, unexpired, and enforceable, (
ii
) the Company and its Subsidiaries exclusively own the above-scheduled items and their material unregistered proprietary Intellectual Property, in each case, free and clear of
all Liens, except for Permitted Liens, (
iii
) the Company and its Subsidiaries have the right to use all other Intellectual Property to the extent currently used or otherwise necessary and material to the conduct of their business and
(
iv
) no Person (other than employees on a
need-to-know
basis) has any current or contingent right to access or possess any proprietary source code of the
Company or any of its Subsidiaries.
(b) Except, in each case, as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, (
i
) the conduct of the business of the Company and its Subsidiaries does not infringe, violate or misappropriate any Intellectual Property of any other Person, (
ii
) there is no pending
(or, to the Knowledge of the Company, threatened) Proceeding against the Company or any of its Subsidiaries alleging any such infringement, violation or misappropriation and (
iii
) no Person is challenging or, to the Knowledge of the
Company, infringing, misappropriating or otherwise violating, any right of the Company or any of its Subsidiaries with respect to any Owned Intellectual Property.
(c) Except for actions or failure to take actions that would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, the Company and its Subsidiaries have taken commercially reasonable actions to maintain and/or prosecute (as applicable) the (
i
) Registered Intellectual Property and (
ii
) secrecy of the Trade Secrets
that are Owned Intellectual Property.
A-30
(d) Except for actions or failures to take action that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries licenses, distributes or makes available to Third Parties any Software that is material to the Company or any of its Subsidiaries
that uses, contains, is based upon or interacts with any Software that is licensed, provided or distributed under any open source license, including any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the
Free Software Definition (as promulgated by the Free Software Foundation), in any manner that would require any source code of the Software owned by the Company or any of its Subsidiaries to be disclosed, licensed for free, publicly distributed or
dedicated to the public.
(e) All IT Systems material to the business of the Company and its Subsidiaries are in operating condition and
in a good state of maintenance and repair (ordinary wear and tear excepted) and are adequate and suitable for the purposes for which they are presently being used or held for use. Except for actions or failures to take action that would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have implemented and maintain commercially reasonable security, backup and disaster recovery procedures and systems
sufficient to conduct the business of the Company and its Subsidiaries without disruption. Except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, none of the material
IT Systems contains any back door, drop dead device, time bomb, Trojan horse, virus or worm (as such terms are commonly understood in the software industry) or any other code
intended to disrupt, disable, harm or otherwise impede the operation of, or provide unauthorized access to, a computer system or network or other device on which such code is stored or installed.
(f) The Company has taken commercially reasonable actions to protect the security and integrity of the IT Systems and the data and other
information contained therein. Since December 31, 2015, the Company and its Subsidiaries (
i
) have not had a failure, unauthorized access or use, or other adverse event affecting any of the IT Systems (or any data within) and
(
ii
) have not had any data security, information security, or other technological deficiency with respect to the IT Systems, in each case of (i) and (ii), that caused or causes or presented or presents a risk of disruption to the IT
Systems or of unauthorized access to or disclosure thereto of any information therein or personally identifiable information that had or would reasonably be expected to have a Company Material Adverse Effect.
Section 3.16
Data Privacy and Security
. Since December 31, 2015, the Company and its Subsidiaries have (
i
) posted
a Privacy Policy on their websites and (
ii
) been in compliance in all material respects with all applicable Laws pertaining to data protection or information privacy and security and (
iii
) complied in all material respects
with their Privacy Policies, applicable industry guidelines, and contractual requirements pertaining to data protection or information privacy and security. Since December 31, 2015 through the date of this Agreement, neither the Company nor any
of its Subsidiaries has received any written notice or complaint from any Governmental Authority of violation of any applicable Laws applicable to data protection or information privacy and security and, to the Knowledge of the Company, there is no
pending investigation by any Governmental Authority of the Company or any of its Subsidiaries relating to such Laws.
Section 3.17
Taxes
. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:
(a) (
i
) all Tax Returns required to be filed by, on behalf of or with respect to the Company or any of its Subsidiaries have been
duly and timely filed and are complete and correct, (
ii
) all Taxes (whether or not reflected on such Tax Returns) required to be paid by the Company or any of its Subsidiaries have been duly and timely paid, (
iii
) all Taxes
required to be withheld by the Company or any of its Subsidiaries have been duly and timely withheld, and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose,
(
iv
) no Taxes or Tax Returns with respect to the Company or any of its Subsidiaries are under audit or examination by or any other proceeding with any Taxing Authority, (
v
) no Taxing Authority has asserted in writing any
deficiency with respect to Taxes against the Company or any of its
A-31
Subsidiaries with respect to any taxable period for which the period of assessment or collection remains open, (
vi
) there are no Liens for Taxes on any of the assets of the Company or
any of its Subsidiaries other than Permitted Liens and (
vii
) neither the Company nor any of its Subsidiaries has received a claim from any Taxing Authority in a jurisdiction where it does not file Tax Returns that it is or may be subject
to taxation by, or required to file Tax Returns in, that jurisdiction;
(b) during the
two-year
period ending on the date of this Agreement, neither the Company nor any of its Subsidiaries was a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code;
(c) neither the Company nor any of its Subsidiaries is a party to any agreement providing for the allocation, indemnification or sharing of
Taxes, except for any such agreements that (
i
) are solely between the Company and/or any of its Subsidiaries, (
ii
) will terminate as of, or prior to, the Closing and for which the Company and its Subsidiaries will have no
liability following the Closing or (
iii
) are customary commercial contracts entered into in the ordinary course of business, the principal purpose of which is not the allocation or sharing of Taxes;
(d) (
i
) neither the Company nor any of its Subsidiaries is or has been a member of any affiliated, consolidated, combined or
unitary group (that includes any Person other than the Company and its Subsidiaries) for purposes of filing Tax Returns on net income, (
ii
) neither the Company nor any of its Subsidiaries has any liability for Taxes of any Person (other
than the Company or any of its Subsidiaries) arising from the application of Treasury Regulations
Section 1.1502-6
or any analogous provision of state, local or foreign Law or as a transferee or
successor, (
iii
) neither the Company nor any of its Subsidiaries has waived any statute of limitations with respect to any Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency and
(
iv
) there are no issued or pending closing agreements pursuant to Section 7121 of the Code, or any similar provision of any Tax Law, or private letter rulings from the IRS, or comparable rulings of any Taxing Authority, with
respect to either the Company or any of its Subsidiaries that would bind the Company or any of its Subsidiaries after the Closing Date;
(e) neither the Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code;
(f) neither the
Company nor any of its Subsidiaries has participated in a listed transaction within the meaning of Treasury Regulations
Section 1.6011-4(c);
and
(g) neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from,
taxable income for any taxable period (or portion thereof) beginning after the Closing Date as a result of any (
i
) change in or incorrect method of accounting, (
ii
) intercompany transactions or any excess loss account
described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or foreign Tax Law), (
iii
) installment sale or open transaction disposition made prior to Closing, (
iv
) prepaid amount
received prior to Closing or (
v
) any election under Section 108(i) of the Code.
Section 3.18
Employee Benefit
Plans
.
(a)
Section 3.18(a)(
i
)
of the Company Disclosure Letter contains a correct and complete list identifying
each material Company Plan. For purposes of this Agreement,
Company Plan
means each employee benefit plan within the meaning of ERISA Section 3(3), whether or not subject to ERISA, all equity or equity-based,
change in control, bonus or other incentive compensation, disability, salary continuation, employment, consulting, indemnification, severance, retention, retirement, pension, profit sharing, savings or thrift, deferred compensation, health or life
insurance, employee discount or free product, vacation, sick pay or paid time off agreements or plans, and each other material benefit or compensation plan, program, contract, agreement or arrangement, whether written or unwritten that the Company
or any Subsidiary sponsors, maintains or
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contributes to, or is required to sponsor, maintain or contribute to, for the benefit of any current or former employee, independent contractor (who is a natural person) or director of the
Company or its Subsidiaries. The Company has made available to Parent with respect to each material written Company Plan, as applicable: (
A
) a true and complete copy of the Company Plan and all material amendments thereto and, if
applicable, all related trust documents and funding instruments, (
B
) the most recent annual report (Form 5500 including, if applicable, all schedules and attachments thereto), if any, required under ERISA or the Code in connection
therewith, (
C
) all summary plan descriptions, together with each summary of material modifications, if any, required under ERISA, (
D
) the most recent Internal Revenue Service determination or opinion letter issued with
respect to each such Company Plan intended to be qualified under Section 401(a) of the Code and (
E
) all material correspondence to or from any Governmental Authority within the past three years with respect to any Company Plan.
(b) Except as would not reasonably be expected to have a Company Material Adverse Effect, each Company Plan has been maintained, administered
and operated in compliance with its terms and the requirements of applicable Law.
(c) Except as would not be reasonably be expected to
have a Company Material Adverse Effect, other than routine claims for benefits, there are no pending or, to the Knowledge of the Company, threatened Proceedings by or on behalf of any participant in any Company Plan, or otherwise involving any
Company Plan or the assets of any Company Plan.
(d) Each Company Plan that is intended to be qualified under Section 401(a) of the
Code has received a determination or opinion letter from the IRS that it is so qualified and each related trust that is intended to be exempt from federal income taxation under Section 501(a) of the Code has received a determination or opinion
letter from the IRS that it is so exempt and, to the Knowledge of the Company, no fact or event has occurred since the date of such letter or letters from the IRS that could reasonably be expected to adversely affect the qualified status of any such
Company Plan or the exempt status of any such trust.
(e) Neither the Company nor any ERISA Affiliate maintains, contributes to, or
sponsors (or has in the past six years maintained, contributed to, or sponsored) (
i
) a multiemployer plan as defined in Section 3(37) of ERISA or (
ii
) a plan subject to Title IV of ERISA or Section 412 of the Code.
No Company Plan provides post-employment health or welfare benefits for any current or former employees or other service providers of the Company or its Subsidiaries (or their dependent), other than as required under Section 4980B of the Code.
(f) Except as expressly contemplated by this Agreement, including
Section
2.12
, the consummation of the
transactions contemplated hereby would not reasonably be expected to, either alone or in combination with another event, (
i
) result in any material payment becoming due, accelerate the time of payment or vesting, or materially increase
the amount of compensation due to any such director, officer or employee of the Company or its Subsidiaries; (
ii
) result in any forgiveness of indebtedness, trigger any funding obligation under any Company Plan or impose any restrictions
or limitations on the Companys rights to administer, amend or terminate any Company Plan; or (
iii
) result in any payment (whether in cash or property or the vesting of property) to any disqualified individual (as such
term is defined in Treasury Regulations
Section 1.280G-1)
that would, individually or in combination with any other such payment, constitute an excess parachute payment (as defined in
Section 280G(b)(1) of the Code). Neither the Company nor any of its Subsidiaries has any obligation to provide any
gross-up
payment to any individual with respect to any income Tax, additional Tax, excise
Tax or interest charge imposed pursuant to Section 409A or 4999 of the Code.
(g) Except as would not be reasonably be expected to
have a Company Material Adverse Effect, with respect to each Company Plan established or maintained outside of the United States of America for the benefit of employees of the Company or any of its Subsidiaries residing or working outside the United
States of America (a
Foreign Benefit Plan
): (i) all employer and employee contributions to each Foreign Benefit Plan required by Law or by the terms of such Foreign Benefit Plan have been made or, if applicable, accrued, in
accordance with
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normal accounting practices, (ii) each Foreign Benefit Plan which is subject to minimum funding or book reserve requirements is so funded or book reserved and (iii) each Foreign Benefit
Plan required to be registered has been registered and has been so registered, approved and maintained in good standing with applicable Governmental Authorities.
Section 3.19
Employees; Labor Matters
.
(a) Neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or any similar agreement
with any entity representing a group of Employees, and there are no, and during the last three years have been no, labor unions or other organizations representing, purporting to represent or, to the Knowledge of the Company, attempting to represent
any Employees.
(b) The Company and its Subsidiaries have complied with all applicable Laws relating to employment and engagement of
labor, including all applicable Laws relating to wages, hours, collective bargaining, employment discrimination, civil rights, safety and health, workers compensation, pay equity, classification of employees and independent contractors,
immigration, and the collection and payment of withholding and/or social security Taxes, in each case, except as would not reasonably be expected to have a Company Material Adverse Effect.
(c) As of the date of this Agreement, there is no strike, other material labor dispute or unfair labor practice Proceeding pending or, to the
Knowledge of the Company, threatened, nor, to the Knowledge of the Company, is there any material activity involving its or any of its Subsidiaries Employees seeking to certify a collective bargaining unit or engaging in other similar
organizational activity.
Section 3.20
Environmental Matters
. Except as has not had, and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, (
i
) the Company and its Subsidiaries are and, since December 31, 2015, have been, in compliance with all applicable Environmental Laws and possess and are in
compliance with all Environmental Permits, (
ii
) since December 31, 2015 through the date of this Agreement, no notice of violation or other notice has been received by the Company or any of its Subsidiaries alleging any violation
of, or liability arising out of, any Environmental Law the substance of which has not been resolved, (
iii
) no Proceeding is pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries under any
Environmental Law and (
iv
) neither the Company nor any of its Subsidiaries has released, disposed or arranged for disposal of, or exposed any Person to, any Hazardous Substances or has owned or operated at any real property (other than
any interest in real property pursuant to Mortgage Loans) contaminated by any Hazardous Substances, in each case that has resulted in an investigation or cleanup by, or liability of, the Company or any of its Subsidiaries.
Section 3.21
Material Contracts
.
(a)
Section 3.21(a)
of the Company Disclosure Letter sets forth, as of the date of this Agreement, a correct and complete list of each
of the following types of Contracts to which the Company or any of its Subsidiaries is a party or by which any of their respective properties or assets is bound:
(i) each Contract that (
A
) limits or restricts the Company and its Subsidiaries (or would, from and after the
Effective Time, limit or restrict Parent, any of its Subsidiaries or any of its stockholders) from competing in any line of business or with any Person in any geographic region, or (
B
) contains most favored nation pricing
provisions, exclusivity obligations, rights of first refusal, rights of first negotiation or offer or similar restrictions binding on the Company or any of its Subsidiaries;
(ii) each Contract that is a joint venture or partnership agreement that is material to the Company and its Subsidiaries, taken
as a whole;
(iii) each Contract in respect of (
A
) Secured Company Indebtedness or (
B
) MSR Related
Transactions with respect to Mortgage Servicing Rights having an unpaid principal balance in the aggregate of $5 billion or greater;
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(iv) each Contract that is a loan, guarantee of indebtedness or credit agreement,
note, bond, mortgage, indenture or other binding commitment evidencing indebtedness for borrowed money of the Company or any of its Subsidiaries (other than letters of credit, surety bonds and similar performance guarantees and intercompany loans
between the Company and its wholly-owned Subsidiaries) in each case in an amount in excess of $50 million individually;
(v) each Contract with respect to an interest, rate, currency or other swap or derivative transaction (other than those between
the Company and its Subsidiaries) with a fair value in excess of $10 million;
(vi) each Contract that is an
acquisition agreement or divestiture agreement pursuant to which (
A
) the Company reasonably expects that it is required to pay total consideration (including assumption of debt) after the date of this Agreement to be in excess of
$50 million, (
B
) any other Person has the right to acquire any assets of the Company or any of its Subsidiaries after the date of this Agreement with a fair market value or purchase price of more than $50 million,
(
C
) the Company has any ongoing indemnification or other outstanding obligations as of the date of this Agreement that are material to the Company and its Subsidiaries, taken as a whole, or pursuant to which the Company or any of its
Subsidiaries has continuing earn out or other contingent payment obligations after the date of this Agreement reasonably likely to result in the payment of in excess of $500,000, excluding, in each case, (
x
) Contracts related
to Secured Company Indebtedness, (
y
) acquisitions or dispositions of inventory, products or assets in the ordinary course of the Companys and its Subsidiaries business, including in connection with MSR Related Transactions,
securitizations or other similar transactions involving Mortgage Servicing Rights or Mortgage Loans or (
z
) of inventory, products, equipment, properties or other assets that are obsolete, worn out, surplus or no longer used or useful in
the conduct of business of the Company or its Subsidiaries;
(vii) each Contract between the Company or any of its
Subsidiaries and a Governmental Authority;
(viii) each Contract that is required to be filed by the Company as a
material contract pursuant to Item 601(b)(10) of
Regulation S-K
under the Securities Act;
(ix) each Related Party Contract;
(x) each Contract which restricts the payment of dividends or distributions in respect of the capital stock or equity interests
of the Company or any of its Subsidiaries;
(xi) each Contract under which the Company or any of its Subsidiaries
(
A
) grants or is granted, in any material respect, a license or other right or interest with respect to any Intellectual Property or IT Systems (including any settlement or
co-existence
agreements
or agreements with covenants not to sue, but excluding any
non-exclusive
license (
x
) for the use of any commercially available,
off-the-shelf
software with a replacement cost and/or aggregate annual payments of less than $250,000, and/or (
y
) which is granted in the ordinary course of
business by the Company and its Subsidiaries and is not material to the Company and/or any of its Subsidiaries), or (
B
) is subject to any material restrictions with respect to any Intellectual Property or IT Systems owned by the Company
and its Subsidiaries; and
(xii) each Contract involving the settlement of any Proceeding or threatened Proceeding (or
series of Proceedings), other than a claim, action or Proceeding relating to Taxes, which (
x
) may involve payments in excess of $2 million after the date hereof or since December 31, 2015 has involved payments in excess of
$2 million or (
y
) impose or would purport to impose material restrictions on the operation of the businesses of Parent or any of its Subsidiaries following the Closing.
Each Contract of the type described in clauses (i) through (vii) is referred to herein as a
Company Material Contract
.
(b) Except for any Company Material Contract that has terminated or expired in accordance with its terms or except as has not had, and would
not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each Company Material Contract is valid and binding and in full force and effect and, to the Knowledge of the Company, enforceable against the
other party or parties thereto in accordance with its terms, subject to the Enforceability Exceptions. Except for breaches, violations or defaults which have
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not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries, nor to the Knowledge
of the Company any other party to a Company Material Contract, is in violation of or in default under any provision of such Company Material Contract. True and complete copies of the Company Material Contracts and any material amendments thereto
have been made available to Parent prior to the date of this Agreement.
Section 3.22
Mortgage Business
.
(a) Nationstar (
i
) is approved as an issuer of the Government National Mortgage Association, a seller/servicer of the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation, and a lender of the Federal Housing Administration, the United States Department of Veterans Affairs and the United States Department of Agriculture, (
ii
) has
not received any written or, to the Knowledge of the Company, any oral or other notice of any cancellation or suspension of, or material limitation on, its status as an approved issuer, seller/servicer or lender, as applicable, from any of the
foregoing Governmental Authorities, nor to the Knowledge of the Company does any circumstance exist that could reasonably be expected to result in such cancellation, suspension or material limitation, and (
iii
) has not received any
written notice indicating that any event has occurred that could reasonably be expected to result in the Company or any of its Subsidiaries not maintaining its Mortgage Servicing Rights in respect of any Servicing Agreement, except, in the case of
this clause (iii), as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) Except as set forth in
Section
3.22(b)
of the Company Disclosure Letter or as would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have the entire right, title and interest in and to the Mortgage Servicing Rights and the right to service the Mortgage Loans currently
being serviced by Nationstar, subject to Applicable Requirements and Permitted Liens. Except as would not reasonably be expected to have, either individually or in the aggregate, a Company Material Adverse Effect, (
i
) each servicing
advance made by or on behalf of the Company or any of its Subsidiaries was made, and is reimbursable in accordance with, the applicable Servicing Agreement and is a valid and subsisting amount owing to the Company or such Subsidiary and
(
ii
) neither the Company nor any of its Subsidiaries has received any written notice from an investor, insurer or other party in which such investor, insurer or other party disputes or denies any claim by or on behalf of the Company or
such Subsidiary for reimbursement in connection with a servicing advance.
(c) Except as set forth in
Section
3.22(c)
of the Company Disclosure Letter or except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (
i
) the Company and its Subsidiaries
are, and since December 31, 2015 have been, in compliance with the Companys and its Subsidiaries servicing or, as applicable, subservicing or master servicing, obligations under all Applicable Requirements, including with respect to
(
A
) the collection and application of mortgagor payments, (
B
) the servicing of adjustable rate Mortgage Loans, (
C
) the assessment and collection of late charges, (
D
) the maintenance of escrow accounts,
(
E
) the collection of delinquent or defaulted accounts, including loss mitigation, foreclosure and real-estate owned management, (
F
) the maintenance of required insurance, including force-placed insurance policies,
(
G
) the communication regarding processing of loan payoffs, (
H
) the release and satisfaction of mortgages and (
I
) the assessment and calculation of fees and (
ii
) through the date of this Agreement,
neither the Company nor any of its Subsidiaries has received written or, to the Knowledge of the Company, oral or other notice of any pending or threatened cancellation or partial termination of any Servicing Agreement.
(d) In connection with securitizations of Company Originated Mortgage Loans and, to the extent applicable, Company Serviced Mortgage Loans,
except for failures that would not reasonably be expected to be materially adverse to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries have provided all material servicer reports, certifications, attestations,
certificates and information that were required to be prepared or otherwise provided by the Company or its Subsidiaries (including as required under Regulation AB),
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pursuant to any Servicing Agreement, including any that were to be included in any Form
8-K
(and/or Form
10-D)
or
Form
10-K,
to the person designated for receipt in the applicable Servicing Agreement on a timely basis.
(e) Except as set forth in
Section
3.22(e)
of the Company Disclosure Letter or as would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect: (
i
) each Company Originated Mortgage Loan was underwritten, originated, funded and delivered in accordance with all Applicable Requirements in effect at the
time such Company Originated Mortgage Loan was underwritten, originated, funded or delivered, as applicable, (
ii
) no Company Originated Mortgage Loan is subject to any defect or condition that would allow an investor or Governmental
Authority to increase the loss level for such Company Originated Mortgage Loan, seek putback, repurchase or indemnification or seek other recourse or remedies against the Company or any of its Subsidiaries, (
iii
) no facts or
circumstances exist that would result in the loss or reduction of any mortgage insurance or guarantee benefit, or claims for recoupment or restitution of payments previously made under any mortgage insurance or guarantee benefit; (
iv
) to
the Knowledge of the Company, each appraisal obtained in connection with each Company Originated Mortgage Loan complies with uniform standards of professional appraisal practice in effect at the time the appraisal was conducted; (
v
) each
Company Originated Mortgage Loan was originated as a qualified mortgage as defined in Regulation Z (12 CFR §1026.43) and meets the qualified mortgage standards set forth therein; and (
vi
) no Company Originated Mortgage
Loan was classified as a high cost loan under the Home Ownership and Equity Protection Act, as amended, or a high cost, threshold, covered, or predatory loan under any other applicable Law
(or a similarly classified loan using different terminology under a Law imposing heightened regulatory scrutiny or additional legal liability for Mortgage Loans having high interest rates, points and/or fees).
(f) Except as would not reasonably be expected to have, either individually or in the aggregate, a Company Material Adverse Effect,
(
i
) the servicing file for each Company Originated Mortgage Loan owned, or Company Serviced Mortgage Loan serviced, by the Company or any of its Subsidiaries as of the date hereof is complete and complies with all Applicable
Requirements, (
ii
) there has been no servicer default, servicer termination event, portfolio trigger or other default or breach by the Company or any of its Subsidiaries under any Servicing Agreement or any Applicable Requirements and
(
iii
) no event, condition, or omission has occurred or exists that with or without the passage of time or the giving of notice or both would: (
A
) constitute a default or breach by the Company or such Subsidiary under any such
Servicing Agreement or Applicable Requirements; (
B
) permit termination of any such Servicing Agreement by a Third Party without the consent of the Company or such Subsidiary; (
C
) impose on the Company or its Subsidiaries
sanctions or penalties in respect of any Servicing Agreement or any Applicable Requirement; or (
D
) rescind any insurance policy or reduce insurance benefits in respect of any Servicing Agreement that would result in a breach or trigger a
default of any obligation of the Company or its Subsidiaries under any Servicing Agreement or Applicable Requirement.
(g) Prior to the
date hereof, the Company has made available to Parent the Data Tape. The information included in the Data Tape is true and correct in all material respects as of the date(s) specified therein.
Section 3.23
Finders
Fee, etc
. Except for the parties listed on
Section
3.23
of the
Company Disclosure Letter, no investment banker, broker or finder that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries is entitled to any fee or commission from the Company or any of its Subsidiaries
in connection with the transactions contemplated by this Agreement. The Company has made available to Parent a complete and correct copy of all agreements pursuant to which the parties listed on
Section
3.23
of the Company
Disclosure Letter are entitled to any fees and expenses in connection with the Merger or any of the transactions contemplated by this Agreement.
Section 3.24 Antitakeover Statutes. Assuming the accuracy of Parents and Merger Subs representations and warranties in
Section
4.17
, (
a
) the Company Board has taken all action necessary to exempt the Merger, this Agreement and the transactions contemplated hereby from Section 203 of the DGCL and any other similar Takeover
Statute and (
b
) to the Knowledge of the Company, no other Takeover Statute enacted under U.S. state or federal laws apply to this Agreement or any of the transactions contemplated hereby.
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Section 3.25
Certain Business Practices
. Since December 31, 2012, none of the
Company, its Subsidiaries and, to the Knowledge of the Company, any director, officer, employee or agent of the Company or any of its Subsidiaries with respect to any matter relating to the Company or any of its Subsidiaries, has
(
a
) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity or (
b
) offered, promised, made or authorized any unlawful payment of anything of value to foreign
or domestic government officials or employees (including any officer or employee of a government or government-owned or -controlled entity or of a public international organization), to foreign or domestic political parties or campaigns, or to any
other Person acting in an official capacity, to influence official action or secure an improper advantage, or to encourage the recipient to breach a duty of good faith or loyalty or otherwise violated any Anti-Bribery Law.
Section 3.26
Insurance
. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, as of the date hereof, each of the insurance policies and arrangements relating to the business, assets and operations of the Company and its Subsidiaries are in full force and effect and all premiums thereunder have been paid when
due to the applicable insurer or Third Party financing such premiums. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, such insurance policies are sufficient for compliance with
all applicable Laws. As of the date of this Agreement, neither the Company nor any of its Subsidiaries has received any written notice regarding any cancellation or invalidation of any such insurance policy, other than such cancellation or
invalidation that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the Knowledge of the Company, no event has occurred which, with or without notice or the lapse of time, would
constitute a breach or default under, or permit termination of, any such insurance policy, other than such breach, default or termination that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 3.27
Related Party Transactions
. Except as set forth on
Section
3.27
of the Company
Disclosure Letter, no current director, officer, Affiliate of the Company or any of its Subsidiaries (
a
) has outstanding any indebtedness to the Company or a Subsidiary of the Company or (
b
) is otherwise a party to, or
directly or indirectly benefits from, any contract, arrangement or understanding with the Company or a Subsidiary of the Company of a type that would be required to be disclosed under Item 404 of Regulation
S-K
under the Securities Act (each such indebtedness, contract, arrangement or understanding, a
Related Party Contract
).
Section 3.28
Fairness Opinions
. (
a
) The Company Board has received the opinion of Citigroup Global Markets Inc. as of
the date of this Agreement to the effect that, as of such date and subject to the assumptions, limitations and qualifications reflected therein, and after giving effect to the Principal Stockholder Cash Election, the Minimum Average Per Share
Consideration (as defined in such opinion) to be received by the holders of Company Stock (other than the Principal Stockholder) in the Merger pursuant to this Agreement is fair, from a financial point of view, to such holders of Company Stock; and
(
b
) a special committee of the Company Board has received the opinion of PJT Partners LP as of the date of this Agreement to the effect that, as of such date and subject to the assumptions, limitations and qualifications reflected
therein, and taking into account the Principal Stockholder Cash Election, the Merger Consideration, in the aggregate, to be received by the holders of Company Stock (other than the Principal Stockholder) in the Merger pursuant to this Agreement, is
fair, from a financial point of view, to such holders of Company Stock.
Section 3.29
Acknowledgment and Representations by the
Company.
The Company acknowledges and agrees that (
a
) it has made its own independent review and investigations into and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and
prospects of Parent and its Subsidiaries, (
b
) it has been provided with access to such information, documents and other materials relating to Parent and its Subsidiaries and their respective businesses and operations and
(
c
) it has been provided an opportunity to ask questions of Parent and Merger Sub with respect to such information, documents and other materials and receive answers to such questions. In entering into this Agreement, the Company
acknowledges that, except for the representations and warranties set forth in Article IV, the Parent Disclosure Letter and any
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certificate delivered hereunder, (
x
) none of Parent, Merger Sub or any of their respective Subsidiaries or any of their respective Representatives or Affiliates makes or has made any
express or implied representation or warranty, including any implied warranty of merchantability or suitability, (
i
) as to the accuracy or completeness of any of the information provided or made available to the Company or any of its
Representatives or Affiliates prior to the execution of this Agreement, including any information, documentation, forecasts, budgets, projections or estimates provided by Parent, Merger Sub or any Representative of Parent or Merger Sub in any
data rooms or management presentations or the accuracy or completeness of any of the foregoing, or (
ii
) with respect to any projections, forecasts, estimates, plans or budgets of future revenues, expenses or expenditures,
future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of Parent, Merger Sub or any of their respective Subsidiaries heretofore or hereafter
delivered to or made available to the Company or its Representatives or Affiliates and (
y
) it has not been induced by or relied upon any representation, warranty, inducement, promise or other statement, express or implied, made by
Parent, Merger Sub or any of their respective Subsidiaries or any of their respective Representatives, Affiliates or any other Person.
Section 3.30
No Additional Representations.
Except for the representations and warranties expressly made by the Company in this
Article III
, the Company Disclosure Letter and any certificate delivered by the Company hereunder, (
a
) neither the Company nor any other Person makes any express or implied representation or warranty whatsoever or with respect to
any information provided or made available in connection with the transactions contemplated by this Agreement, including any information, documentation, forecasts, budgets, projections or estimates provided by the Company or any Representative of
the Company in any data rooms or management presentations or the accuracy or completeness of any of the foregoing, and (
b
) the Company expressly disclaims any express or implied representation or warranty with respect to the
Company and its Subsidiaries, including as to the condition, value, quality or prospects of their businesses or their assets, and specifically disclaims any express or implied representation or warranty of merchantability, usage, suitability or
fitness for any particular purpose with respect to the Companys and its Subsidiaries assets, any part thereof, the workmanship thereof, and the absence of any defects therein, whether latent or patent, it being understood that such
subject assets are being acquired as is, where is, on the Closing Date, and in their present condition.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Subject to
Section
10.5
, (
a
) except as disclosed in the Parent SEC Documents publicly filed since
January 1, 2015 and prior to the date of this Agreement (
provided
that in no event shall any risk factor disclosure under the heading Risk Factors or disclosure set forth in any forward looking statements
disclaimer or other general statements to the extent they are cautionary, predictive or forward looking in nature that are included in any part of any Parent SEC Document be deemed to be an exception to, or, as applicable, disclosure for purposes
of, any representations and warranties of Parent or Merger Sub contained in this Agreement), it being agreed that this clause (a) shall not be applicable to
Section
4.2
or
Section
4.5
, and
(
b
) except as set forth in the Parent Disclosure Letter, Parent and Merger Sub represent and warrant to the Company that:
Section 4.1
Corporate Existence and Power.
Each of Parent and Merger Sub is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. Each of Parent and Merger Sub has all corporate power and authority to carry on its business as now conducted and is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary for the conduct of its business as presently conducted, except where any failure to have such power or authority or to be so qualified would not reasonably be expected, individually
or in the aggregate, to have a Parent Material Adverse Effect. Prior to the date of this Agreement, Parent has delivered or made available to the Company true and complete copies of the certificate of incorporation and bylaws of Parent and Merger
Sub as in effect on the date of this Agreement.
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Section 4.2
Corporate Authorization.
(a) Each of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby, and Parent has all requisite corporate power and authority to execute and deliver the Fortress Voting Agreement, to perform its obligations thereunder and to consummate
the transactions contemplated thereby. The execution and delivery of this Agreement by Parent and Merger Sub, the performance of their obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Parent and Merger Sub, and the execution and delivery of the Fortress Voting Agreement by Parent, the performance of its obligations thereunder and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part of Parent. Other than the approval of the Parent Share Issuance by a majority of all votes cast at the Parent Meeting by holders of outstanding shares of Parent Common
Stock and outstanding shares of Parent Preferred Stock (on an
as-converted
to Parent Common Stock basis as determined in accordance with Parents amended and restated certificate of incorporation), voting
together as a single class (the
Parent Stockholder Approval
), no other corporate proceeding on the part of Parent or Merger Sub is necessary to authorize the execution and delivery of this Agreement, the Fortress Voting Agreement,
the performance by Parent and Merger Sub of their respective obligations hereunder and, with respect to Parent only, thereunder and the consummation by Parent and Merger Sub of the transactions contemplated hereby and, with respect to Parent only,
thereby. This Agreement, assuming due authorization, execution and delivery by the Company, constitutes a valid and binding obligation of each of Parent and Merger Sub enforceable against each party in accordance with its terms, subject to the
Enforceability Exceptions, and each of the Fortress Voting Agreement, assuming due authorization, execution and delivery by each other party thereto (except for Parent), constitutes a valid and binding obligation of Parent, enforceable against
Parent in accordance with its terms, subject to the Enforceability Exceptions.
(b) The Parent Board has unanimously approved the Parent
Board Resolutions, and the board of directors of Merger Sub has approved and declared advisable this Agreement and the transactions contemplated hereby.
Section 4.3
Governmental Authorization.
The execution and delivery of this Agreement by Parent and Merger Sub (and the execution
and delivery of the Fortress Voting Agreement by Parent) and the performance of their obligations hereunder (and of Parents obligations thereunder) require no action by or in respect of, or filing with, any Governmental Authority, other than
(
a
) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (
b
) compliance with any applicable requirements of the HSR Act, (
c
) all consents, notices and approvals, as
applicable, from the Governmental Authorities set forth in
Section
3.3(c)
of the Company Disclosure Letter, (
d
) compliance with any applicable requirements of the Securities Act, the Exchange Act and any other
applicable state or federal securities laws, including the filing with the SEC of the Registration Statement, (
e
) compliance with any applicable requirements of NASDAQ and (
f
) any actions or filings the absence of which would
not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.4
Non-Contravention.
The execution and delivery of this Agreement by Parent and Merger Sub (and the execution and delivery of the Fortress Voting Agreement by Parent) and the performance of their obligations
hereunder (and of Parents obligations thereunder) do not and will not, assuming the authorizations, consents and approvals referred to in clauses (a) through (e) of
Section
4.3
are obtained,
(
a
) conflict with or breach any provision of the organizational documents of Parent and Merger Sub, (
b
) conflict with or breach any provision of any Law or Order, (
c
) require any consent of or other action by any
Person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the
loss of any benefit under any provision of any Contract to which Parent or any of its Subsidiaries is party or which is binding upon Parent or any of its Subsidiaries, any of their respective properties or assets or any license, franchise, permit,
certificate, approval or other similar authorization affecting Parent and its Subsidiaries or (
d
) result in the creation or imposition of any Lien, other than any Permitted Lien, on any property or asset of Parent or any of its
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Subsidiaries, except, in the case of each of clauses (b), (c) and (d), as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.5
Capitalization
.
(a) The authorized capital stock of (
i
) Parent consists of (
A
) 3,500,000,000 shares of Parent Common Stock (which
amount includes shares of restricted Parent Common Stock) and (
B
) 10,000,000 shares of Parent Preferred Stock and (
ii
) Merger Sub consists solely of 1,000 shares of common stock, par value $0.01. As of the close of business
on February 8, 2018 (the
Parent Capitalization Date
), (x) there were issued and outstanding (
I
) 206,714,132 shares of Parent Common Stock (which amount includes shares of restricted Parent Common Stock),
(
II
) 1,000,000 shares of Parent Series A Preferred Stock, (
III
) 600,000 shares of Parent Series B Preferred Stock and (
IV
) one share of common stock, par value $0.01, of Merger Sub, and (y) no shares of
Parent Common Stock were subject to compensatory options to purchase shares of Parent Common Stock (the
Parent Stock Options
). None of the issued and outstanding shares of Parent Stock or other Parent Securities are required
to be redeemed by Parent prior to October 5, 2019.
(b) Except as set forth in
Section
4.5(a)
above or
Section
4.5(b)
of the Parent Disclosure Letter or upon the exercise of Parent Stock Options that were outstanding on the Parent Capitalization Date, there are no outstanding (
i
) shares of capital stock or other
voting securities of or other ownership interests in Parent, (
ii
) securities of Parent convertible into or exchangeable for shares of capital stock or other voting securities of or other ownership interests in Parent,
(
iii
) options or other rights or agreements, commitments or understandings to acquire from Parent, or other obligation of Parent to issue, any shares of capital stock or other voting securities of or other ownership interests in Parent,
or securities convertible into or exchangeable for shares of capital stock or other voting securities of or other ownership interests in Parent or (
iv
) restricted shares, stock appreciation rights, performance units, restricted stock
units, contingent value rights, phantom stock or similar securities or rights issued or granted by Parent or any of its Subsidiaries that are derivative of, or provide economic benefits based, directly or indirectly, on the value or
price of, any shares of capital stock of or other voting securities of or other ownership interests in Parent (the items in clauses (i) through (iv) being referred to collectively as the
Parent Securities
).
(c) There are no outstanding obligations of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Parent
Securities. Neither Parent nor any of its Subsidiaries is a party to any voting trust, proxy, voting agreement or other similar agreement with respect to the voting of any Parent Securities. All outstanding shares of capital stock of
Parent have been duly authorized and validly issued and are fully paid and nonassessable, are not subject to any preemptive rights and have been issued in compliance with all applicable securities Laws. No Subsidiary of Parent owns any shares
of capital stock of Parent or any Parent Securities. There are no outstanding bonds, debentures, notes or other indebtedness of Parent having the right to vote (whether on an
as-converted
basis or
otherwise) (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of Parent may vote.
(d) The shares of Parent Common Stock to be issued as part of the Merger Consideration, when issued and delivered in accordance with the terms
of this Agreement, will have been duly authorized and validly issued and will be fully paid and nonassessable and free of preemptive rights and have been issued in compliance with all applicable securities Laws.
Section 4.6
Subsidiaries.
(a) Each Subsidiary of Parent is duly incorporated or otherwise duly organized, validly existing and (where such concept is recognized) in
good standing under the laws of its jurisdiction of incorporation or organization, except, in the case of any such Subsidiary, where the failure to be so incorporated, organized, existing or in good standing would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. Each Subsidiary of Parent has all corporate, limited liability company or comparable powers required to
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carry on its business as now conducted, except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Each such Subsidiary is duly
qualified to do business as a foreign entity and (where such concept is recognized) is in good standing in each jurisdiction in which it is required to be so qualified or in good standing, except where failure to be so qualified or in good standing
would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(b) The outstanding capital
stock or other voting securities of or other ownership interests in each Subsidiary of Parent are owned, directly or indirectly, by Parent free and clear of any Lien other than Permitted Liens.
Section
4.6(b)
of the Parent
Disclosure Letter contains a complete and accurate list of the Subsidiaries of Parent, including, for each of the Subsidiaries, (
x
) its name and (
y
) its jurisdiction of organization. Except as set forth on
Section
4.6(b)
of the Parent Disclosure Letter, each Subsidiary is directly or indirectly wholly owned by Parent. There are no issued, reserved for issuance or outstanding (
i
) securities of Parent or any of its
Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or other voting securities of or other ownership interests in any Subsidiary of Parent, (
ii
) options or other rights or agreements, commitments or
understandings to acquire from Parent or any of its Subsidiaries, or other obligations of Parent or any of its Subsidiaries to issue, any shares of capital stock or other voting securities of or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for, any shares of capital stock or other voting securities of or other ownership interests in any Subsidiary of Parent or (
iii
) restricted shares, stock appreciation rights, performance
units, contingent value rights, phantom stock or similar securities or rights issued or granted by Parent or any of its Subsidiaries that are derivative of, or provide economic benefits based, directly or indirectly, on the value or
price of, any capital stock or other voting securities of or other ownership interests in any Subsidiary of Parent (the items in clauses (i) through (iii) being referred to collectively as the
Parent Subsidiary
Securities
). There are no outstanding obligations of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Parent Subsidiary Securities.
(c) Except as set forth on
Section
4.6(b)
of the Parent Disclosure Letter, Parent does not have any Subsidiaries or
own any equity interest in any other Person. Other than Merger Sub, Parent does not have any Subsidiaries or own any equity interest in any other Person.
Section 4.7
SEC Filings and the Sarbanes-Oxley Act.
(a) Parent has filed with or furnished to the SEC on a timely basis (including following any extensions of time for filing provided by Rule
12b-25
promulgated under the Exchange Act) all reports, schedules, forms and documents (including exhibits and other information incorporated therein) required to be filed or furnished, as the case may be, by Parent
since December 31, 2015 (collectively, the
Parent SEC Documents
). As of its filing date (or, if amended or supplemented, as of the date of the most recent amendment or supplement and giving effect to such amendment or
supplement), each Parent SEC Document complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, and any rules and regulations promulgated thereunder, as the case may be,
and none of the Parent SEC Documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) Parent has established and maintains disclosure controls and procedures and internal control over
financial reporting (as such terms are defined in Rule
13a-15
under the Exchange Act) as required by Rule
13a-15
under the Exchange Act. Such disclosure controls and
procedures are reasonably designed to ensure that material information required to be disclosed by Parent in the reports and other documents that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to Parents 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. Since December 31, 2015, Parents principal executive officer and its principal financial officer have disclosed to Parents auditors and audit
committee (
i
) any significant deficiencies and material weaknesses in the design or
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operation of Parents internal controls over financial reporting and (
ii
) any fraud, whether or not material, that involves management or other employees of Parent who have a
significant role in Parents internal control over financial reporting.
Section 4.8
Financial Statements.
The
consolidated financial statements of Parent included or incorporated by reference in the Parent SEC Documents (including all related notes and schedules thereto) when filed complied as to form in all material respects with the applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto in effect at the time of such filing and fairly present in all material respects the consolidated financial position of Parent and its consolidated Subsidiaries, as
of the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal
year-end
audit adjustments and to any other adjustments described therein, including the notes thereto) and were prepared in accordance with GAAP (except, in the case of the unaudited statements for normal
year-end
adjustments and for the absence of notes) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto). Such consolidated financial statements have
been prepared from, and are in accordance with, the books and records of Parent and its Subsidiaries.
Section 4.9
Information
Supplied.
The information relating to Parent, its Subsidiaries and Merger Sub to be contained in, or incorporated by reference in, the Registration Statement, in which the Proxy Statement will be included, including any amendments or supplements
thereto and any other document incorporated or referenced therein, will not, on the date the Registration Statement is declared effective, the date on which the Proxy Statement is first mailed to stockholders of Parent or at the time of the Parent
Meeting, contain any untrue statement of any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, at the time and in light of the circumstances under which they were
made, not false or misleading. Notwithstanding the foregoing provisions of this
Section
4.9
, no representation or warranty is made by Parent or Merger Sub with respect to information or statements made or incorporated by
reference in the Registration Statement or the Proxy Statement that were not supplied by or on behalf of Parent or Merger Sub for use therein.
Section 4.10
Financing.
(a) Parent has delivered to the Company true, correct and complete fully executed copies of (
i
) the commitment letter, dated as of
the date hereof, among Merger Sub, Credit Suisse Securities (USA) LLC, Credit Suisse AG, Jefferies Finance LLC, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc., HSBC Bank USA, National Association and HSBC Securities (USA) Inc.
(the
Debt Commitment Letter
) and (
ii
) the fee letter, dated as of the date hereof, among Merger Sub, Credit Suisse Securities (USA) LLC, Credit Suisse AG, Jefferies Finance LLC, Deutsche Bank AG Cayman Islands Branch,
Deutsche Bank Securities Inc., HSBC Bank USA, National Association and HSBC Securities (USA) Inc. (together with the Debt Commitment Letter, the
Debt Letters
), in each case, including all exhibits, schedules, annexes and
amendments to such letters in effect as of the date of this Agreement, pursuant to which and subject to the terms and conditions thereof each of the parties thereto (other than Parent) have severally committed to provide the amount of debt financing
set forth therein to Merger Sub (such debt financing, including the offering of the Notes as contemplated by the Debt Commitment Letter, but subject to the provisions of
Section
7.5
, the
Debt
Financing
) for the purposes set forth in such Debt Letters.
(b) As of the date hereof, the Debt Letters are in full force and
effect and constitute the legal, valid, enforceable and binding obligations of Merger Sub and, to the Knowledge of Parent, the other parties thereto, subject in each case to the Enforceability Exceptions. As of the date hereof, the Debt Letters have
not been amended, restated or otherwise modified in any respect (and no amendment, restatement or modification is contemplated, except to add purchasers, lenders or agents) and the commitments contained in the Debt Letters have not been withdrawn,
rescinded, modified or terminated in any respect by Parent or, to the Knowledge of Parent, any other party thereto (and, to the Knowledge of Parent, no such withdrawal, rescission, modification or
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termination is contemplated). There are no conditions precedent or contingencies related to the funding of the full amount of the Debt Financing pursuant to the Debt Letters, other than as
expressly set forth in such letters. As of the date hereof, there are no side letters or other agreements, Contracts or arrangements related to the Debt Financing or the funding of all or any part of the Debt Financing other than as expressly set
forth in the Debt Letters (except for any engagement letters or fee discount letters related to the Debt Financing). Assuming the conditions set forth in
Section
8.1
and in
Section
8.2
are
satisfied at Closing and assuming the accuracy of the Companys representations and warranties in
Article III
, and subject to the terms and conditions of the Debt Letters, the net proceeds contemplated from the Debt Financing will, in
the aggregate at and as of the Closing Date along with all other funds available to Parent including the Escrow Account, be sufficient for the satisfaction of all of Parents payment obligations under this Agreement, including the payment of
the Merger Consideration and all fees and expenses reasonably expected to be incurred in connection therewith or required to be paid by Parent hereunder. As of the date of this Agreement, assuming the satisfaction of the conditions to the Merger set
forth in
Section
8.1
and in
Section
8.2
and assuming the accuracy of the Companys representations and warranties in
Article III
, no event has occurred which, with or without notice,
lapse of time or both, would or would reasonably be expected to constitute a breach or default on the part of Parent under the Debt Letters or, to the Knowledge of Parent, any other party to the Debt Letters. As of the date hereof, assuming the
satisfaction of the conditions to the Merger set forth in
Section
8.1
and in
Section
8.2
and assuming the accuracy of the Companys representations and warranties in
Article III
, Parent
has no reason to believe that any of the conditions to the Debt Financing contained in the Debt Letters, as the case may be, to be satisfied by it will not be satisfied, nor does Parent have Knowledge, as of the date of this Agreement, that the full
amount of the Debt Financing will not be made available to Parent and/or Merger Sub as of the time at which the Closing is required to occur pursuant to
Section
2.2
.
Section 4.11
Availability of Escrowed Funds.
The Escrow Agreement is in full force and effect and is a legal, valid and binding
obligation of Parent and, to the knowledge of Parent, the Escrow Agent. The funds held in the Escrow Account total, as of the date hereof, in excess of $550 million, and not less than $550 million of such funds will remain available to
Parent until the Closing (or earlier termination of this Agreement and satisfaction of any obligations of Parent under
Section
9.3
hereof) for use to satisfy the obligations of Parent and Merger Sub under this Agreement.
The funds held in the Escrow Account are sufficient to satisfy any reasonably anticipated obligations of Parent under
Section
7.5(g)
,
Section
7.6(c)
or
Section
9.3
. The
transactions contemplated by this Agreement constitute a Qualified Acquisition (as such term is defined in the Parent Certificate of Incorporation and the Escrow Agreement).
Section 4.12
No Operations.
(a) Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement and has and, immediately prior
to the Effective Time, will have engaged in no business or incurred any liabilities or obligations other than in connection with the transactions contemplated by this Agreement.
(b) Parent has not engaged in any business activity other than (
i
) as described in the Parent SEC Documents and
(
ii
) in connection with the evaluation, negotiation and consummation of the transactions contemplated by this Agreement.
Section 4.13
Absence of Certain Changes.
(a) Since December 31, 2016, there has not been any effect, change, development or occurrence that has had or would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(b) (
i
) From December 31, 2016 through
the date of this Agreement, except as for events giving rise to and the discussion and negotiation of this Agreement, the business of Parent and its Subsidiaries has been conducted in the ordinary course of business consistent with past practices in
all material respects, and (
ii
) from September 30, 2017 through the date of this Agreement, except as for events giving rise to and the discussion and
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negotiation of this Agreement, there has not been any action taken by Parent or any of its Subsidiaries that, if taken during the period from the date of this Agreement through the Effective Time
without the Companys consent, would constitute a breach of, or require consent of the Company under,
Section
6.1
.
Section 4.14
No Undisclosed Material Liabilities.
There are no liabilities or obligations of Parent or any of its Subsidiaries
that would be required by GAAP, as in effect on the date hereof, to be reflected on the consolidated balance sheet of Parent (including the notes thereto), other than (
a
) liabilities or obligations disclosed, reflected, reserved against
or otherwise provided for in the Parent Balance Sheet or in the notes thereto, (
b
) liabilities or obligations incurred in the ordinary course of business since September 30, 2017, (
c
) liabilities or obligations arising out of
the preparation, negotiation and consummation of the transactions contemplated by this Agreement and (
d
) liabilities or obligations that have not had, and would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
Section 4.15
Compliance with Laws and Court Orders; Governmental Authorizations.
(a) Parent and its Subsidiaries are and have been since December 31, 2015 in material compliance with all Laws and Orders applicable to
Parent or any of its Subsidiaries, and to the Knowledge of Parent, are not under investigation by any Governmental Authority with respect to any material violation of any applicable Law or Order.
(b) Except for matters that are not, and would not reasonably be expected to be, individually or in the aggregate, material to Parent and its
Subsidiaries, (
i
) Parent and its Subsidiaries have all Governmental Authorizations necessary for the ownership and operation of their business as presently conducted, and each such Governmental Authorization is in full force and effect,
(
ii
) Parent and its Subsidiaries are and have been since December 31, 2015, in compliance with the terms of all Governmental Authorizations necessary for the ownership and operation of their businesses, (
iii
) since
December 31, 2015 through the date of this Agreement, neither Parent nor any of its Subsidiaries has received written notice or, to the Knowledge of Parent, any other communication from any Governmental Authority alleging any conflict with or
breach of any such Governmental Authorization, (
iv
) since December 31, 2015, neither Parent nor any of its Subsidiaries has received written notice or, to the Knowledge of Parent, any other communication from any Governmental
Authority regarding any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any such Governmental Authorization and (
v
) to the Knowledge of Parent, no event has occurred which could be
grounds for revocation, withdrawal, suspension, cancellation, termination or modification of any such Governmental Authorization.
(c)
Except as set forth on Section 4.15 of the Parent Disclosure Letter, there is no material liability, debt or other obligation, contingent, accrued or otherwise, of Parent or any of its Subsidiaries arising out of or in connection with the
Seventh Amended Joint Plan of the Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code, as filed on December 12, 2011 and subsequently amended, or any period of time prior to September 26, 2008.
(d)
Section 4.15(d)
of the Parent Disclosure Letter sets forth, as of the date hereof, a true and complete list of all material
Governmental Authorizations held by Parent or any its Subsidiaries and used for the conduct of their business as presently conducted.
Section 4.16
Litigation.
Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect, there is no (
a
) Proceeding pending (or, to the Knowledge of Parent, threatened) with respect to or against Parent or any of its Subsidiaries by or before any Governmental Authority and (
b
) Order against the
Parent or any of its Subsidiaries.
Section 4.17
Share Ownership.
None of Parent, Merger Sub or any of their respective
Affiliates beneficially owns (as such term is used in
Rule 13d-3
promulgated under the Exchange Act) any Company Stock or any
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options, warrants or other rights to acquire Company Stock or other securities of, or any other economic interest (through derivatives, securities or otherwise) in the Company.
Section 4.18
Absence of Certain Agreements.
None of Parent, Merger Sub or any of their respective Affiliates has entered into any
contract, arrangement or understanding (in each case, whether written or oral) or authorized, committed or agreed to enter into any contract, arrangement or understanding (in each case, whether written or oral), pursuant to which any stockholder of
the Company in its capacity as such would be entitled to receive consideration of a different amount or nature than the Merger Consideration on a per share basis in connection with the transactions contemplated by this Agreement.
Section 4.19
Tax Matters.
(a) As of December 31, 2016, Parents net operating loss carryforward for U.S. federal income tax purposes was at least
$5,700,000,000, and at least $5,700,000,000 of such net operating loss is not subject to any limitations under Section 382 of the Code or otherwise.
(b) Parent has not taken any action (or refrained from taking any action) that is inconsistent with the representations made in IRS Private
Letter Ruling 201108001, and to the Knowledge of Parent, such Private Letter Ruling has not been revoked or modified.
(c) Except as has
not had, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect:
(i) (
A
) all Tax Returns required to be filed by, on behalf of or with respect to Parent or any of its Subsidiaries have
been duly and timely filed and are complete and correct, (
B
) all Taxes (whether or not reflected on such Tax Returns) required to be paid by Parent or any of its Subsidiaries have been duly and timely paid, (
C
) all Taxes
required to be withheld by Parent or any of its Subsidiaries have been duly and timely withheld, and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose,
(
D
) no Taxes or Tax Returns with respect to Parent or any of its Subsidiaries are under audit or examination by or any other proceeding with any Taxing Authority, (
E
) no Taxing Authority has asserted in writing any deficiency
with respect to Taxes against Parent or any of its Subsidiaries with respect to any taxable period for which the period of assessment or collection remains open, (
F
) there are no Liens for Taxes on any of the assets of Parent or any of
its Subsidiaries other than Permitted Liens and (
G
) neither Parent nor any of its Subsidiaries has received a claim from any Taxing Authority in a jurisdiction where it does not file Tax Returns that it is or may be subject to taxation
by, or required to file Tax Returns in, that jurisdiction;
(ii) neither Parent nor any of its Subsidiaries is a party to
any agreement providing for the allocation, indemnification or sharing of Taxes, except for any such agreements that (
A
) are solely between Parent and/or any of its Subsidiaries, (
B
) will terminate as of, or prior to, the
Closing and for which Parent and its Subsidiaries will have no liability following the Closing or (
C
) are customary commercial contracts entered into in the ordinary course of business, the principal purpose of which is not the
allocation or sharing of Taxes;
(iii) (
A
) neither Parent nor any of its Subsidiaries has any liability for Taxes of
any Person (other than Parent or any of its Subsidiaries) arising from the application of Treasury Regulations
Section 1.1502-6
or any analogous provision of state, local or foreign Law or as a transferee
or successor, (
B
) neither Parent nor any of its Subsidiaries has waived any statute of limitations with respect to any Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency and (
C
) there
are no issued or pending closing agreements pursuant to Section 7121 of the Code, or any similar provision of any Tax Law, or private letter rulings from the IRS, or comparable rulings of any Taxing Authority, with respect to either Parent or
any of its Subsidiaries that would bind Parent or any of its Subsidiaries after the Closing Date (other than IRS Private Letter Ruling 201108001); and
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(iv) neither Parent nor any of its Subsidiaries has participated in a
listed transaction within the meaning of Treasury Regulations
Section 1.6011-4(c).
Section 4.20
Related Party Transactions.
Except as set forth on Section 4.20 of the Parent
Disclosure Letter, no current or former director, officer, stockholder or Affiliate of Parent (including for this purpose, KKR) is a party to, or directly or indirectly benefits from, any Contract with Parent or a Subsidiary of Parent, other than
any employment agreement with officers in the ordinary course of business.
Section 4.21
Finders Fee, etc
. Except for
the parties listed on Section 4.21 of the Parent Disclosure Letter, no investment banker, broker or finder that has been retained by or is authorized to act on behalf of Parent or any of its Affiliates is entitled to any fee or commission from
Parent or any of their Subsidiaries in connection with the transactions contemplated by this Agreement. Parent has made available to the Company a complete and correct copy of all agreements pursuant to which the parties listed on Section 4.21
of the Parent Disclosure Letter are entitled to any fees and expenses in connection with the Merger or any of the transactions contemplated by this Agreement.
Section 4.22
Captive Insurance Company.
(a) WM Mortgage Reinsurance Company (the
Captive Insurance Company
) is duly licensed as a class 2 captive insurance company
in the State of Hawaii, such license is valid and in full force and effect and the Captive Insurance Company is not the subject of any pending or, to the Knowledge of Parent, threatened Proceeding for or contemplating the suspension, termination,
modification, limitation, cancellation, revocation, nonrenewal or impairment of such license. The Captive Insurance Company is not licensed to do insurance business in or subject to the Insurance Laws of any jurisdiction other than the State of
Hawaii.
(b)
Section 4.22
of the Parent Disclosure Letter sets forth a true and complete list of all Contracts to which the Captive
Insurance Company is party, including each reinsurance treaty or agreement to which the Captive Insurance Company is a party (the
Captive Documents
). To the Knowledge of Parent, (
i
) no counterparty under any Captive
Document is insolvent or the subject of a rehabilitation, liquidation, conservatorship, bankruptcy or similar proceeding and (
ii
) the financial condition of any such counterparty is not impaired to the extent that a default thereunder is
reasonably anticipated. No notice of intended cancellation or termination has been received by Parent or any of its Subsidiaries from any such counterparty, and neither Parent nor any of its Subsidiaries has received or delivered any notice of
dispute under, any Captive Document, except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(c) Since December 31, 2015, the Captive Insurance Company has timely filed all statements and reports, together with all exhibits,
interrogatories, notes, actuarial opinions, affirmations, certifications, schedules or other material supporting documents in connection therewith, required to be filed by it with the applicable insurance regulatory authorities on forms prescribed
or permitted by such insurance regulatory authorities, except for such failures to file which would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. All such statements and reports complied when
filed with the requirements of applicable Laws, and no deficiencies have been asserted in writing by any insurance regulatory authorities with respect to such statements and reports that have not been remedied, except as would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(d) Prior to the date hereof, Parent has delivered
to the Company complete copies of the audited annual financial statements of the Captive Insurance Company at and for the period ended December 31, 2016, together with the report of Captive Insurance Companys independent auditors thereon
(the
Audited Captive Financial Statements
). The Audited Captive Financial Statements have been prepared in accordance with GAAP applied on a consistent basis (except as may be indicated in the notes thereto) and present fairly in
all material respects in accordance with GAAP the financial position and results of operations of the Captive Insurance Company at and for the respective periods indicated.
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(e) The Captive Insurance Company has no Subsidiaries.
(f) All reserves and other liabilities for claims, losses (including, without limitation, incurred but not reported losses), loss adjustment
expenses (whether allocated or unallocated) and unearned premium, as reflected in the Audited Captive Financial Statements (
i
) were determined in accordance with generally accepted actuarial standards consistently applied throughout the
specified periods and (
ii
) are in compliance in all material respects with the requirements of applicable Law, including, without limitation, Insurance Laws. To the Knowledge of Parent, no facts or circumstances exist as of the date of
this Agreement which would necessitate any material adverse change in the statutorily required reserves of the Captive Insurance Company above those reflected in the Audited Captive Financial Statements. The Captive Insurance Company owns assets
that qualify as admitted assets under applicable Insurance Laws in an amount at least equal to any such reserves plus the minimum statutory capital and surplus as required under applicable Insurance Laws.
Section 4.23
Acknowledgment and Representations by Parent and Merger Sub.
Each of Parent and Merger Sub acknowledges and agrees
that (
a
) it has made its own independent review and investigations into and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of the Company and its Subsidiaries,
(
b
) it has been provided with access to such information, documents and other materials relating to the Company and its Subsidiaries and their respective businesses and operations and (
c
) it has been provided an opportunity
to ask questions of the Company with respect to such information, documents and other materials and receive answers to such questions. In entering into this Agreement, each of Parent and Merger Sub acknowledges that, except for the representations
and warranties set forth in
Article III
, the Company Disclosure Letter and any certificate delivered hereunder, (
x
) none of the Company or any of its Subsidiaries or any of their respective Representatives or Affiliates makes or
has made any express or implied representation or warranty, including any implied warranty of merchantability or suitability, (
i
) as to the accuracy or completeness of any of the information provided or made available to Parent or any of
its Representatives or Affiliates prior to the execution of this Agreement, including any information, documentation, forecasts, budgets, projections or estimates provided by the Company or any Representative of the Company in any data
rooms or management presentations or the accuracy or completeness of any of the foregoing, or (
ii
) with respect to any projections, forecasts, estimates, plans or budgets of future revenues, expenses or expenditures, future results
of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of the Company or any of its Subsidiaries heretofore or hereafter delivered to or made available to
Parent or any of its Representatives or Affiliates and (
y
) it has not been induced by or relied upon any representation, warranty, inducement, promise or other statement, express or implied, made by the Company or any of its Subsidiaries
or any of their respective Representatives, Affiliates or any other Person.
Section 4.24
No Additional Representations.
Except for the representations and warranties expressly made by Parent and Merger Sub in this
Article IV
, the Parent Disclosure Letter and any certificate delivered by Parent or Merger Sub hereunder, (
a
) none of Parent, Merger Sub
or any other Person makes any express or implied representation or warranty whatsoever or with respect to any information provided or made available in connection with the transactions contemplated by this Agreement, including any information,
documentation, forecasts, budgets, projections or estimates provided by Parent, Merger Sub or any Representative of Parent or Merger Sub in any data rooms or management presentations or the accuracy or completeness of any of the
foregoing, and (
b
) Parent and Merger Sub expressly disclaim any express or implied representation or warranty with respect to Parent and its Subsidiaries, including as to the condition, value, quality or prospects of their businesses or
their assets, and specifically disclaims any express or implied representation or warranty of merchantability, usage, suitability or fitness for any particular purpose with respect to Parents and its Subsidiaries assets, any part
thereof, the workmanship thereof, and the absence of any defects therein, whether latent or patent, it being understood that such subject assets are being acquired as is, where is, on the Closing Date, and in their present condition.
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ARTICLE V
COVENANTS OF THE COMPANY
Section 5.1
Conduct of the Company.
From the date of this Agreement until the earlier to occur of the Effective Time and the
termination of this Agreement in accordance with
Article IX
, except as otherwise expressly permitted or contemplated by this Agreement, as set forth in
Section
5.1
of the Company Disclosure Letter, as consented to in
writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed) or as required by applicable Law, the Company shall, and shall cause each of its Subsidiaries to, (
i
) conduct its business in the ordinary course of
business consistent with past practices, (
ii
) subject to, for the avoidance of doubt,
Section
7.1
and
Section
5.1
(n)
, maintain in effect all Governmental Authorizations necessary
for the conduct of the Company and its Subsidiaries business and (
iii
) use its commercially reasonable efforts to preserve intact in all material respects its current business organization, ongoing businesses and significant
relationships with Third Parties, including Governmental Authorities. Without limiting the generality of the foregoing, from the date of this Agreement until the earlier to occur of the Effective Time and the termination of this Agreement in
accordance with
Article IX
, except as otherwise expressly permitted or contemplated by this Agreement, as set forth in
Section
5.1
of the Company Disclosure Letter, as consented to in writing by Parent (such consent
not to be unreasonably withheld, conditioned or delayed) or as required by applicable Law, the Company shall not, nor shall it permit any of its Subsidiaries to:
(a) amend its certificate of incorporation, bylaws or other similar organizational documents (other than amendments to the organizational
documents of any wholly owned Subsidiary of the Company that would not or would not reasonably be expected to prevent, materially delay or materially impair the consummation of the Merger or the transactions contemplated hereby);
(b) (
i
) other than dividends and other distributions by a direct or indirect Subsidiary of the Company to the Company or any
direct or indirect wholly-owned Subsidiary of the Company, declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock or other equity securities, (
ii
) split, recapitalize,
subdivide, combine or reclassify any Company Securities or Company Subsidiary Securities or issue or authorize the issuance of any other securities in respect of, or in substitution for, outstanding shares of capital stock of the Company, except, in
the case of this clause (ii), following consultation with Parent, for the grant of Company RSUs and Company Restricted Stock under the Company Equity Plan in the ordinary course of business consistent with past practice but in no event in an amount
that would result in the issuance of shares of Company Stock upon the vesting or settlement of such Company RSUs or Company Restricted Stock (as applicable) in excess of 1.2 million shares of Company Stock on the terms and conditions set forth
on Section 5.1(b)(ii) of the Company Disclosure Letter, or (
iii
) purchase, redeem or otherwise acquire or offer to purchase, redeem or otherwise acquire any Company Securities or Company Subsidiary Securities, except, in the case of
this clause (iii), for (
A
) such purchases, redemptions and other acquisitions solely between the Company and a wholly owned Subsidiary thereof, or between a wholly owned Subsidiary of the Company and another wholly owned Subsidiary of
the Company and (
B
) redemptions, repurchases or acquisitions in connection with the settlement of Company RSUs or vesting of Company Restricted Stock, in each case that are outstanding on the date of this Agreement and in accordance with
the applicable terms thereof as they exist on the date of this Agreement;
(c) (
i
) issue, deliver, pledge, sell or otherwise
encumber to any Lien (other than a Permitted Lien) or authorize the issuance, delivery, pledge, sale or encumbrance to any Lien (other than a Permitted Lien) of any shares of any Company Securities or Company Subsidiary Securities, other than
(
x
) the issuance of any shares of Company Stock upon the settlement of Company RSUs that are outstanding on the date of this Agreement and in accordance with the applicable terms thereof as they exist on the date of this Agreement,
(
y
) the grant of Company RSUs and Company Restricted Stock under the Company Equity Plan in the ordinary course of business consistent with past practice in reliance on the exception to clause (ii) of
Section
5.1(b)
and (
z
) issuances of securities of the Companys Subsidiaries to the Company or to wholly owned Subsidiaries of the
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Company or (
ii
) amend any term of any Company Security (in each case, whether by merger, consolidation or otherwise);
(d) make any acquisition (whether by merger, consolidation or acquisition of stock or assets) of any interest in any Person or any division or
assets thereof with a value or purchase price (including all potentially payable
earn-out
consideration or any other obligation to potentially pay consideration in the future) in excess of
$50 million individually or $50 million in the aggregate, other than (
i
) acquisitions pursuant to Contracts in effect as of the date of this Agreement that were publicly announced prior to the date of this Agreement or
otherwise made available to Parent prior to the date hereof and (
ii
) purchases of assets in the ordinary course of business, including purchases of Mortgage Loans and Mortgage Servicing Rights;
(e) sell, assign, license, lease, transfer, abandon or otherwise dispose of, or create any Lien on, or otherwise dispose of, any of the
Companys or its Subsidiaries material assets, other than (
i
) Permitted Liens or (
ii
) in connection with (
A
) MSR Related Transactions or other transactions involving Mortgage Servicing Rights having an
aggregate unpaid principal balance less than $5 billion or (
B
) Mortgage Loans in the ordinary course of business;
(f)
incur any indebtedness for borrowed money or guarantees thereof, other than (
i
) the MSR Related Transactions, (
ii
) under the Secured Company Indebtedness or (
iii
) indebtedness incurred for the refinancing of the
Companys 6.500% Senior Notes due 2018 so long as (
x
) the aggregate costs and fees incurred in connection with such refinancing indebtedness, when added to the costs and fees that would be required to be incurred in order to pay off
such refinancing indebtedness at Closing, would not exceed $15,000,000 and (
y
) such refinancing indebtedness can be prepaid or refinanced at Closing;
(g) make any loans, advances or capital contributions to, or investments in, any Person in excess of $25 million in the aggregate, other
than (
i
) the Company or its wholly owned Subsidiaries or (
ii
) Mortgage Loans in the ordinary course of business;
(h) other than in the ordinary course of business consistent with past practice (including renewals consistent with the terms thereof),
(
x
) amend or modify in any material respect or terminate (excluding terminations or renewals upon expiration of the term thereof in accordance with the terms thereof) any Company Material Contract, (
y
) enter into any Contract that
would constitute a Related Party Contract or (
z
) waive, release or assign any material rights, claims or benefits, or grant any material consent, under any Company Material Contract;
(i) other than to the extent required by the terms of any Company Plan, (
i
) grant or increase any severance or termination pay or
benefits with respect to any independent contractor, employee, officer or director of the Company or any of its Subsidiaries, except with respect to officers and employees of the Company or its Subsidiaries who are not Section 16 Officers
(
Non-Management
Employees
) in the ordinary course of business consistent with past practice, (
ii
) make or grant any bonus or any incentive compensation, other than with respect
to bonuses or incentive compensation for performance periods in progress as of the date hereof that will be completed prior to the Effective Time or for
Non-Management
Employees in the ordinary course of
business consistent with past practice, (
iii
) establish, adopt, enter into, amend or terminate any Company Plan or establish, adopt, enter into, amend or terminate any other benefit plan, arrangement that would be a Company Plan if in
existence on the date of this Agreement, except for routine amendments or renewals to health and welfare plans (other than severance plans) that would not result in a material increase in benefits or in cost to the Company or any of its
Subsidiaries, (
iv
) except in the ordinary course of business consistent with past practice for
Non-Management
Employees, increase the compensation, bonus or other benefits payable or provided to
any independent contractor, employee, officer or director of the Company or any of its Subsidiaries, other than promotion or merit-based annual salary increases (and any corresponding increase in incentive opportunity, to the extent determined based
on annual base salary) for Section 16 Officers in the ordinary course of business consistent with past practice which increases do not in the aggregate exceed 5% for any
one-year
period or more than 10%
as to any individual Section 16 Officer, (
v
) grant any equity or equity-based awards, except for the grant of Company RSUs and Company Restricted Stock under the Company Equity Plan in the ordinary course
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of business consistent with past practice in reliance on the exception to clause (ii) of
Section
5.1(b)
, (
vi
) hire any employees that would reasonable be
expected to be considered Section 16 Officers were they employed at the end of the prior fiscal year, other than to replace any Section 16 Officer whose employment terminated prior to the Effective Time, (
vii
) loan or advance
any money or other property to any independent contractor, employee, officer or director of the Company or any of its Subsidiaries, other than routine expense advances in the ordinary course of business consistent with past practice, or loans under
the Companys 401(k) plan in accordance with the terms of the Companys 401(k) plan, or (
viii
) adopt, become party to or materially amend any collective bargaining agreement;
(j) materially change the Companys methods, principles or practices of financial accounting or annual accounting or fiscal period,
except as required by GAAP or in
Regulation S-X
of the Exchange Act (or any interpretation thereof), any Governmental Authority or applicable Law;
(k) materially modify the Companys or any of its Subsidiaries Privacy Policies or the operation or security of its material IT
Systems;
(l) make, change or revoke any Tax election (other than any election that is not material and is made in the ordinary course of
filing Tax Returns), file any material amended Tax Return or claim for a Tax refund, change any Tax accounting period or method, enter into any closing agreement, request any ruling from a Taxing Authority, surrender any right to a material Tax
refund, consent to any extension or waiver of the limitations period applicable to any Tax claim or assessment, or settle or compromise any material Tax claim;
(m) adopt or publicly propose a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a
dissolution, in each case, of the Company or any material Subsidiary of the Company;
(n) settle any
Proceeding against the Company or any of its Subsidiaries other than in accordance with Section 5.1(n) of the Company Disclosure Letter;
(o) fail to maintain in full force and effect existing insurance policies in accordance with their terms or permit any insurance coverage with
respect to the material assets, operations and activities of the Company and its Subsidiaries to lapse without obtaining replacement coverage; or
(p) agree, resolve or commit to do any of the foregoing.
Parent and Merger Sub acknowledge and agree that: (
i
) nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly,
the right to control or direct the Companys operations prior to the Closing, (
ii
) prior to the Closing, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over
its and its Subsidiaries operations and (
iii
) notwithstanding anything to the contrary set forth in this Agreement, no consent of Parent or Merger Sub shall be required with respect to any matter set forth in this
Section
5.1
or elsewhere in this Agreement to the extent that the requirement of such consent would violate any applicable Law.
Section 5.2
Related Party Contracts
. The Company shall enter into a termination and release instrument with FIF HE Holdings LLC to
terminate the Stockholders Agreement, with effect from and after the Closing, and release the Surviving Corporation and its Affiliates from all liabilities or obligations arising under the Stockholders Agreement from and after the Closing.
ARTICLE VI
COVENANTS OF PARENT
AND MERGER SUB
Section 6.1
Conduct of Parent
. From the date of this Agreement until the earlier to occur of the Effective
Time and the termination of this Agreement in accordance with
Article IX
, except as otherwise expressly
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permitted or contemplated by this Agreement, as set forth in
Section
6.1
of the Parent Disclosure Letter, as consented to in writing by the Company (such consent not to
be unreasonably withheld, conditioned or delayed) or as required by applicable Law, Parent shall, and shall cause each of its Subsidiaries to, conduct its business in the ordinary course of business consistent with past practices since
December 31, 2015. Without limiting the generality of the foregoing, from the date of this Agreement until the earlier to occur of the Effective Time and the date of termination of this Agreement in accordance with
Article IX
,
except as expressly permitted or contemplated by this Agreement, as set forth in
Section
6.1
of the Parent Disclosure Letter, as consented to in writing by the Company (such consent not to be unreasonably withheld,
conditioned or delayed) or as required by applicable Law, none of Parent and Merger Sub shall, nor shall Parent permit any of its Subsidiaries to:
(a) (
i
) other than dividends and other distributions by a direct or indirect Subsidiary of Parent to Parent or any direct or
indirect wholly-owned Subsidiary of Parent, declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock or other equity securities, (
ii
) split, recapitalize, subdivide, combine or
reclassify any shares of Parent Common Stock, Parent Preferred Stock, Parent Common Stock or issue or authorize the issuance of any other securities in respect of, convertible into or in substitution for, outstanding shares of Parent Common Stock,
Parent Preferred Stock or Parent Common Stock, or (
iii
) purchase, redeem or otherwise acquire or offer to purchase, redeem or otherwise acquire any Parent Securities or Parent Subsidiary Securities, except, in the case of this clause
(iii), for such purchases, redemptions and other acquisitions solely between Parent and a wholly owned Subsidiary thereof, or between a wholly owned Subsidiary of Parent and another wholly owned Subsidiary of Parent;
(b) amend its certificate of incorporation, bylaws or other similar organizational documents;
(c) (
i
) issue, deliver, pledge, sell or otherwise encumber to any Lien (other than a Permitted Lien) or authorize the issuance,
delivery, pledge, sale or encumbrance to any Lien (other than a Permitted Lien) of any shares of any Parent Securities or Parent Subsidiary Securities, other than issuances of securities of Parents Subsidiaries to Parent or to wholly owned
Subsidiaries of Parent or (
ii
) amend any term or rights of Parent Stock, warrants for Parent Stock or any other Parent Security (in each case, whether by merger, consolidation or otherwise);
(d) make any acquisition (whether by merger, consolidation or acquisition of stock or assets) of any interest in any Person or any division or
assets thereof that would reasonably be expected to prevent, materially delay or materially impair the consummation of the Merger;
(e)
enter into any business outside of the existing business maintained by Parent or any of its Subsidiaries as of the date hereof;
(f) sell,
assign, license, lease, transfer, abandon or otherwise dispose of, or create any Lien on, or otherwise dispose of, any of Parents or its Subsidiaries material assets, other than Permitted Liens;
(g) make any loans, advances or capital contributions to, or investments in, any Person, other than Parent or its wholly owned Subsidiaries;
(h) enter into any agreement that would be required to be disclosed in
Section
4.20
of the Parent Disclosure
Letter if in effect on the date hereof or amend in any material respect any agreement required to be disclosed thereon;
(i) incur or
guaranty any indebtedness for borrowed money other than the Debt Financing;
(j) other than to the extent required by the terms of any
Parent Plan, (
i
) grant or increase any severance or termination pay or benefits with respect to any independent contractor, employee, officer or director of Parent or any of its Subsidiaries, (
ii
) make or grant any bonus or
any incentive compensation, (
iii
) establish, adopt, enter
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into, amend or terminate any Parent Plan or establish, adopt, enter into, amend or terminate any other benefit plan, arrangement that would be a Parent Plan if in existence on the date of this
Agreement, except for routine amendments or renewals to health and welfare plans (other than severance plans) that would not result in a material increase in benefits or in cost to Parent or any of its Subsidiaries, (
iv
) increase the
compensation, bonus or other benefits payable or provided to any independent contractor, employee, officer or director of Parent or any of its Subsidiaries, (
v
) grant any equity or equity-based awards or (
vi
) loan or advance
any money or other property to any independent contractor, employee, officer or director of Parent or any of its Subsidiaries, other than routine expense advances in the ordinary course of business consistent with past practice;
(k) take (or refrain from taking) any action that would cause the representations in
Section
4.11
and
Section
4.19
to fail to be true and correct in all material respects on or prior to the Closing Date, including, without limitation any amendment of the Escrow Agreement;
(l) consent to, authorize or approve any Transfer (as such term is defined in the Parent Certificate of Incorporation) of Parent Stock that
would otherwise be prohibited by Section 2(a) of Article VIII of the Parent Certificate of Incorporation;
(m) (
i
) settle any
Proceeding against Parent or any of its Subsidiaries or (
ii
) otherwise enter into a settlement of any Proceeding against the Parent or any of its Subsidiaries that would reasonably be expected to materially limit or restrict the
operation of the business of Parent or any of its Subsidiaries (and after the Closing, Parent or any of its Subsidiaries); or
(n) agree,
resolve or commit to do any of the foregoing.
The Company acknowledges and agrees that: (
i
) nothing contained in this Agreement shall
give the Company, directly or indirectly, the right to control or direct Parents or Merger Subs operations prior to the Closing, (
ii
) prior to the Closing, Parent and Merger Sub shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its and its Subsidiaries operations and (
iii
) notwithstanding anything to the contrary set forth in this Agreement, no consent of the Company shall be required
with respect to any matter set forth in this
Section
6.1
or elsewhere in this Agreement to the extent that the requirement of such consent would violate any applicable Law.
Section 6.2
Obligations of Merger Sub
. Parent shall cause Merger Sub to perform when due its obligations under this Agreement and
to consummate the Merger pursuant to the terms and subject to the conditions set forth in this Agreement.
Section 6.3
Director
and Officer Indemnification
.
(a) For a period of not less than six years after the Effective Time, Parent shall cause the Surviving
Corporation to indemnify and hold harmless each former and present director or officer of the Company or any of its Subsidiaries (each, together with such persons heirs, executors or administrators, an
Indemnified Party
)
against any costs, expenses (including advancing as incurred attorneys fees and expenses in advance of the final disposition of any actual or threatened claim to the fullest extent permitted by Law), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any actual or threatened claim with respect to acts or omissions occurring or alleged to have occurred at or prior to the Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, in connection with such persons serving as an officer, director or other fiduciary of the Company or any of its Subsidiaries or of any Person if such service was at the request of or for the benefit of the Company or any of its
Subsidiaries, to the fullest extent provided in their respective certificates of incorporation, bylaws (or comparable organizational documents) or any indemnification agreement as in effect on the date of this Agreement and made available by the
Company to Parent prior to the date of this Agreement. All rights to elimination of liability, indemnification and advancement of expenses for acts or omissions occurring or alleged to have occurred at or prior to the Effective Time, whether
asserted or
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claimed prior to, at or after the Effective Time, in effect as of the date of this Agreement in favor of the Indemnified Parties shall survive the Merger and continue in full force and effect in
accordance with their terms, and the Surviving Corporation shall (and Parent shall cause the Surviving Corporation to) honor all the terms thereof. Notwithstanding anything herein to the contrary, if any Indemnified Party notifies Parent on or prior
to the sixth anniversary of the Effective Time of a matter in respect of which such Person may seek indemnification pursuant to this
Section
6.3
, the provisions of this
Section
6.3
shall continue
in effect with respect to such matter until the final disposition of all claims relating thereto.
(b) For a period of not less than six
years after the Effective Time, Parent, to the fullest extent permitted under applicable Law, shall cause to be maintained in effect the provisions in the certificates of incorporation and bylaws and comparable organizational documents of the
Surviving Corporation and each Subsidiary of the Company (or in such documents of any successor thereto) regarding elimination of liability, indemnification and advancement of expenses in effect as of immediately prior to the Effective Time, and,
during such six year period, shall not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any individual who immediately before the Effective Time was a Indemnified Party, except
as required by applicable Law.
(c) Parent shall, or shall cause the Surviving Corporation to, either (
i
) continue to maintain
in effect for a period of no less than six years after the Effective Time the directors and officers insurance policies (the
D&O Insurance
) maintained by the Company and in place as of the date of this Agreement or
(
ii
) purchase comparable D&O Insurance (from a carrier with the same or better credit rating as the Companys D&O Insurance carrier) for such
six-year
period, in each case, with
coverage for the persons who are covered by such existing D&O Insurance, with terms, conditions, retentions and levels of coverage at least as favorable to the insured individuals as such existing D&O Insurance with respect to matters
existing or occurring prior to the Effective Time;
provided
that in no event shall Parent or the Surviving Corporation be required to expend for such policies pursuant to this sentence an annual premium amount in excess of 300% of the amount
per annum the Company paid in its last full fiscal year (the
Premium Cap
);
provided
,
further
, that if the amount necessary to procure such insurance coverage exceeds the Premium Cap, the Company may purchase the most
advantageous policy available for an amount not to exceed the Premium Cap. At the Companys option or at Parents request, the Company may purchase, prior to the Effective Time, a prepaid tail policy for a period of no more
than six years after the Effective Time with coverage for the persons who are covered by the Companys existing D&O Insurance, with terms, conditions, retentions and levels of coverage at least as favorable to the insured individuals as
such existing D&O Insurance with respect to matters existing or occurring prior to the Effective Time, in which event Parent shall cease to have any obligations under the first sentence of this
Section
6.3(c)
;
provided
that the aggregate premium for such policies shall not exceed the Premium Cap;
provided
,
further
, that if the amount of annual premiums necessary to maintain or procure such insurance coverage exceeds the Premium Cap,
the Company may procure and maintain for such
six-year
period the most advantageous policy available for an annual premium equal to the Premium Cap. In the event the Company elects to purchase such a
tail policy, the Surviving Corporation shall (and Parent shall cause the Surviving Corporation to) shall, and shall cause the Surviving Corporation to, maintain such tail policy in full force and effect for a period of no
less than six years after the Effective Time and continue to honor its obligations thereunder.
(d) No Indemnified Party shall settle,
compromise or consent to the entry of any judgment with respect to any claim for which indemnification is sought by an Indemnified Party pursuant to
Section
6.3(a)
(an
Indemnification Claim
) without the
prior written consent of Parent not to be unreasonably withheld or delayed. Each of Parent and the Indemnified Parties will cooperate in the defense of any Indemnification Claim and will provide access to properties and individuals as reasonably
requested and furnish or cause to be furnished records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.
(e) In the event that either Parent or 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
A-54
entity of such consolidation or merger or (
ii
) transfers or conveys all or substantially all of its properties, rights and other assets to any Person, then, and in each such case,
Parent shall cause the successors and assigns of Parent or the Surviving Corporation, as the case may be, to succeed to or assume its obligations set forth in this
Section
6.3
.
(f) The provisions of this
Section
6.3
shall survive consummation of the Merger, are intended to be for the benefit
of, and will be enforceable by, each of the Indemnified Parties and are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by Contract, at Law or otherwise.
Section 6.4
Employee Matters
.
(a) For a period beginning on the Closing Date and continuing thereafter for twelve months or, if shorter, during the period of employment for
an employee of the Surviving Corporation or its Subsidiaries following the Effective Time, Parent shall provide, or shall cause the Surviving Corporation and its Subsidiaries to provide, to each employee of the Company and its Subsidiaries as of
immediately prior to the Effective Time who continue employment with Parent or any of its Subsidiaries, including the Surviving Corporation, following the Closing (collectively, the
Continuing Employees
) with (
1
) base
wage or annual base salary levels that are no less favorable than those in effect immediately prior to the Effective Time, (
2
) short term and long term incentive compensation opportunities that are no less favorable in the aggregate than
those in effect for such Continuing Employee immediately prior to the Effective Time, (
3
) employee benefits (excluding compensation and benefits covered by clauses (2) and (4) of this
Section
6.4
, benefits
under a defined benefit pension plan and equity or equity-based compensation, other than benefits under the NSM Private Services Limited Provident Fund with respect to Continuing Employees who participate in such plan as of the date of this
Agreement) that are substantially similar in the aggregate to those provided to such Continuing Employees immediately prior to the Effective Time and (
4
) severance benefits that are no less favorable than those provided pursuant to the
applicable Company Plans set forth on
Section
3.18(a)(i)
of the Company Disclosure Letter.
(b) For all purposes
under the employee benefit plans, programs and arrangements established or maintained by Parent and its respective Affiliates in which Continuing Employees may be eligible to participate after the Closing (the
New Benefit Plans
),
each Continuing Employee shall be credited with the same amount of service as was credited by the Company immediately prior to the Effective Time under similar or comparable Company Plans in which such Continuing Employee participated immediately
prior to the Effective Time (except (
x
) for purposes of benefit accrual under defined benefit plans (other than under the NSM Private Services Limited Provident Fund with respect to Continuing Employees who participate in such plan as of
the date of this Agreement) or benefit levels under retiree welfare plans and (
y
) to the extent such credit would result in a duplication of benefits). In addition, and without limiting the generality of the foregoing, Parent, the
Surviving Corporation or any of their respective Subsidiaries shall: (
i
) with respect to any New Benefit Plans in which the Continuing Employees may be eligible to participate following the Closing, cause each Continuing Employee to be
immediately eligible to participate in such New Benefit Plans, without any waiting time, to the extent coverage under such New Benefit Plans replaces coverage under a similar or comparable Company Plan in which such Continuing Employee was eligible
to participate immediately before such commencement of participation and (
ii
) use commercially reasonable efforts to cause, for purposes of each New Benefit Plan providing medical, dental, pharmaceutical and/or vision benefits to any
Continuing Employee, all
pre-existing
condition exclusions and
actively-at-work
requirements of such New Benefit Plan to be
waived for such Continuing Employee and his or her covered dependents, to the extent any such exclusions or requirements were waived or were inapplicable under any similar or comparable Company Plan in which such Continuing Employee participated
immediately prior to the Closing. Parent shall cause any eligible expenses incurred by such Continuing Employee and his or her covered dependents during the portion of the plan year of the Company Plan ending on the date such Continuing
Employees participation in the corresponding New Benefit Plan begins to be taken into account under such New Benefit Plan for purposes of satisfying all deductible, 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 Benefit Plan.
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(c) Parent hereby acknowledges that the consummation of the Merger and the other transactions
contemplated hereby will constitute a change in control or change of control (or other similar phrase) for purposes of each Company Plan listed on
Section
6.4(c)
of the Company Disclosure Letter.
(d) Parent shall cause the Company and its Subsidiaries to honor in accordance with their terms as in effect immediately prior to the
Effective Time, all Company Plans set forth on
Section
6.4(d)
of the Company Disclosure Letter, subject to any amendment or termination thereof that may be permitted by such plans, agreements or written arrangements
consistent with the terms of this
Section
6.4
.
(e) The terms of this
Section
6.4
are
included for the sole benefit of the Parties and shall not confer any rights or remedies upon any Continuing Employee or former employee of the Company or any of its Subsidiaries, any participant or beneficiary in any Company Plan or any other
Person or Governmental Authority (whether as a third party beneficiary or otherwise) other than the Parties hereto. Nothing contained in this Agreement shall (
i
) constitute or be deemed to constitute an amendment to any Company Plan or
other compensation or benefit plan, policy, program or arrangement, (
ii
) obligate Parent or any of its Subsidiaries to (
x
) maintain any particular benefit plan or arrangement or (
y
) retain the employment of any
particular employee or (
iii
) prevent the Surviving Corporation or any of its Subsidiaries from amending or terminating any benefit plan or arrangement.
ARTICLE VII
COVENANTS OF PARENT
AND THE COMPANY
Section 7.1
Efforts
.
(a) Subject to the terms and conditions of this Agreement, each of the Company and Parent shall use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Law to consummate and make effective the Merger and the other transactions contemplated by this Agreement as promptly as
reasonably practicable after the date of this Agreement, including (
i
) preparing and filing, in consultation with the other Parties, as promptly as reasonably practicable with any Governmental Authority or other Third Party all
documentation to effect all necessary, proper or advisable filings, notices, petitions, statements, registrations, submissions of information, applications and other documents and (
ii
) obtaining and maintaining all approvals, consents,
registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority or other Third Party, in each case, that are necessary, proper or advisable to consummate and make effective the Merger and the
other transactions contemplated by this Agreement (whether or not such approvals, consents, registrations, permits, authorizations and other confirmations are conditions to the consummation of the Merger pursuant to
Article VIII
);
provided
, notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall require (or be deemed to require) Parent or any of its Affiliates to agree to or accept (nor shall the Company or any of its Subsidiaries,
without Parents prior written consent, agree to or accept) any obligation, restriction, requirement, limitation, divestiture, condition, remedy or other action imposed by a Governmental Authority that would reasonably be expected to result in
a material adverse effect on the financial condition, properties, assets and liabilities (considered together), business or results of operation of the Surviving Corporation (assuming the consummation of the Merger) and its Subsidiaries, taken as a
whole (any such obligation, restriction, requirement, limitation, divestiture, condition, remedy or other action, a
Burdensome Condition
).
(b) In furtherance and not in limitation of the foregoing, each of Parent and the Company, including, as necessary, the respective Affiliates
of each, shall (
i
) make, as promptly as reasonably practicable, and in any event within fifteen (15) Business Days of the date of this Agreement, an appropriate filing of a Notification and Report Form pursuant to the HSR Act with
respect to the transactions contemplated by this Agreement and (
ii
) make, as promptly as reasonably practicable, and in any event within twenty-five (25) Business Days of the
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date of this Agreement, each in a materially complete form, any filing that may be required with any other Governmental Authority. Each of the Company and Parent shall supply as promptly as
reasonably practicable any additional information and documentary material that may be requested by any Governmental Authority and necessary to obtain approval, consent, registration, a permit, authorization or other confirmation from such
Governmental Authority and furnish to the other such necessary information and reasonable assistance as the other may reasonably request in connection with the preparation of any required applications, notices, registrations and requests as may be
required or advisable to be filed with any Governmental Authority (including providing financial information and certificates as well as personal information of senior management or directors of the Company or Parent, as applicable, and making
individuals with appropriate seniority and expertise of the Company or Parent, as applicable, available to participate in discussions or hearings).
(c) Except as prohibited by applicable Law or Order, each of Parent and the Company, including, as necessary, the respective Affiliates of
each, shall (
i
) cooperate and consult with each other in connection with any filing or submission with a Governmental Authority in connection with the transactions contemplated by this Agreement and in connection with any investigation
or other inquiry by or before a Governmental Authority relating to the transactions contemplated by this Agreement, including any Proceeding initiated by a private party, including by allowing the other Party to have a reasonable opportunity to
review in advance and comment on drafts of filings and submissions (except documents or portions thereof for which confidential treatment has been requested or given), (
ii
) promptly inform the other Party of (and if in writing, supply to
the other Party) any substantive communication received by such Party from, or given by such Party to, any Governmental Authority, including the Federal Trade Commission or the Antitrust Division of the Department of Justice, and of any material
communication received or given in connection with any Proceeding by a private party, in each case regarding any of the transactions contemplated by this Agreement, (
iii
) consult with each other prior to taking any material position with
respect to the filings under the HSR Act or in discussions with or filings to be submitted to any other Governmental Authority, (
iv
) permit the other to review and discuss in advance, and consider in good faith the views of the other (to
the extent timely communicated) in connection with, any analyses, presentations, memoranda, briefs, arguments, opinions and proposals to be submitted to any Governmental Authority and (
v
) coordinate with the other in preparing and
exchanging such information and promptly provide the other (and its counsel) with copies of all filings, presentations or submissions (and a summary of any oral presentations) made by such Party with any Governmental Authority relating to this
Agreement or the transactions contemplated hereby, including under the HSR Act,
provided
, however, that materials may be redacted or provided on an outside counsel only basis as necessary to address reasonable privilege or confidentiality
concerns (including with respect to other businesses of the Parent, its Subsidiaries and any other Affiliates or stockholders of Parent or the Company), and to remove references concerning the valuation of the Company and its Subsidiaries, or Parent
and its Subsidiaries, and other competitively sensitive material.
(d) Unless prohibited by applicable Law or Order or by the applicable
Governmental Authority, each of the Company and Parent, including, as necessary, the respective Affiliates of each, shall (
i
) to the extent reasonably practicable, not participate in or attend any meeting, or engage in any substantive
conversation, with any Governmental Authority in respect of the Merger (including with respect to any of the actions referred to in
Section
7.1(a)
) without the other, (
ii
) to the extent reasonably practicable,
give the other reasonable prior notice of any such meeting or conversation and (
iii
) in the event one such Party is prohibited by applicable Law or Order or by the applicable Governmental Authority from participating or attending any
such meeting or engaging in any such conversation, keep the
non-participating
Party reasonably apprised with respect thereto.
(e) In furtherance and not in limitation of the foregoing, Parent and the Company shall each use its reasonable best efforts to avoid the
entry of, or to have vacated, lifted, reversed or overturned, any decree, judgment, injunction or other Order, whether temporary, preliminary or permanent, that would restrain, prevent or delay the consummation of the Merger and the other
transactions contemplated hereby.
(f) To the extent that any consent, approval or waiver of a Third Party (other than any Governmental
Authority) is required with respect to any Contract in connection with the transactions contemplated by this
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Agreement (each, a
Third Party Consent
), the Company and Parent shall cooperate with each other and use their respective reasonable best efforts to obtain such Third Party
Consent as promptly as practicable after the date of this Agreement;
provided
that nothing in this Agreement shall require the Company to make any payment or deliver anything of value to any Third Party in order to obtain any Third Party
Consent. Parent shall reasonably cooperate with the Company in connection with obtaining such Third Party Consents, including by making its Representatives reasonably available to meet with such Third Parties by telephone or in person during normal
business hours as reasonably requested by the Company, and shall reasonably cooperate to provide such documentation or information as is required by any such Third Parties as promptly as practicable.
Section 7.2
Preparation of SEC Documents; Stockholders Meetings
.
(a) All filings by the Company or Parent with the SEC in connection with the transactions contemplated hereby and all mailings to the
stockholders of the Company in connection with the Merger or to the stockholders of Parent in connection with the Parent Share Issuance shall be subject to the prior review and comment by the other Party.
(b) As promptly as practicable following the date of this Agreement, and in any event within twenty-five (25) Business Days following the
date of this Agreement, Parent and the Company shall jointly prepare, and Parent shall cause to be filed with the SEC, the Registration Statement, in which a joint proxy statement to be sent to the stockholders of Parent and the stockholders of the
Company relating to the Parent Meeting and the Company Meeting, respectively (together with any amendments or supplements thereto, the
Proxy Statement
) will be included. Each of Parent and the Company shall use its reasonable best
efforts to cause the Registration Statement and the Proxy Statement to comply with the rules and regulations promulgated by the SEC, to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such
filing and to keep the Registration Statement effective as long as is necessary to consummate the Merger. Each of Parent and the Company shall furnish all information concerning it as may reasonably be requested by the other Party in connection
with such actions and the preparation of the Proxy Statement and the Registration Statement. Promptly after the Registration Statement is declared effective under the Securities Act, the Company will cause the Proxy Statement to be mailed to
stockholders of the Company, and Parent will cause the Proxy Statement to be mailed to stockholders of Parent.
(c) Each of Parent and the
Company shall (
i
) as promptly as practicable notify the other of (
1
) the receipt of any comments from the SEC or its staff and all other written correspondence and oral communications with the SEC relating to the Proxy
Statement or the Registration Statement (including the time when the Registration Statement becomes effective and the issuance of any stop order or suspension of qualifications relating to the Registration Statement) and (
2
) any request
from the SEC or its staff for amendments or supplements to the Proxy Statement or the Registration Statement or for additional information with respect thereto, and (
ii
) provide the other with copies of (
1
) all correspondence
between it and its Representatives, on the one hand, and the SEC and its staff, on the other hand, relating to the Proxy Statement, the Registration Statement or the transactions contemplated hereby and (
2
) all Orders of the SEC relating
to the Registration Statement. Each of Parent and the Company shall ensure that none of the information supplied by or on its behalf for inclusion or incorporation by reference in (
A
) the Registration Statement will, at the time the
Registration Statement is filed with the SEC, at each time at which it is amended and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading and (
B
) the Proxy Statement will, on the date on which it is first mailed to the stockholders of the Company and
the stockholders of Parent and at the time of each of the Company Meeting and the Parent Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not misleading. Each of Parent and the Company shall use its reasonable best efforts to respond (with the assistance of, and after consultation with, the other as provided
by this
Section
7.2(c)
) as promptly as practicable to any comments of the SEC with respect to the Proxy Statement and the Registration Statement. If at any time prior to the Effective Time, any information
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relating to the Company, Parent or any of their respective Affiliates (including with respect to Parent, solely for this purpose, KKR), officers or directors is discovered by the Company or
Parent which should be set forth in an amendment or supplement to the Proxy Statement or the Registration Statement, so that neither the Proxy Statement or the Registration Statement would contain an 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 the light of the circumstances under which they are made, not misleading, the Party that discovers such information shall promptly notify
the other Parties thereof, and an appropriate amendment or supplement describing such information shall be filed with the SEC and, to the extent required by applicable Law, disseminated to the stockholders of the Company and Parent.
(d) The Company will, as soon as reasonably practicable following the date the Registration Statement is declared effective by the SEC, duly
call, give notice of, convene and hold a meeting of the Companys stockholders for the purpose of obtaining the Company Stockholder Approval (the
Company Meeting
). The Company will, subject to compliance with the DGCL and the
Exchange Act, use its reasonable best efforts to (
i
) hold the Company Meeting as soon as reasonably practicable after the Registration Statement is declared effective under the Securities Act and (
ii
) subject to
Section
7.3(e)
, solicit proxies in favor of the adoption of this Agreement. The Company will include the Company Board Recommendation in the Proxy Statement, except to the extent that the Company Board shall have made a
Company Adverse Recommendation Change as permitted by
Section
7.3(e)
. Notwithstanding the foregoing provisions of this
Section
7.2(d)
, if on a date for which the Company Meeting is scheduled, the
Company has not received proxies representing a sufficient number of shares of Company Stock to obtain the Company Stockholder Approval, whether or not a quorum is present, or if the Parent has provided consent, the Company will have the right to
make one or more successive postponements or adjournments of the Company Meeting, provided that the Company Meeting is not postponed or adjourned to a date that is more than 30 days after the date for which the Company Meeting was originally
scheduled (excluding any adjournments or postponements required by applicable Law). The Company agrees that, unless this Agreement has been terminated in accordance with
Section
9.1
, its obligations pursuant to this
Section
7.2
will not be affected by the commencement, public proposal, public disclosure or communication to the Company of any Company Acquisition Proposal, by the making of any Company Adverse Recommendation Change by the
Company Board or the occurrence of a Company Intervening Event.
(e) Parent will, as soon as reasonably practicable following the date the
Registration Statement is declared effective by the SEC, duly call, give notice of, convene and hold a meeting of Parents stockholders for the purpose of obtaining the Parent Stockholder Approval (the
Parent Meeting
). Parent
will, subject to compliance with the DGCL and the Exchange Act, use its reasonable best efforts to (
i
) hold the Parent Meeting as soon as reasonably practicable after the Registration Statement is declared effective under the Securities
Act and (
ii
) subject to
Section
7.4(c)
, solicit proxies in favor of the Parent Share Issuance. Parent will include the Parent Board Recommendation in the Proxy Statement, except to the extent that the Parent
Board shall have made a Parent Adverse Recommendation Change as permitted by
Section
7.4(c)
. Notwithstanding the foregoing provisions of this
Section
7.2(e)
, if on a date for which the Parent
Meeting is scheduled, Parent has not received proxies representing a sufficient number of shares of Parent Common Stock to obtain the Parent Stockholder Approval, whether or not a quorum is present, or if the Company has provided consent, Parent
will have the right to make one or more successive postponements or adjournments of the Parent Meeting, provided that the Parent Meeting is not postponed or adjourned to a date that is more than 30 days after the date for which the Parent Meeting
was originally scheduled (excluding any adjournments or postponements required by applicable Law). Parent agrees that, unless this Agreement has been terminated in accordance with
Section
9.1
, its obligations pursuant to
this
Section
7.2
will not be affected by the commencement, public proposal, public disclosure or communication to Parent of any Parent Acquisition Proposal, by the making of any Parent Adverse Recommendation Change by the
Parent Board or the occurrence of a Parent Intervening Event.
(f) The Parties will use their reasonable best efforts to hold the Company
Meeting and the Parent Meeting on the same day at the same time.
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Section 7.3
No Solicitation by the Company
.
(a) From and after the date of this Agreement until the earlier to occur of the Effective Time and the termination of this Agreement in
accordance with
Article IX
, and except as otherwise specifically provided for in this Agreement, the Company shall not, and shall cause its Subsidiaries not to, and shall not authorize or permit any of its officers, directors, employees or
Representatives to, directly or indirectly, (
i
) solicit, initiate or knowingly encourage or knowingly facilitate any inquiry, proposal or offer which constitutes, or could reasonably be expected to lead to, a Company Acquisition
Proposal, (
ii
) participate in any discussions or negotiations regarding, or furnish to any Person (other than Parent, its Affiliates and their respective Representatives) any nonpublic information relating to the Company and its
Subsidiaries, in connection with any Company Acquisition Proposal or, subject to
Section
7.3(e)
, effect a Company Adverse Recommendation Change, (
iii
) approve or recommend, or make any public statement approving
or recommending, a Company Acquisition Proposal, (
iv
) enter into any letter of intent, merger agreement or other similar agreement providing for a Company Acquisition Proposal (other than an Acceptable Confidentiality Agreement) (each an
Alternative Company Acquisition Agreement
), (
v
) submit any Company Acquisition Proposal to a vote of the stockholders of the Company or (
vi
) resolve or agree to do any of the foregoing.
(b) Notwithstanding the limitations set forth in
Section
7.3(a)
, if, prior to the time the Company Stockholder
Approval is obtained, the Company receives an unsolicited bona fide written Company Acquisition Proposal that the Company Board determines in good faith, after consultation with the Companys outside financial advisors and outside legal
counsel, (
i
) is or could reasonably be expected to lead to a Superior Company Proposal and (
ii
) failure to take such action would reasonably be expected to be inconsistent with the directors fiduciary duties under
applicable Law, then the Company may, in response to such Company Acquisition Proposal, furnish nonpublic information relating to the Company and its Subsidiaries to the Person or group (or any of their Representatives) making such Company
Acquisition Proposal and engage in discussions or negotiations with such Person or group and their Representatives regarding such Company Acquisition Proposal;
provided
that (
x
) prior to furnishing any nonpublic information
relating to the Company and its Subsidiaries to such Person or group or their respective Representatives, the Company enters into an Acceptable Confidentiality Agreement with the Person or group making such Company Acquisition Proposal and
(
y
) promptly (but not more than 48 hours) after furnishing any such nonpublic information to such Person, the Company furnishes such nonpublic information to Parent (to the extent such nonpublic information has not been previously so
furnished to Parent or its Representatives). Notwithstanding anything to the contrary contained in this Agreement, the Company and its Subsidiaries and the Companys Representatives may in any event (
A
) seek to clarify the terms and
conditions of any Company Acquisition Proposal solely to determine whether such Company Acquisition Proposal constitutes or would reasonably be expected to lead to a Superior Company Proposal and (
B
) inform a Person or group that has
made or, to the Knowledge of the Company, is considering making, a Company Acquisition Proposal of the provisions of this
Section
7.3
.
(c) The Company shall promptly (and in any event within 48 hours) notify Parent after receipt of any Company Acquisition Proposal, any inquiry
or proposal that would reasonably be expected to lead to a Company Acquisition Proposal or any inquiry or request for nonpublic information relating to the Company and its Subsidiaries by any Person who has made or would reasonably be expected to
make a Company Acquisition Proposal and provide to Parent copies of all material correspondence and written materials sent or provided to the Company or any of its Subsidiaries relating to such Company Acquisition Proposal or such inquiry or
proposal. Such notice shall indicate the identity of the Person making the proposal or offer, the material terms and conditions of any such proposal or offer and any related financing and, if applicable, the nature of the information requested
pursuant to such inquiry or request. Thereafter, the Company shall keep Parent reasonably informed, on a prompt basis (and in any event within 48 hours), regarding any material changes to the status and material terms of any such proposal or offer
(including any material amendments thereto or any material change to the scope or material terms or conditions thereof), and provide to Parent copies of all material correspondence and written materials sent or provided to the Company or any of its
Subsidiaries relating to such proposal or offer.
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(d) The Company shall, and shall cause each of its Subsidiaries to, and shall direct its
Representatives to, immediately (
i
) cease any existing discussions or negotiations with any Person with respect to a Company Acquisition Proposal, (
ii
) terminate access for any Person (other than Parent, its Affiliates and
their respective Representatives) to any data room and (
iii
) request the return or destruction of any
non-public
information provided to any Person (other than Parent, its Affiliates and their
respective Representatives) in connection with a potential Company Acquisition Proposal.
(e) Notwithstanding anything to the contrary in
this Agreement, prior to the time the Company Stockholder Approval is obtained, the Company Board may effect a Company Adverse Recommendation Change (and, in the case of a Company Acquisition Proposal that was unsolicited after the date of this
Agreement and that did not result from a material breach of
Section
7.3(d)
, terminate this Agreement pursuant to
Section
9.1(d)(iii)
and concurrently pay the fees required by
Section
9.3
in order to enter into a definitive agreement in connection with a Superior Company Proposal) if: (
i
) (
A
) a Company Acquisition Proposal is made to the Company after the date of this
Agreement and such Company Acquisition Proposal is not withdrawn prior to such Company Adverse Recommendation Change or (
B
) there has been a Company Intervening Event; (
ii
) in the case of a Company Acquisition Proposal, the
Company Board concludes in good faith, after consultation with the Companys outside financial advisors and outside legal counsel, that such Company Acquisition Proposal constitutes a Superior Company Proposal; and (
iii
) the Company
Board concludes in good faith, after consultation with the Companys outside legal counsel, that failure to take such action would reasonably be expected to be inconsistent with the directors fiduciary duties under applicable Laws.
(f) Prior to making any Company Adverse Recommendation Change or entering into any Alternative Company Acquisition Agreement,
(
i
) the Company Board shall provide Parent at least four Business Days prior written notice of its intention to take such action, which notice shall specify, in reasonable detail, the identity of the Person making the proposal or
offer, the reasons therefor and, in the case of a Company Acquisition Proposal, the material terms and conditions of such proposal, including a copy of any proposed definitive agreement; (
ii
) during the four Business Days following such
written notice, the Company Board and its Representatives shall negotiate in good faith with Parent (to the extent Parent desires to negotiate) regarding any revisions to the terms of the transactions contemplated hereby proposed by Parent in
response to such Superior Company Proposal or Company Intervening Event, as applicable; and (
iii
) at the end of the four Business Day period described in the foregoing clause (ii), the Company Board shall have concluded in good
faith, after consultation with the Companys outside legal counsel and outside financial advisors (and taking into account any adjustment or modification of the terms of this Agreement proposed in writing by Parent), that, as applicable
(
A
) the Company Acquisition Proposal continues to be a Superior Company Proposal or (
B
) the Company Intervening Event continues to warrant a Company Adverse Recommendation Change and, in each case, that failure to take such
action would reasonably be expected to be inconsistent with the directors fiduciary duties under applicable Laws. The provisions of this
Section
7.3(f)
shall also apply to any change to the financial or other material
terms of a proposal that was previously the subject of a notice under this
Section
7.3(f)
, and any such change shall require a new notice to Parent as described above, except that all references in this
Section
7.3(f)
to four Business Days shall be deemed to be three Business Days.
(g) Nothing contained in this
Agreement shall prohibit the Company Board from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a)
promulgated under the Exchange Act or making a statement contemplated by
Item 1012(a) of
Regulation M-A
or
Rule 14d-9
promulgated under the Exchange Act;
provided
,
however
, that this
Section
7.3(g)
shall not permit the Company Board to effect a Company Adverse Recommendation Change except to the extent otherwise permitted by this
Section
7.3
;
provided
,
further
,
that a request by Parent for the Company to publicly recommend against a Company Acquisition Proposal may not be made more than once with respect to any Company Acquisition Proposal unless such Company Acquisition Proposal is subsequently materially
amended or modified, in which case Parent may make one request each time such Company Acquisition Proposal is so subsequently materially amended or modified. For the avoidance of doubt, any stop, look and listen communication or similar
communication of the type contemplated by Rule
14d-9(f)
under the Exchange Act shall not constitute a Company Adverse Recommendation Change.
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Section 7.4
No Solicitation by Parent
.
(a) From and after the date of this Agreement until the earlier to occur of the Effective Time and the termination of this Agreement in
accordance with
Article IX
, and except as otherwise specifically provided for in this Agreement, Parent shall not, and shall cause its Subsidiaries not to, and shall not authorize or permit any of its officers, directors, employees or
Representatives to, directly or indirectly, (
i
) solicit, initiate or knowingly encourage or knowingly facilitate any inquiry, proposal or offer which constitutes, or could reasonably be expected to lead to, a Parent Acquisition Proposal,
(
ii
) participate in any discussions or negotiations regarding, or furnish to any Person (other than Parent, its Affiliates and their respective Representatives) any nonpublic information relating to Parent and its Subsidiaries, in
connection with any Parent Acquisition Proposal or, subject to
Section
7.4(c)
, effect a Parent Adverse Recommendation Change, (
iii
) approve or recommend, or make any public statement approving or recommending, a
Parent Acquisition Proposal, (
iv
) enter into any letter of intent, merger agreement or other similar agreement providing for a Parent Acquisition Proposal, (
v
) submit any Parent Acquisition Proposal to a vote of the
stockholders of Parent or (
vi
) resolve or agree to do any of the foregoing.
(b) Parent shall, and shall cause each of its
Subsidiaries to, and shall direct its Representatives to, immediately (
i
) cease any existing discussions or negotiations with any Person with respect to a Parent Acquisition Proposal, (
ii
) terminate access for any Person
(other than the Company, its Affiliates and their respective Representatives) to any data room and (
iii
) request the return or destruction of any
non-public
information provided to any Person
(other than the Company, its Affiliates and their respective Representatives) in connection with a potential Parent Acquisition Proposal.
(c) Notwithstanding anything to the contrary in this Agreement, prior to the time the Parent Stockholder Approval is obtained, the Parent
Board may effect a Parent Adverse Recommendation Change if there has been a Parent Intervening Event.
(d) Prior to making any Parent
Adverse Recommendation Change, (
i
) the Parent Board shall provide the Company at least four Business Days prior written notice of its intention to take such action, which notice shall specify, in reasonable detail, the reasons
therefor; (
ii
) during the four Business Days following such written notice, the Parent Board and its Representatives shall negotiate in good faith with the Company (to the extent the Company desires to negotiate) regarding any revisions
to the terms of the transactions contemplated hereby proposed by the Company in response to such Parent Intervening Event, as applicable; and (
iii
) at the end of the four Business Day period described in the foregoing clause (ii),
the Parent Board shall have concluded in good faith, after consultation with Parents outside legal counsel and outside financial advisors (and taking into account any adjustment or modification of the terms of this Agreement proposed in
writing by the Company), that the Parent Intervening Event continues to warrant a Parent Adverse Recommendation Change and, in each case, that failure to take such action would reasonably be expected to be inconsistent with the directors
fiduciary duties under applicable Laws.
(e) Nothing contained in this Agreement shall prohibit the Parent Board from taking and
disclosing to its stockholders a position contemplated by
Rule 14e-2(a)
promulgated under the Exchange Act or making a statement contemplated by Item 1012(a) of
Regulation M-A
or
Rule 14d-9
promulgated under the Exchange Act;
provided
,
however
, that this
Section
7.4(e)
shall not
permit the Parent Board to effect a Parent Adverse Recommendation Change except to the extent otherwise permitted by this
Section
7.4
;
provided
,
further
, that a request by the Company for Parent to publicly
recommend against a Parent Acquisition Proposal may not be made more than once with respect to any Parent Acquisition Proposal unless such Parent Acquisition Proposal is subsequently materially amended or modified, in which case the Company may make
one request each time such Parent Acquisition Proposal is so subsequently materially amended or modified. For the avoidance of doubt, any stop, look and listen communication or similar communication of the type contemplated by Rule
14d-9(f)
under the Exchange Act shall not constitute a Parent Adverse Recommendation Change.
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Section 7.5
Financing
.
(a) Each of Parent and Merger Sub shall use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to arrange, obtain and consummate the Debt Financing on the terms and conditions described in the Debt Letters, no later than the time at which the Closing is required to occur pursuant to
Section
2.2
), including using their reasonable best efforts to (
i
) (
A
) maintain in effect the Debt Letters and comply with all of their respective obligations thereunder to the extent that the failure to comply would
adversely impact the amount or timing of Debt Financing (taking into account the expected timing of the Marketing Period) or the availability of the Debt Financing at Closing, (
B
) negotiate, enter into and, assuming all conditions to
Closing set forth in
Article VIII
hereof have been satisfied, deliver definitive agreements with respect to the Debt Financing reflecting the terms and conditions contained in the Debt Letters or on other terms that (
1
) are
acceptable to Parent and Merger Sub in their sole discretion, (
2
) would not reasonably be expected to delay (taking into account the expected timing of the Marketing Period) or adversely affect the ability of Parent and Merger Sub to
consummate the transactions contemplated hereby and (
3
) would otherwise not be prohibited by
Section
7.5(c)
, so that such agreements are in effect no later than the time at which the Closing is required to occur
pursuant to
Section
2.2
and (
C
) enforce their rights under the Debt Letters to the extent that the failure to enforce would adversely impact the amount or timing of Debt Financing (taking into account the
expected timing of the Marketing Period) or the availability of the Debt Financing at Closing and (
ii
) satisfy on a timely basis (taking into account the expected timing of the Marketing Period) (or obtain the waiver of) all the
conditions to the Debt Financing and the definitive agreements related thereto that are applicable to Parent and Merger Sub and in their control. In the event that (
x
) all conditions set forth in
Article VIII
have been satisfied
or waived or, upon funding shall be satisfied or waived, and (
y
) the conditions to the Debt Financing have been satisfied or waived, or, upon funding shall be satisfied or waived, Parent and Merger Sub shall use their reasonable best
efforts to cause the Persons providing the Debt Financing (the
Debt Financing Parties
) to fund the Debt Financing at Closing.
(b) Parent shall keep the Company reasonably informed on a reasonably current basis of any material developments concerning the status of the
Debt Financing which could reasonably be expected to impact the availability of the Debt Financing and upon the Companys reasonable written request, provide the Company with copies of executed material definitive agreements related to the Debt
Financing. Without limiting the foregoing, Parent shall promptly (and in no event less than one Business Day) after obtaining knowledge thereof, give the Company written notice of any (
i
) breach or default by Parent, its Affiliates, any
Debt Financing Party or any other party to the Debt Letters or any definitive document related to the Debt Financing (or any event or circumstance, with or without notice, lapse of time, or both, would give rise to any breach or default) if such
breach or default could reasonably be expect to result in a delay of, or in any way limit, the availability of the Debt Financing, (
ii
) receipt by Parent of any written notice or other written communication from any Debt Financing
Parties with respect to threatened or actual withdrawal, repudiation, expiration, intention not to fund under or termination of the Debt Letters or the Debt Financing, (
iii
) receipt by Parent of any written notice or other written
communication from any Debt Financing Parties with respect to material dispute or disagreement between or among any parties to the Debt Letters or any definitive document related to the Debt Financing (other than ordinary course negotiations) with
respect to the obligation to provide the Debt Financing or the amount of the Debt Financing to be funded at Closing, in each case, that could reasonably be expected to make the funding of the Debt Financing (or satisfaction of the conditions to
obtaining the Debt Financing) less likely to occur or delay the availability of the Debt Financing or (
iv
) if for any reason Parent in good faith believes that there is a material possibility that it will not be able to obtain all or any
portion of the Debt Financing needed to consummate the Merger at the Effective Time;
provided
, that in no event will Parent be under any obligation to provide any information shared among Parent, Merger Sub and their professional advisors in
connection with matters contemplated by the foregoing that is subject to attorney-client or other privilege if Parent and Merger Sub shall have used their reasonable best efforts to disclose such information in a way that would not waive such
privilege.
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(c) Parent may amend, supplement, modify, terminate, assign or agree to any waiver under the Debt
Letters without the prior written approval of the Company,
provided
that Parent shall not, without Companys prior written consent, permit any amendment, modification, assignment, termination or material waiver to be made to, or consent
to or agree to any waiver of, any provision of or remedy under the Debt Letters which would (
A
) reduce the aggregate amount of the Debt Financing (including by increasing the amount of fees to be paid or original issue discount (except
as set forth in any market flex provisions contemplated by the fee letter)) to an amount less than the amount required to consummate the transactions contemplated hereby or (
B
) impose new or additional conditions to the Debt
Financing or otherwise expand, amend or modify any of the conditions to the Debt Financing, in each case, in a manner that would or would reasonably be expected to (
I
) delay, prevent or make less likely the consummation of the Merger or
the funding of the Debt Financing (or satisfaction of the conditions to the Debt Financing) at the Effective Time (taking into account the expected timing of the Marketing Period) (it being understood and agreed that, in any event, Parent may amend
the Debt Letters to add additional Financing Sources), (
II
) adversely impact the ability of Parent to enforce its rights against the Debt Financing Parties or any other parties to the Debt Letters or the definitive agreements with respect
thereto or (
III
) adversely affect the ability of Parent to timely consummate the Merger and the other transactions contemplated hereby. In the event that new commitment letters and/or fee letters are entered into in accordance with any
amendment, replacement, supplement or other modification of the Debt Letters permitted pursuant to this
Section
7.5
, such new commitment letters and/or fee letters shall be deemed to be a part of the Debt
Financing and deemed to be the Debt Letters for all purposes of this Agreement. Parent shall promptly (and in any event no later than one Business Day) deliver to the Company true, correct and complete copies of any termination,
amendment, modification or replacement of the Debt Letters.
(d) If funds in the amounts set forth in the Debt Letters, or any portion
thereof, become unavailable on the terms and conditions (including any market flex provisions applicable thereto) contemplated in the Debt Letters, Parent and Merger Sub shall, as promptly as practicable following the occurrence of such
event (taking into account the Marketing Period), (
x
) notify the Company in writing thereof, (
y
) use their respective reasonable best efforts to obtain substitute financing, including from alternative sources, in an amount
sufficient, when added to the portion of the Debt Financing that is available and any cash of the Company and its Subsidiaries on hand at the Closing Date and the other cash available to Parent and its Affiliates in the Escrow Account, to enable
Parent to consummate the payment of the Maximum Cash Amount pursuant to the Merger and the other transactions contemplated hereby in accordance with the terms hereof (the
Substitute Financing
) and (
z
) use their
respective reasonable best efforts to obtain new financing commitment letter(s) that provide for such Substitute Financing and, promptly after execution thereof (and, in any event, no later than one Business Day), deliver to the Company true,
complete and correct copies of the new commitment letter(s) and the related fee letters;
provided
that in no event shall Parent and Merger Sub be obligated to accept or pursue any Substitute Financing if it is materially less favorable to
Parent in any respect than the Debt Financing contemplated by the Debt Letters. The provisions of this
Section
7.5
shall be applicable to the Substitute Financing and upon obtaining any commitment for any such Substitute
Financing, such financing shall be deemed to be a part of the Debt Financing and any commitment letter and fee letter for such Substitute Financing shall be deemed the Debt Letters, as applicable, for all purposes of this
Agreement. Parent shall pay, or cause to be paid, as the same shall become due and payable, all fees and other amounts that become due and payable under the Debt Letters. Notwithstanding anything to the contrary contained herein, in no event shall
Parent and Merger Sub be required pursuant to this Agreement to agree to pay to the Debt Financing Parties providing the Debt Financing any additional fees or to increase any interest rates or original issue discounts applicable to the Debt
Financing, except as expressly required pursuant to the Debt Letters in existence as of the date hereof. The Company acknowledges and agrees that Parent and Merger Sub shall not be required to consummate the Debt Financing until the final day of the
Marketing Period.
(e) Notwithstanding anything contained in this Agreement to the contrary, Parent and Merger Sub expressly acknowledge
and agree that neither Parents nor Merger Subs obligations to consummate the transactions contemplated by this Agreement are in any manner conditioned upon Parent or Merger Sub obtaining the Debt Financing, any Substitute Financing or
any other financing.
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(f) Prior to the Closing, the Company and its Subsidiaries shall, and shall use their reasonable
best efforts to cause their respective Representatives, including legal and accounting, to provide, as promptly as reasonably practicable, to Parent and Merger Sub all cooperation as may be reasonably requested by Parent and Merger Sub in connection
with arranging, obtaining and syndicating the Debt Financing (including, for the avoidance of doubt, consummating the offering of the Notes as contemplated by the Debt Commitment Letter (the
New Notes
)) and causing the
conditions in the Debt Letters to be satisfied, including, subject to the limitations set forth in the definition of Required Information:
(i) preparing and furnishing Parent, Merger Sub and their Financing Sources as promptly as practicable all Required Information
and all other financial and other pertinent information and disclosures regarding the Company and its Subsidiaries (including their businesses, operations, financial projections and prospects) as may be reasonably requested by Parent or Merger Sub
to assist in Parent and Merger Subs preparation of the Offering Documents and all supplements thereto;
(ii) using
reasonable best efforts to assist in the preparation of any Offering Documents (and any supplement thereto) (including identifying any portion of the information included therein that constitutes material,
non-public
information);
(iii) upon reasonable advance notice to the Company from
the Parent, having appropriate senior management of the Company and its Subsidiaries, with appropriate seniority and expertise, and appropriate Representatives participate in a reasonable number of meetings (including customary
one-on-one
meetings), due diligence sessions, drafting sessions and lender and roadshow presentations and ratings agency meetings and sessions;
(iv) cooperating with the marketing efforts of Parent and the Financing Sources in connection with the Debt Financing,
including direct contact between senior management and Representatives of the Company and its Subsidiaries and potential lenders and investors in the Debt Financing;
(v) cooperating with the Financing Sources and their advisors in performing their due diligence;
(vi) if and to the extent Parent elects to prepay, redeem, terminate or otherwise discharge any of the Companys existing
indebtedness other than the Company Notes, which are the subject of
Section
7.6
, (
w
) delivering notices of prepayment, redemption or termination within the time periods required by the relevant agreements governing
such indebtedness (to the extent such notices are and are permitted to be conditioned on the occurrence of the Closing), (
x
) providing all cooperation reasonably requested by Parent and Merger Sub to facilitate and effectuate such prepayment,
redemption, termination or discharge (including via a tender offer), including communicating with agents, lenders, trustees and holders of such indebtedness, (
y
) delivering any other documents and materials as may be necessary in
connection with the payoff, discharge and termination in full on the Closing, of such indebtedness and liens under such indebtedness and (
z
) obtaining customary payoff letters, lien terminations, instruments of discharge to be delivered
at the Closing and any possessory collateral delivered in connection with such indebtedness;
(vii) providing at least
three (3) Business Days prior to the Closing Date, all documentation and other information about the Company and each of its Subsidiaries as is reasonably requested in writing by Parent at least 8 Business Days prior to the Closing Date with
respect to applicable know your customer and anti-money laundering rules and regulations, including, without limitation, the USA PATRIOT Act;
(viii) cooperating with Parents and Merger Subs legal counsel in connection with any legal opinions that such legal
counsel may be required to deliver in connection with the Debt Financing;
(ix) using reasonable best efforts to obtain
customary consents of independent accountants of the Company and its Subsidiaries for use of their auditor opinions in any materials relating to the Debt Financing at the expense of and as reasonably requested by Parent on behalf of the Financing
Sources and directing such accountants to partake in customary accounting and auditor due diligence sessions;
(x) using
reasonable best efforts to assist Parent and Merger Sub in obtaining any corporate credit and family ratings from any ratings agencies in respect of the relevant borrower, issuer or parent guarantors
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under the Debt Financing, including assisting Parent, Merger Sub and the Financing Sources in the preparation of materials for rating agency presentations;
(xi) using reasonable best efforts to assist in the preparation, execution and delivery of definitive financing documents,
including equity, guarantee and collateral documents and other certificates and documents as may reasonably be requested by Parent;
(xii) facilitating the pledging of collateral for the Debt Financing (including the delivery of original share certificates,
together with share powers executed in blank, with respect to the Company and each of its Subsidiaries), including taking reasonable actions necessary to permit the Financing Sources to evaluate the Companys and its Subsidiaries assets,
inventory, cash management and accounting systems, policies and procedures relating thereto for the purpose of establishing collateral arrangements (including establishing bank and other accounts and blocked account and control agreements in
connection with the foregoing);
(xiii) using reasonable best efforts to assist the Financing Sources in benefitting from
the existing lender relationships of the Company and its Subsidiaries, including seeking consent to the transactions contemplated hereby from lenders under existing Advance Facilities and Warehouse Facilities;
(xiv) executing and delivering such documents as Parent may reasonably request, including (
x
) a certificate of the
chief financial officer of the Company with respect to solvency matters as of the Closing, on a pro forma basis, in the form of attached to the Debt Commitment Letter (or substantially similar provisions in any Substitute Financing) and
(
y
) the Authorization Letters);
(xv) using reasonable best efforts to obtain surveys and title insurance at
the expense of and as reasonably requested by Parent on behalf of the Financing Sources; and
(xvi) cooperate with Parent
to the extent within the control of the Company, and take all organizational actions, subject to the occurrence of the Closing and not prior to the Effective Time, reasonably requested by Parent to permit the consummation of the Debt Financing;
provided
that (
i
) no such cooperation shall be required to the extent that it would (
A
) require the Company to take any action
that in the good faith judgment of the Company unreasonably interferes with the ongoing business or operations of the Company and/or its Subsidiaries, (
B
) require the Company or any of its Subsidiaries to incur any fee, expense or other
liability in connection with the Debt Financing prior to the Effective Time for which it is not promptly reimbursed or indemnified by Parent, (
C
) cause any representation or warranty in this Agreement to be breached by the Company and
its Subsidiaries, (
D
) cause any condition to Closing in
Section
8.2
to fail to be satisfied or otherwise cause any breach of this Agreement, (
E
) be reasonably expected to cause any director, officer
or employee of the Company or any of its Subsidiaries to incur any personal liability or (
F
) cause any breach of any applicable Law or any Company Material Contract to which the Company or any of its Subsidiaries is a party and
(
ii
) the Company and its Subsidiaries shall not be required to enter into, execute, or approve any agreement or other documentation prior to the Closing or agree to any change or modification of any existing agreement or other
documentation that would be effective prior to the Closing (other than the execution of Authorization Letters).
(g) Parent shall
indemnify, defend and hold harmless the Company and its Subsidiaries, and their respective
pre-Closing
Representatives, from and against any losses and damages suffered or incurred by them in connection with
the arrangement of the Debt Financing, any information provided in connection therewith (other than arising from information provided by the Company and its Subsidiaries but including violations of the KKR Confidentiality Agreement) and any misuse
of the logos, names or trademarks of the Company or its Subsidiaries, except in the event such losses and damages are determined by a final
non-appealable
judgment of a court of competent jurisdiction to have
arisen out of or resulted from the gross negligence, bad faith or willful misconduct of the Company, any of its Subsidiaries or any of their respective
pre-Closing
Representatives.
Parent shall
promptly, upon reasonable written request by the Company, reimburse the Company and its Subsidiaries for all
out-of-pocket
costs and expenses incurred by the Company or
its Subsidiaries and their respective Representatives in connection with the cooperation and assistance contemplated by this
Section
7.5
(including, to the extent incurred at the request or consent of Parent, professional
fees and expenses of
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accountants, legal counsel and other advisors). Subject to Parents indemnification obligations under this
Section
7.5
, the Company hereby consents to the use of
all of its and its Subsidiaries corporate logos, names and trademarks in connection with the Debt Financing,
provided
that such logos, names and trademarks are used solely in a manner that is not intended to or reasonably likely to harm
or disparage the Company or its Subsidiaries or the reputation or goodwill of the Company or any of its Subsidiaries.
Section 7.6
Treatment of Existing Indebtedness of the Company
.
(a) At Parents request, the Company shall use its reasonable efforts to
commence and conduct one or more tender offers (each, an
Offer
and collectively, the
Offers
), with respect to any or all of the Company Notes identified by Parent to the Company in writing prior to, on, or after
the date hereof on terms that are acceptable to Parent. The Company will not be required to commence any applicable Offer until Parent shall have provided the Company with the necessary offer to purchase, letter of transmittal or other related
documents in connection with the Offer (collectively, the
Offer Documents
) a reasonable period of time in advance of the Company commencing the applicable Offer to allow the Company and its counsel to review and comment on the
related Offer Documents. Parent will reasonably consult with the Company regarding the timing and commencement of any Offer and any relevant deadlines. The closing of the Offers shall be expressly conditioned on (
i
) the occurrence of the
Closing and (
ii
) the deposit by Parent with or on behalf of the Company of immediately available funds for the full payment of all Company Notes properly tendered and not withdrawn and any related consent payments to the extent required
pursuant to the terms of any applicable Offer (clauses (i) and (ii) together, the
Conditions
), and the parties shall use their reasonable best efforts to cause the Offers to close on the Closing Date;
provided
, that
the consummation of an Offer with respect to any series of Company Notes shall not be a condition to Closing. The Offers shall be conducted in compliance with any applicable provisions of the applicable indenture and with applicable Law, including
SEC rules and regulations, and the Company shall not be required to commence and conduct any Offer that is not in compliance with the applicable indenture and applicable Laws. The Company shall waive any of the conditions relating to an Offer other
than the Conditions as may be reasonably requested by Parent in writing and shall not, without the written consent of Parent, waive any condition to any Offer or make any changes to any Offer other than as agreed between Parent and the Company. The
Company shall, at Parents discretion, engage one or more dealer manager(s) and one or more information agent(s) designated by Parent and shall use its reasonable best efforts to enter into customary agreements with such parties, with terms to
be agreed by Parent, and in form and substance reasonably satisfactory to the Company. The Company shall timely provide the dealer manager(s) and information agent(s) with such officers certificates, legal opinions and other documentation
reasonably requested by the dealer manager(s) and information agent(s) in connection each Offer. The Company shall also use its reasonable best efforts to cause the trustees to cooperate with Parent to facilitate each such Offer. Parent hereby
covenants and agrees to provide (or to cause to be provided) immediately available funds for the full payment at the Effective Time of all Company Notes properly tendered and not withdrawn and any related consent payments to the extent required
pursuant to the terms of any applicable Offer. The Company shall, and shall cause its Subsidiaries and any Representatives to, in each case, use their reasonable best efforts, at Parents sole expense as contemplated by clause (c) below,
to provide all cooperation reasonably requested by Parent in connection with any Offer. To the extent that the provisions of any applicable Law conflict with this
Section
7.6(a)
, Parent and the Company shall comply with the
applicable Law and shall not be deemed to have breached their obligations under this Agreement by such compliance.
(b) If requested by
Parent in writing, in lieu of or in addition to the Company commencing or closing an Offer for any series of Company Notes, the Company shall use its reasonable best efforts, to the extent permitted by such series of Company Notes and the applicable
indenture, to (
x
) issue a notice of redemption for all of the outstanding aggregate principal amount of such series of Company Notes, pursuant to the redemption provisions of the applicable indenture, which notice of redemption shall be
issued at or after the Effective Time and (
y
) take any other actions prior to the Effective Time reasonably requested by Parent to facilitate the redemption and satisfaction and discharge of such series of Company Notes and the related
indenture immediately following the Effective Time pursuant to the redemption and the satisfaction and discharge provisions of the applicable
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indenture and the other provisions of such indenture applicable thereto;
provided
, that prior to the Company being required under clause (x) above to issue any notice of redemption,
Parent shall have, or shall have caused to be, deposited with the trustee under the applicable indenture sufficient funds to effect such redemption and satisfaction and discharge. The redemption and satisfaction and discharge of any series of
Company Notes pursuant to the preceding sentence immediately following the Effective Time are referred to collectively as the
Discharge
of such series of Company Notes. The Company shall, and shall cause its Subsidiaries and the
Representatives to, in each case, use their reasonable best efforts, at Parents sole expense as contemplated by clause (c) below, to provide all cooperation reasonably requested by Parent in connection with the Discharge of any series of
Notes identified to the Company by Parent in writing at any time. The Company shall deliver such officers certificates, and shall facilitate the delivery by legal counsel of legal opinions, to the trustee as reasonably requested by the trustee
in connection therewith. The Company shall also use its reasonable best efforts to cause the trustee for each series of Company Notes to cooperate with Parent to facilitate each Discharge.
(c) Parent shall promptly, upon request by the Company, reimburse the Company for (
i
) all reasonable and documented
out-of-pocket
costs and expenses (including reasonable outside attorneys fees and expenses) incurred by the Company, its Subsidiaries or Representatives in connection
with the Offers or Discharge in respect of any series of Company Notes and (
ii
) any reasonable
out-of-pocket
costs incurred by the Company, its Subsidiaries
or the Representatives to the trustee or its counsel pursuant to the applicable indenture in connection with the Offers or Discharge in respect of any series of Company Notes. Parent shall indemnify and hold harmless the Company, its Subsidiaries
and the Representatives from and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by them in connection with any action taken by them in connection with this
Section
7.6
except to the extent suffered or incurred as a result of the bad faith, gross negligence, willful misconduct or material breach of this Agreement by the Company, its Subsidiaries or the Representatives.
Section 7.7
Public Announcements
. So long as this Agreement is in effect, neither Parent nor the Company, nor any of their
respective Affiliates (including for this purpose, with respect to Parent, KKR), shall issue or cause the publication of any press release or other public statement relating to the Merger or this Agreement without the prior written consent of the
other Party, unless such Party determines, after consultation with outside counsel, that it is required by applicable Law or by any listing agreement with or the listing rules of a national securities exchange or trading market to issue or cause the
publication of any press release or other public announcement with respect to the Merger or this Agreement, in which event such Party shall provide, on a basis reasonable under the circumstances, an opportunity to the other Party to review and
comment on such press release or other announcement in advance, and shall give reasonable consideration to all reasonable comments suggested thereto. None of the limitations set forth in this
Section
7.7
shall apply to any
disclosure of any information (
a
) in connection with or following a Company Acquisition Proposal, Parent Acquisition Proposal, Company Adverse Recommendation Change or Parent Adverse Recommendation Change and matters related thereto,
(
b
) in connection with any dispute between the Parties relating to this Agreement, (
c
) to any Governmental Authority in connection with the filings, notices, petitions, statements, registrations, submissions of information,
applications and other documents contemplated by
Section
7.1
or (
d
) consistent with previous press releases, public disclosures or public statements made by Parent or the Company in compliance with this
Section
7.7
.
Section 7.8
Notices of Certain Events
. Each of the Company and Parent shall promptly
notify and provide copies to the other of (
a
) any material written notice from any Person alleging that the approval or consent of such Person is or may be required in connection with the Merger or the other transactions contemplated by
this Agreement, (
b
) any written notice or other material communication from any Governmental Authority or securities exchange in connection with the Merger or the other transactions contemplated by this Agreement, (
c
) any
Proceeding or investigation, commenced or, to its Knowledge, threatened against, the Company or any of its Subsidiaries or Parent or any of its Subsidiaries, as the case may be, that would be reasonably likely to (
i
) prevent or
materially delay the consummation of the Merger or the other transactions contemplated hereby or
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(
ii
) result in the failure of any condition to the Merger set forth in
Article VIII
to be satisfied, or (
d
) the occurrence of any event which would or would be
reasonably likely to (
i
) prevent or materially delay the consummation of the Merger or the other transactions contemplated hereby or (
ii
) result in the failure of any condition to the Merger set forth in
Article VIII
to be satisfied;
provided
that the delivery of any notice pursuant to this
Section
7.8
shall not (
x
) affect or be deemed to modify any representation, warranty, covenant, right, remedy, or condition to
any obligation of any Party hereunder or (
y
) update any section of the Company Disclosure Letter or the Parent Disclosure Letter.
Section 7.9
Access to Information
.
(a) From and after the date of this Agreement until the earlier to occur of the Effective Time and the termination of this Agreement in
accordance with
Article IX
, upon reasonable advance notice and subject to applicable Law, each Party shall (and shall cause its Subsidiaries to) afford to any other Party, its Affiliates and its directors, officers, agents, control persons,
employees, consultants, professional advisers (including attorneys, accountants and financial advisors) and Financing Sources (
Representatives
) reasonable access during normal business hours, to all of its and its
Subsidiaries properties, books, Contracts, commitments, records, officers and employees and, during such period each Party shall (and shall cause its Subsidiaries to) furnish to the other Party all other information concerning it, its
Subsidiaries and each of their respective businesses, properties and personnel as the requesting Party may reasonably request;
provided
that the Party receiving such request may restrict the foregoing access and the disclosure of information
to the extent that, in the good faith judgment of such Party, (
i
) any Law applicable to such Party or its Subsidiaries requires such Party or its Subsidiaries to restrict or prohibit access to any such properties or information,
(
ii
) the information is subject to confidentiality obligations to a Third Party, (
iii
) disclosure of any such information or document could result in the loss of attorney-client privilege or (
iv
) such access would
unreasonably disrupt the operations of such Party or any of its Subsidiaries;
provided
,
further
, that the Party receiving such request shall use commercially reasonable efforts to provide the other Party such information in a manner
that would not violate any such Law or confidentiality obligations or waive attorney-client privilege, as applicable.
(b) With respect to
the information disclosed pursuant to
Section
7.9(a)
, each of Parent and the Company shall comply with, and shall cause such partys Representatives to comply with, (
x
) all of its obligations under the
Confidentiality Agreements, which agreements shall remain in full force and effect in accordance with their respective terms, and (
y
) with respect to NPI, applicable Law.
Section 7.10
Section
16 Matters
. Prior to the Effective Time, Parent and the Company shall each use reasonable
best efforts to take all such steps as may be required to cause any dispositions of Company Stock (including derivative securities with respect to Company Stock), dispositions of Parent Common Stock (including derivative securities with respect to
Parent Common Stock) or acquisitions of Parent Common Stock (including derivative securities with respect to Parent Common Stock) resulting from the transactions contemplated by this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act (each such individual, a
Section
16 Officer
) with respect to the Company to be exempt under
Rule 16b-3
promulgated under the Exchange Act, to the extent permitted by applicable Law.
Section 7.11
Stock Exchange Listing
. Parent
shall use reasonable best efforts to cause the Parent Common Stock issuable under
Article II
to be approved for listing on NASDAQ, subject to official notice of issuance, as promptly as practicable after the date of this Agreement, and in any
event within ninety (90) days after the date of this Agreement.
Section 7.12
Stockholder Litigation
. Each Party shall
promptly notify the other Party in writing of any litigation related to this Agreement, the Merger or the other transactions contemplated by this Agreement that is brought against such Party, its Subsidiaries and/or any of their respective directors
and shall keep the other Party informed on a reasonably current basis with respect to the status thereof. Each Party shall give the other Party the opportunity to participate, at the requesting Partys expense and subject to a customary joint
defense agreement, in the defense or settlement of any such litigation, and no Party shall settle any such litigation without the prior
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written consent of the other Party (not to be unreasonably withheld, conditioned or delayed). Without limiting in any way the Parties obligations under
Section
7.1
, each of the Company and Parent shall, and shall cause their respective Subsidiaries to, cooperate in the defense or settlement of any litigation contemplated by this
Section
7.12
.
Section 7.13
Takeover Statutes
. The Parties shall use their respective reasonable best efforts (
a
) to take all action
necessary so that no Takeover Statute is or becomes applicable to the Merger or any other transaction contemplated hereby and (
b
) if any such Takeover Statute is or becomes applicable to any of the foregoing, to take all action necessary
so that the Merger and the other transactions contemplated hereby may be consummated as promptly as reasonably practicable on the terms contemplated by this Agreement and otherwise to eliminate or minimize the effect of such Takeover Statute on the
Merger and the other transactions contemplated hereby. Unless this Agreement is otherwise terminated pursuant to
Section
9.1
, no Company Adverse Recommendation Change shall change, or be deemed to change, the approval of
the Company Board for purposes of causing any Takeover Statute to be inapplicable to the Merger or the other transactions contemplated hereby.
Section 7.14
Tax Matters
. Parent shall use reasonable best efforts to obtain the opinion described in
Section
8.3(d)
.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.1
Conditions to Obligations of Each Party
. The obligations of each Party to consummate the Merger are subject to the
satisfaction, at or prior to the Closing, of the following conditions (which may be waived, in whole or in part, to the extent permitted by Law, by the mutual consent of Parent and the Company):
(a)
Company Stockholder Approval
. The Company Stockholder Approval shall have been obtained in accordance with applicable Law and the
certificate of incorporation and bylaws of the Company.
(b)
Parent Stockholder Approval
. The Parent Stockholder Approval shall
have been obtained in accordance with applicable Law and the certificate of incorporation and bylaws of Parent.
(c)
HSR Approval
.
Any waiting period (and extension thereof) under the HSR Act relating to the transactions contemplated by the Agreement shall have expired or been terminated.
(d)
Other Regulatory Approvals
. All consents, notices,
non-objections,
registrations and
approvals, as applicable, from the Governmental Authorities set forth in Section 8.1(d) of the Company Disclosure Letter (each such consent, notice,
non-objection,
registration or approval, a
Required Regulatory Approval
) shall have been obtained without the imposition of a Burdensome Condition (other than a Burdensome Condition as to which Parent had previously agreed in writing).
(e)
Registration Statement
. The Registration Statement shall have become effective under the Securities Act, and no stop order or
proceedings seeking a stop order shall have been initiated by the SEC.
(f)
Exchange Listing
. The shares of Parent Common Stock
issuable in connection with the Merger or otherwise pursuant to this Agreement shall have been approved for listing on NASDAQ, subject to official notice of issuance.
(g)
Statutes and Injunctions
. No Law or Order (whether temporary, preliminary or permanent) shall have been promulgated, entered,
enforced, enacted or issued or be applicable to the Merger by any Governmental Authority that prohibits or makes illegal the consummation of the Merger and remains in effect.
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Section 8.2
Conditions to Obligations of Parent and Merger Sub
. The obligations of
Parent and Merger Sub to consummate the Merger are further subject to the satisfaction, at or prior to the Closing, of the following conditions (which may be waived, in whole or in part, to the extent permitted by Law, by Parent):
(a)
Representations and Warranties
. The representations and warranties of the Company (
i
) contained in
Section
3.5(a)
and
(b)
(Capitalization) and
Section
3.10(a)
(Absence of Certain Changes) shall be true and correct in all respects (other than with respect to
Section
3.5(a)
and
(b)
for inaccuracies that are individually and in the aggregate de minimis) at and as of the Closing as if made at and as of the Closing (except any such representations and warranties that by
their terms speak specifically as of another specified time, in which case as of such time), (
ii
) contained in
Section
3.1
,
Section
3.2
,
Section
3.5(c)
and
Section
3.23
shall be true and correct in all material respects (disregarding all materiality and Company Material Adverse Effect qualifiers contained therein) at and as of the Closing as if made at and as of
the Closing (except any such representations and warranties that by their terms speak specifically as of another specified time, in which case as of such time) and (
iii
) except for the representations and warranties described in the
foregoing clauses (i)(ii), the Companys representations and warranties contained in this Agreement shall be true and correct in all respects (disregarding all materiality and Company Material Adverse Effect qualifiers
contained therein), in each case at and as of the Closing as if made at and as of the Closing (except any such representations and warranties that by their terms speak specifically as of another specified time, in which case such representations and
warranties shall be true and correct in all respects as of such time), except where the failure of the representations and warranties contained in this clause (iii) to be so true and correct has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(b)
Performance of Obligations of the Company
. The
Company shall have performed in all material respects its covenants and obligations under the Agreement required to be performed by it at or prior to the Closing.
(c)
Company Certificate
. The Company shall have delivered to Parent and Merger Sub a certificate signed by an executive officer of the
Company certifying on behalf of the Company, and not in such officers personal capacity, that the conditions set forth in
Section
8.2(a)
and
Section
8.2(b)
have been satisfied.
Section 8.3
Conditions to Obligations of the Company
. The obligations of the Company to consummate the Merger are further subject
to the satisfaction, at or prior to the Closing, of the following conditions (which may be waived, in whole or in part, to the extent permitted by Law, by the Company):
(a)
Representations and Warranties
. The representations and warranties of Parent and Merger Sub (
i
) contained in
Section
4.5(a)
and
(b)
,
Section
4.12
and
Section
4.13(a)
shall be true and correct in all respects (other than with respect to
Section
4.5(a)
and
(b)
for inaccuracies that are individually or in the aggregate de minimis) at and as of the Closing as if made at and as of the Closing (except any such representations and warranties that by
their terms speak specifically as of another specified time, in which case as of such time), (
ii
) contained in
Section
4.1
,
Section
4.2
,
Section
4.5(c)
and
(d)
,
Section
4.19(a)
and
(b)
and
Section
4.21
shall be true and correct in all material respects (disregarding all materiality and Parent Material Adverse Effect
qualifiers contained therein) at and as of the Closing as if made at and as of the Closing (except any such representations and warranties that by their terms speak specifically as of another specified time, in which case as of such time) and
(
iii
) except for the representations and warranties described in the foregoing clauses (i)(ii), Parents representations and warranties contained in this Agreement shall be true and correct in all respects (disregarding all
materiality and Parent Material Adverse Effect qualifiers contained therein), in each case at and as of the Closing as if made at and as of the Closing (except any such representations and warranties that by their terms speak
specifically as of another specified time, in which case such representations and warranties shall be true and correct in all respects as of such time), except where the failure of the representations and warranties contained in this clause
(iii) to be so true and correct has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
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(b)
Performance of Obligations of Parent and Merger Sub
. Parent and Merger Sub shall have
performed in all material respects their covenants and obligations under the Agreement required to be performed by them at or prior to the Closing.
(c)
Parent Certificate
. Parent shall have delivered to the Company a certificate signed by an executive officer of Parent certifying on
behalf of Parent, and not in such officers personal capacity, that the conditions set forth in
Section
8.3(a)
and
Section
8.3(b)
have been satisfied.
(d)
Tax Opinion
. The Company shall have received a copy of a written opinion of BDO (
Parent
s Tax
Advisor
), dated as of the Closing Date, in form and substance reasonably satisfactory to the Company, to the effect that (based on the most current information available prior to the Closing Date as provided by Parent to BDO and subject to
customary assumptions and qualifications) (
i
) there should not have been an Ownership Change since March 19, 2012, and (
ii
) the Merger, taken together with the other transactions contemplated by this Agreement and
occurring on the Closing Date, should not result in an Ownership Change (the
382 Tax Opinion
). In rendering the 382 Tax Opinion, Parents Tax Advisor shall be entitled to receive and rely upon tax representation letters,
including from Parent.
ARTICLE IX
TERMINATION
Section 9.1
Termination
. This Agreement may be terminated at any time prior to the Effective Time (except as otherwise stated below):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent:
(i) if the Effective Time shall not have occurred on or before November 12, 2018 (the
End Date
);
provided
that such period may be extended by the Company or Parent upon written notice for one or more
30-day
periods, not to exceed 90 days in the aggregate, to the extent all closing conditions herein
are capable of being satisfied as of such time other than the condition regarding receipt of the consents, notices and approvals, as applicable, from the Governmental Authorities set forth in
Section
8.1(d)
of the Company
Disclosure Letter;
provided
,
further
, that the right to terminate this Agreement under this
Section
9.1(b)(
i
)
shall not be available to a Party if the failure of the Effective Time to occur
before the End Date was primarily due to such Partys breach of any of its obligations under this Agreement;
(ii) if
there shall have been issued an Order by a Governmental Authority of competent jurisdiction permanently prohibiting the consummation of the Merger and such Order shall have become final and
non-appealable;
provided
that the Party seeking to terminate this Agreement under this
Section
9.1(b)(ii)
shall have used its reasonable best efforts to have such Order lifted;
(iii) if the Company Meeting (including any adjournments or postponements thereof) shall have concluded following the taking of
a vote to approve the Merger and the Company Stockholder Approval shall not have been obtained; or
(iv) if the Parent
Meeting (including any adjournments or postponements thereof) shall have concluded following the taking of a vote to approve the Parent Share Issuance and the Parent Stockholder Approval shall not have been obtained.
(c) by Parent:
(i) if a Parent Triggering Event shall have occurred; or
(ii) if the Company shall have breached or failed to perform any of its (
A
) representations or warranties or
(
B
) covenants or agreements set forth in this Agreement, in each case which breach or failure to perform
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(
x
) would give rise to the failure of a condition to the Merger set forth in
Section
8.2(a)
or
Section
8.2(b)
and
(
y
) is incapable of being cured by the Company during the
30-day
period after written notice from Parent of such breach or failure to perform, or, if capable of being cured during such
30-day
period, shall not have been cured by the earlier of the end of such
30-day
period and the End Date;
provided
that if such breach or failure to perform is capable
of being cured by the Company and the Company ceases using reasonable best efforts to cure such breach or failure to perform following written notice from Parent, Parent shall have the right to terminate this Agreement pursuant to this
Section
9.1(c)(ii)
;
provided
,
further
, that Parent shall not have the right to terminate this Agreement pursuant to this
Section
9.1(c)(ii)
if Parent or Merger Sub is then in breach
of any of its representations, warranties, covenants or agreements such that the Company has the right to terminate this Agreement pursuant to
Section
9.1(d)(ii)
.
(d) by the Company:
(i) if a Company Triggering Event shall have occurred;
(ii) if Parent or Merger Sub shall have breached or failed to perform any of its (
A
) representations or warranties
or (
B
) covenants or agreements set forth in this Agreement, in each case which breach or failure to perform (
x
) would give rise to the failure of a condition to the Merger set forth in
Section
8.3(a)
or
Section
8.3(b)
and (
y
) is incapable of being cured by Parent or Merger Sub, as applicable, during the
30-day
period after written notice from the Company of such breach
or failure to perform, or, if capable of being cured during such
30-day
period, shall not have been cured by the earlier of the end of such
30-day
period and the End
Date;
provided
that if such breach or failure to perform is capable of being cured by Parent or Merger Sub, as applicable, and Parent or Merger Sub, as applicable, ceases using reasonable best efforts to cure such breach or failure to perform
following written notice from the Company, the Company shall have the right to terminate this Agreement pursuant to this
Section
9.1(d)(ii)
;
provided
,
further
, that the Company shall not have the right to
terminate this Agreement pursuant to this
Section
9.1(d)(ii)
if the Company is then in breach of any of its representations, warranties, covenants or agreements such that Parent has the right to terminate this Agreement
pursuant to
Section
9.1(c)(ii)
;
(iii) if (
A
) the Company Board authorizes the
Company to enter into an Alternative Company Acquisition Agreement with respect to a Superior Company Proposal to the extent permitted by, and subject to the terms and conditions of,
Section
7.3
,
(
B
) substantially concurrent with the termination of this Agreement, the Company enters into an Alternative Company Acquisition Agreement that constituted a Superior Company Proposal and (
C
) prior to or concurrently with such
termination, the Company pays to Parent in immediately available funds any fees required to be paid pursuant to
Section
9.3
; or
(iv) if (
A
) all of the conditions set forth in
Article VIII
have been satisfied or waived (except for any
conditions that by their nature can only be satisfied or waived on the Closing Date, but subject to such conditions being able to be satisfied or waived at the time of termination), (
B
) Parent and Merger Sub fail to consummate the Merger
within three Business Days following the first date the Closing should have occurred pursuant to
Section
2.2
and (
C
) the Company shall have irrevocably notified Parent in writing that it stood ready, willing and
able to consummate the Merger at such time.
Section 9.2
Effect of Termination
. In the event of the termination of this
Agreement by either Parent or the Company as provided in
Section
9.1
, written notice thereof shall forthwith be given by the terminating Party to the other Party specifying the provision hereof pursuant to which such
termination is made. In the event of the termination of this Agreement in compliance with
Section
9.1
, this Agreement shall be terminated and this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of any Party (or any stockholder, director, officer, employee, agent, consultant or representative of such Party), other than the Confidentiality Agreements,
Section
7.5(g)
,
Section
7.6(c)
, this
Section
9.2
,
Section
9.3
, and
Article X
, which provisions shall survive such termination;
provided
,
however
, that, without
limiting
Section
10.12
and subject to the limitations set forth in
Section
9.3(h)
, nothing in this
Section
9.2
shall relieve any Party from liability for any Willful
Breach of, or actual fraud in connection with, this Agreement prior to such termination or the requirement to make the payments set forth in
Section
9.3
. No termination of this Agreement shall affect the obligations of the
Parties contained in the Confidentiality Agreements.
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Section 9.3
Termination Fees
.
(a) In the event that this Agreement is terminated by Parent pursuant to
Section
9.1(c)(
i
)
or in the
event that this Agreement is terminated by the Company pursuant to
Section
9.1(d)(iii)
, then, in each case, the Company shall pay to Parent (or its designee), by wire transfer of immediately available funds, a fee in the
amount of $65,000,000 (the
Company Termination Fee
) at or prior to the termination of this Agreement in the case of a termination pursuant to
Section
9.1(d)(iii)
or as promptly as practicable (and, in any
event, within two Business Days following such termination) in the case of a termination pursuant to
Section
9.1(c)(
i
)
.
(b) In the event that this Agreement is terminated by the Company pursuant to
Section
9.1(d
)(
i
)
, then Parent shall pay to the Company (or its designee), by wire transfer of immediately available funds, a fee in the amount of $65,000,000 (the
Parent Termination
Fee
) as promptly as practicable (and, in any event, within two Business Days following such termination).
(c) In the event that
this Agreement is terminated by the Company or Parent pursuant to
Section
9.1(b
)(
i
)
or
Section
9.1(b)(iii)
, or in the event that this Agreement is terminated by Parent pursuant
to
Section
9.1(c)(ii)
in respect of a Willful Breach of this Agreement by the Company, and in each case (
i
) at any time after the date of this Agreement and prior to such termination of this Agreement, a Company
Acquisition Proposal has been made to the Company or publicly announced (whether or not withdrawn) and (
ii
) within twelve (12) months after such termination, the Company enters into a definitive agreement with respect to a Company
Acquisition Proposal or a Company Acquisition Proposal is consummated (in each case whether or not the same Company Acquisition Proposal as that referred to above), then, in such event, the Company shall pay to Parent (or its designee), by wire
transfer of immediately available funds, the Company Termination Fee within two Business Days following the earlier of the date of the execution of such definitive agreement or the consummation of such transaction;
provided
,
however
,
that for purposes of the definition of Company Acquisition Proposal in this
Section
9.3(c)
, references to 15% and 85% shall be replaced by 50%.
(d) In the event that this Agreement is terminated by the Company pursuant to
Section
9.1(d)(ii)
or
Section
9.1(d)(iv)
, then, in each case, Parent shall pay to the Company (or its designee), by wire transfer of immediately available funds, a fee in the amount of $125,000,000 (the
Reverse Termination
Fee
) as promptly as practicable (and, in any event, within two Business Days following such termination).
(e) In the event that
this Agreement is terminated by the Company or Parent pursuant to
Section
9.1(b
)(
iv)
, then Parent shall pay to the Company (or its designee), by wire transfer of immediately available funds, an amount equal to
$29,385,000 as compensation for the Companys Expenses as promptly as practicable (and, in any event, within two Business Days following such termination), and if:
(
x
) (
i
) at any time after the date of this Agreement and prior to such termination of this Agreement, a
Parent Acquisition Proposal has been made to or by Parent or publicly announced (whether or not withdrawn) and (
ii
) within twelve (12) months after such termination, Parent enters into a definitive agreement with respect to a Parent
Acquisition Proposal or a Parent Acquisition Proposal is consummated (in each case whether or not the same Parent Acquisition Proposal as that referred to above), then, in such event, Parent shall pay to the Company (or its designee), by wire
transfer of immediately available funds, the Parent Termination Fee, less the amount of the Companys Expenses to the extent previously paid by Parent pursuant to this
Section
9.3(e)
, within two Business Days following
the earlier of the date of the execution of such definitive agreement or the consummation of such transaction, or
(
y
) clause (x) of this
Section
9.3(e)
does not apply (i.e., because no Parent Acquisition
Proposal was made to or by Parent or publicly announced (whether or not withdrawn) prior to such termination of this Agreement), and, within twelve (12) months after such termination, Parent enters into a definitive agreement with respect to a
Parent Acquisition Proposal or a Parent Acquisition Proposal is subsequently consummated, then, in such event, Parent shall pay to the Company (or its designee), by wire transfer of immediately available funds, an additional amount equal to
$18,615,000 within two Business Days
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following the earlier of the date of the execution of such definitive agreement or the consummation of such transaction.
(f) In the event that this Agreement is terminated by the Company or Parent pursuant to
Section
9.1(b)(
i
)
and (
i
) at any time after the date of this Agreement and prior to such termination of this Agreement, a Parent Acquisition Proposal has been made to or by Parent or publicly
announced (whether or not withdrawn) and (
ii
) within twelve (12) months after such termination, Parent enters into a definitive agreement with respect to a Parent Acquisition Proposal or a Parent Acquisition Proposal is consummated
(in each case whether or not the same Parent Acquisition Proposal as that referred to above), then, in such event, Parent shall pay to the Company (or its designee), by wire transfer of immediately available funds, the Parent Termination Fee, within
two Business Days following the earlier of the date of the execution of such definitive agreement or the consummation of such transaction.
(g) The Parties acknowledge that (
i
) the agreements contained in this
Section
9.3
are an integral part
of the transactions contemplated by this Agreement, (
ii
) each of the Company Termination Fee, the Parent Termination Fee, any amounts payable pursuant to
Section
9.3(e)
and the Reverse Termination Fee is not a
penalty, but is liquidated damages, in a reasonable amount that will compensate the Company or Parent, as the case may be, in the circumstances in which such fee is payable for the efforts and resources expended and opportunities foregone while
negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, which amount would otherwise be impossible to calculate with precision, and (
iii
) that,
without these agreements, the Parties would not enter into this Agreement. Accordingly, if the Company or Parent, as the case may be, fails to timely pay any amount due pursuant to this
Section
9.3
, and, in order to obtain
such payment, the other Party commences a suit that results in a judgment against such Party for any amount due pursuant to this
Section
9.3
, then such Party shall pay the other Party its reasonable and documented
out-of-pocket
costs and expenses (including reasonable attorneys fees and expenses) in connection with such suit, together with interest on the amount due pursuant to
this
Section
9.3
from the date such payment was required to be made until the date of payment at the annual rate equal to the prime lending rate as published in
The Wall Street Journal
in effect on the date such
payment was required to be made (or such lesser rate as is the maximum permitted by applicable Law). All payments under this
Section
9.3
shall be made by wire transfer of immediately available funds to an account designated
in writing by Parent or the Company, as applicable. In no event shall (
x
) a Company Termination Fee or Reverse Termination Fee be payable more than once and (
y
) the Company receive more than one of the Parent Termination Fee,
the amounts payable pursuant to
Section
9.3(e)
and the Reverse Termination Fee.
(h) Notwithstanding anything in
this Agreement to the contrary, subject to
Section
10.12
, (
i
) in the event that this Agreement is terminated under circumstances where the Company Termination Fee is payable pursuant to this
Section
9.3
, the payment of the Company Termination Fee (plus any costs, expenses or interest, if any, payable pursuant to
Section
9.3(g)
) shall be the sole and exclusive remedy of Parent and
Merger Sub against the Company and its Subsidiaries and any of their respective former, current or future stockholders, directors, officers, employees, Affiliates or Representatives (the
Company Related Parties
) for all losses and
damages suffered as a result of the failure of the transactions contemplated by this Agreement to be consummated or for a breach or failure to perform hereunder or otherwise, and upon payment of such amount, none of the Company Related Parties shall
have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby (including as may arise out of the Voting Agreements), (
ii
) in the event that this Agreement is terminated
under circumstances where the Parent Termination Fee is payable pursuant to this
Section
9.3
, the payment of the Parent Termination Fee (plus any costs, expenses or interest payable pursuant to
Section
9.3(g)
or any losses or damages payable pursuant to
Section
7.5(g)
or
Section
7.6(c)
) shall be the sole and exclusive remedy of the Company against the Parent
Related Parties for all losses and damages suffered as a result of the failure of the transactions contemplated by this Agreement to be consummated or for a breach or failure to perform hereunder or otherwise, and upon payment of such amount, none
of the Parent Related Parties shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby (including as may arise out of the Voting Agreements) and (
iii
) in the
event that this
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Agreement is terminated under circumstances where the Reverse Termination Fee is payable pursuant to this
Section
9.3
, subject to
Section
10.12
, the payment of the Reverse Termination Fee (plus any costs, expenses or interest, if any, payable pursuant to
Section
9.3(g)
or any losses or damages payable pursuant to
Section
7.5(g)
or
Section
7.6(c)
) shall be the sole and exclusive remedy of the Company and its Subsidiaries against Parent, Merger Sub, the Financing Sources or any of their respective
Non-Recourse
Parties (collectively, the
Parent Related Parties
) for all losses and damages suffered as a result of the failure of the transactions contemplated by this Agreement to be consummated
or for a breach or failure to perform hereunder (including any Willful Breach of this Agreement) or otherwise in respect of this Agreement or any oral representation made or alleged to be made in connection herewith, and upon payment of such amount,
none of the Parent Related Parties shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby (including as may arise out of the Voting Agreements).
(i) Other than seeking to terminate this Agreement and receive (
x
) payment of (
A
) the Parent Termination Fee,
(
B
) the Reverse Termination Fee, (
C
) the amounts payable pursuant to
Section
9.3(e)
and/or (
D
) Expenses, in each case, plus any costs, expenses or interest payable pursuant to
Section
9.3(g)
and in accordance with this
Section
9.3
, or (
y
) indemnification for any losses or damages payable pursuant to
Section
7.5(g)
or
Section
7.6(c)
, none of the Company, its Subsidiaries nor any other Company Related Party shall seek to recover any other damages or seek any other remedy, whether based on a claim at law or in equity, in contract, tort or
otherwise, with respect to any losses or damages suffered in connection with this Agreement or the transactions contemplated hereby or any oral representation made or alleged to be made in connection herewith. In no event shall Parent be subject to
(nor shall any Company Related Party seek to recover) monetary damages in excess of an amount equal to the Reverse Termination Fee (plus any costs, expenses or interest, if any, payable pursuant to
Section
9.3(g)
or any
losses or damages payable pursuant to
Section
7.5(g)
or
Section
7.6(c)
), in the aggregate, for any losses or other liabilities arising out of or in connection with breaches by Parent of its
representations, warranties, covenants and agreements contained in this Agreement (whether willful, intentional, unilateral or otherwise, including Willful Breach) or arising from any claim or cause of action that any Company Related Party may have
hereunder, including for a breach of
Section
2.2
as a result of the Debt Financing not being available to be drawn down or otherwise arising from the Debt Letters or in respect of any oral representation made or alleged to
be made in connection herewith or therewith. For the avoidance of doubt, while the Company may pursue both a grant of specific performance and the payment of one of the Parent Termination Fee, the amounts payable pursuant to
Section
9.3(e)
, or the Reverse Termination Fee, under no circumstances shall the Company be permitted or entitled to receive both a grant of specific performance or other equitable relief and the payment of the Parent
Termination Fee, the amounts payable pursuant to
Section
9.3(e)
and/or the Reverse Termination Fee.
ARTICLE X
Miscellaneous
Section 10.1
No Survival of Representations and Warranties
. None of the representations, warranties covenants and agreements in
this Agreement, or in any schedule, certificate, instrument or other document delivered pursuant to this Agreement, shall survive the Effective Time or, except as provided in
Section
9.2
, the termination of this Agreement
pursuant to
Section
9.1
, as the case may be. This
Section
10.1
shall not limit any covenant or agreement of the Parties which by its terms contemplates performance after the Effective Time.
Section 10.2
Amendment and Modification
. Subject to applicable Law, this Agreement may be amended, modified or supplemented in any
and all respects by written agreement of Parent and the Company at any time prior to the Effective Time with respect to any of the terms contained herein;
provided
that after the Company Stockholder Approval is obtained or the Parent
Stockholder Approval is obtained, no amendment that requires further approval of the stockholders of the Company (in the case of the Company Stockholder Approval) or the stockholders of Parent (in the case of the Parent Stockholder Approval), in
each case under applicable Law, shall
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be made without such required further approval;
provided
,
further
, that
Section
9.3
, this
Section
10.2
,
Section
10.8
,
Section
10.11
,
Section
10.12(c)
,
Section
10.13
and
Section
10.14
shall not be amended in any manner
adverse in any material respect to the Debt Financing Parties without the prior written consent of the Financing Sources. A termination of this Agreement pursuant to
Section
9.1
or an amendment or waiver of this Agreement
pursuant to this
Section
10.2
or
Section
10.3
shall, in order to be effective, require, in the case of Parent, Merger Sub and the Company, action by their respective board of directors (or a
committee thereof).
Section 10.3
Extension; Waiver
. At any time prior to the Effective Time, subject to applicable Law,
Parent or Merger Sub on the one hand, or the Company on the other hand, may (
a
) extend the time for the performance of any of the obligations or other acts of the other Parties, (
b
) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement of the other Parties or (
c
) subject to the second proviso of the first sentence of
Section
10.2
,
waive compliance by the other Parties with any of the agreements or conditions contained in this Agreement. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such Party. The failure of any Party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights, nor shall any single or partial exercise by any Party of any of its rights under this
Agreement preclude any other or further exercise of such rights or any other rights under this Agreement. The Parties acknowledge and agree that Parent shall act on behalf of Merger Sub and the Company may rely on any notice given by Parent on
behalf of Merger Sub with respect to the matters set forth in this
Section
10.3
.
Section 10.4
Expenses
. Except as otherwise provided herein and as set forth on Section 1.1(b) of the Company Disclosure Letter, all costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or
expense. Notwithstanding the foregoing, Parent shall pay any and all fees and expenses, other than the Companys attorneys fees, incurred in connection with the filing by the Parties of the premerger notification and report forms relating
to the Merger under the HSR Act.
Section 10.5
Disclosure Letter References
. All capitalized terms not defined in the Company
Disclosure Letter or Parent Disclosure Letter (as applicable, the
Disclosure Letter
) shall have the meanings assigned to them in this Agreement. The Disclosure Letter shall, for all purposes in this Agreement, be arranged in
numbered and lettered parts and subparts corresponding to the numbered and lettered sections and subsections contained in this Agreement. Each item disclosed in the Disclosure Letter shall constitute an exception to or, as applicable, disclosure for
the purposes of, the representations and warranties (or covenants, as applicable) to which it makes express reference and shall also be deemed to be disclosed or set forth for the purposes of every other part in the Disclosure Letter relating to the
representations and warranties (or covenants, as applicable) set forth in this Agreement to the extent a cross-reference within the Disclosure Letter is expressly made to such other part in the Disclosure Letter, as well as to the extent that the
relevance of such item as an exception to or, as applicable, disclosure for purposes of, such other section of this Agreement is reasonably apparent from the face of such disclosure. The listing of any matter on the Disclosure Letter shall not be
deemed to constitute an admission by the Company or Parent, as applicable, or to otherwise imply, that any such matter is material, is required to be disclosed by the Company or Parent, as applicable, under this Agreement or falls within relevant
minimum thresholds or materiality standards set forth in this Agreement. No disclosure in the Disclosure Letter relating to any possible breach or violation by the Company or Parent, as applicable, of any Contract or Law shall be construed as an
admission or indication that any such breach or violation exists or has actually occurred. In no event shall the listing of any matter in the Disclosure Letter be deemed or interpreted to expand the scope of the representations, warranties,
covenants or agreements set forth in this Agreement.
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Section 10.6
Notices
. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by email (with confirmation of receipt) or sent by a nationally recognized overnight courier service, such as Federal Express, to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice made pursuant to this
Section
10.6
):
if to Parent or
Merger Sub to:
WMIH Corp.
Fifth Avenue Plaza, Suite 4100
Seattle, WA 98104
Attention:
Charles E. Smith,
Esq.Email: chad.smith@wamuinc.net
with a copy (which shall not constitute notice) to:
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, NY
10036
Attention: Kerry E. Berchem
Email: kberchem@akingump.com
and
Simpson Thacher &
Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention:
Lee Meyerson
Elizabeth Cooper
Email: lmeyerson@stblaw.com ecooper@stblaw.com
if to the Company, to:
Nationstar Mortgage Holdings Inc.
8950 Cypress Waters Blvd.
Coppell, TX 75019
Attention:
Office of the General Counsel
Email: tony.villani@NationstarMail.com
with a copy (which shall not constitute notice) to:
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY
10022
Attention: Kevin M. Schmidt
Email: kmschmidt@debevoise.com
Section 10.7
Counterparts
. This Agreement may be executed in one or more counterparts, all of which shall be considered one and
the same agreement, it being understood that each Party need not sign the same counterpart. This Agreement shall become effective when each Party shall have received a counterpart hereof signed by all of the other Parties. Signatures delivered
electronically or by facsimile shall be deemed to be original signatures.
Section 10.8
Entire Agreement; No Third Party
Beneficiaries
. This Agreement (including the Exhibits hereto and the documents and the instruments referred to herein), the Company Disclosure Letter, the Parent Disclosure Letter and the Confidentiality Agreements (
a
) constitute the
entire agreement and supersede all prior agreements and understandings, both written and oral, between Parent and the Company and among the Parties with respect to the subject matter hereof and thereof (
provided
that (
x
) any
provisions of any Confidentiality Agreement conflicting with this Agreement shall be superseded by this Agreement and (
y
) all standstill or similar provisions set forth in the Confidentiality Agreements shall terminate and no longer be
in effect upon execution and delivery hereof) and (
b
) are not intended to confer any rights, benefits, remedies, obligations or liabilities
A-78
upon any Person other than the Parties and their respective successors and permitted assigns;
provided
that notwithstanding the foregoing, following the Effective Time, the provisions of
Section
6.3
shall be enforceable by each Indemnified Party hereunder and his or her heirs and his or her representatives;
provided
,
further
, that the Financing Sources shall be express third party
beneficiaries with respect to
Section
9.3(h)
,
Section
10.2
, this
Section
10.8
,
Section
10.11
,
Section
10.12(c)
, and
Section
10.13
and
Section
10.14
.
Section 10.9
Severability
. If any term
or other provision of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms and provisions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, so long as the economic and legal substance of the transactions contemplated hereby, taken as a whole, are not affected in a manner materially adverse to any Party. Upon
such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
Section 10.10
Assignment
. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any of the Parties in whole or in part (whether by operation of Law or otherwise) without the prior written consent of the other Parties, and any such assignment without such
consent shall be null and void. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
Section 10.11
Governing Law
. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of
Delaware, without giving effect to conflicts of laws principles or rules to the extent such principles or rules are not mandatorily applicable and would require or permit the application of the Law of any jurisdiction other than the State of
Delaware;
provided
that, notwithstanding the foregoing, except as otherwise set forth in the Debt Letters as in effect as of the date of this Agreement, all actions, Proceedings, causes of actions, claims, cross-claims or third party claims
of any kind or description (whether at law, in equity, in contract, in tort, or otherwise) against any of the Financing Sources in any way relating to the Debt Letters or any of the transactions contemplated thereby, including the performance
thereof or the Debt Financing, shall be exclusively governed by, and construed in accordance with, the Laws of the State of New York, without giving effect to conflicts of laws principles or rules to the extent such principles or rules are not
mandatorily applicable and would require or permit the application of the Law of any jurisdiction other than the State of New York.
Section 10.12
Enforcement; Exclusive Jurisdiction
.
(a) The rights and remedies of the Parties shall be cumulative with and not exclusive of any other remedy conferred hereby. The Parties agree
that irreparable damage would occur and that the Parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, subject to the limitations in
Section
9.3(h)
, the Parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, including the obligations to consummate the Merger, in the Court of Chancery of the State of Delaware or, if under applicable Law exclusive jurisdiction over such matter is vested in the federal courts,
any federal court located in the State of Delaware without proof of actual damages or otherwise (and each Party hereby waives any requirement for the securing or posting of any bond in connection with such remedy), this being in addition to any
other remedy to which they are entitled at law or in equity. Notwithstanding anything in this Agreement to the contrary, the Parties hereby acknowledge and agree that the Company shall be entitled to specific performance to cause Parent to make the
payment of the Merger Consideration and to cause the Effective Time to occur and to consummate the Closing, in each case, if and only if (
i
) the conditions to the Merger set forth in
Article VIII
have been satisfied or waived at
the time when the Closing is required to occur pursuant to
Section
2.2
, (
ii
) the Debt Financing has been funded or will be funded at the Closing in accordance with the terms of the Debt Commitment Letter,
(
iii
) the Company has irrevocably confirmed in writing that if specific
A-79
performance is granted and the Debt Financing are funded, then the Company will take such action within its control as necessary to ensure that Closing will occur and (
iv
) Parent and
Merger Sub fail to consummate the Merger at the time when the Closing is required to occur pursuant to
Section
2.2
. Each Party agrees that it will not oppose the granting of specific performance and other equitable relief
on the basis that the other Party has an adequate remedy at Law or that an award of specific performance is not an appropriate remedy for any reason at Law or equity. Each Party agrees that any Party seeking an injunction to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this
Section
10.12
shall not be required to provide any bond or other security in connection with any such injunction. The
Parties rights in this
Section
10.12
are an integral part of the transactions contemplated hereby and each Party hereby waives any objections to any remedy referred to in this
Section
10.12
.
For the avoidance of doubt, the Company shall not be entitled to enforce specifically to cause Parent to consummate the Merger if the Debt Financing has not been funded or would not be funded at the Closing.
(b) In addition, each of the Parties (
i
) consents to submit itself, and hereby submits itself, to the personal jurisdiction of the
Court of Chancery of the State of Delaware and any federal court located in the State of Delaware, or, if neither of such courts has subject matter jurisdiction, any state court of the State of Delaware having subject matter jurisdiction, in the
event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (
ii
) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any
such court, and agrees not to plead or claim any objection to the laying of venue in any such court or that any judicial proceeding in any such court has been brought in an inconvenient forum, (
iii
) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the Court of Chancery of the State of Delaware and any federal court located in the State of Delaware, or, if neither of such courts
has subject matter jurisdiction, any state court of the State of Delaware having subject matter jurisdiction and (
iv
) consents to service of process being made through the notice procedures set forth in
Section
10.6
.
(c) Notwithstanding anything to the contrary in this Agreement, each Party agrees (on behalf of
itself and its Affiliates) that it will not bring or support any action, Proceeding, cause of action, claim, cross-claim or third-party claim of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise,
against any Financing Source in any way relating to this Agreement or any of the transactions contemplated hereby, including, but not limited to, any dispute arising out of the Debt Letters or the performance thereof or the Debt Financing, in any
forum other than the Supreme Court of the State of New York, County of New York, or, if under applicable Law exclusive jurisdiction is vested in the federal courts, the United States District Court for the Southern District of New York in the County
of New York (and the appropriate appellate courts therefrom), and each Party submits itself with respect to any such action or Proceeding to the exclusive jurisdiction of such court.
Section 10.13
WAIVER
OF JURY TRIAL
. EACH OF THE PARTIES HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVES
ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM INVOLVING ANY FINANCING SOURCE).
Section 10.14
No Recourse
. This Agreement may only be enforced against, and any claims or causes of action that may be based upon,
arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are expressly identified as parties hereto, except for claims that may be asserted in accordance with
the Voting Agreements or Confidentiality Agreements. No former, current or future holders of any equity, partnership or limited liability company interest, controlling Persons, directors, officers, employees, agents, Affiliates, attorneys,
affiliated (or commonly advised) funds, members, managers, general or limited partners, stockholders or other Representative of any party hereto or any of their successors or permitted assignees (each, a
Non-Recourse
Party
) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise)
A-80
based on, in respect of, or by reason of, the transactions contemplated hereby (including the Debt Financing) or in respect of any oral representations made or alleged to be made in connection
herewith, except as may arise pursuant to the Voting Agreements or Confidentiality Agreements. Without limiting the rights of the Company against Parent or Merger Sub hereunder, in no event shall the Company or any of its Subsidiaries, and the
Company agrees not to and to cause its Subsidiaries not to, seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any
Non-Recourse
Party (other than in accordance with the Confidentiality Agreements).
[
Remainder of Page Intentionally Left Blank
]
A-81
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
respective authorized officers as of the date set forth on the cover page of this Agreement.
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|
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NATIONSTAR MORTGAGE
HOLDINGS INC.
|
|
|
By:
|
|
/s/ Jay Bray
|
|
|
Name: Jay Bray
|
|
|
Title: Chairman, President and Chief
Executive Officer
|
|
WMIH CORP.
|
|
|
By:
|
|
/s/ William Gallagher
|
|
|
Name: William Gallagher
|
|
|
Title: CEO
|
|
WAND MERGER CORPORATION
|
|
|
By:
|
|
/s/ Charles E. Smith
|
|
|
Name: Charles E. Smith
|
|
|
Title: President
|
[Signature Page to Agreement and Plan of Merger]
Exhibit A
FORM OF CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONSTAR MORTGAGE
HOLDINGS INC.
FIRST: The name of the corporation (which is hereinafter referred to as the
Corporation
) is
Nationstar Mortgage Holdings Inc.
SECOND: The registered office of the Corporation in the State of Delaware is located at 1209 Orange
Street, County of New Castle, Wilmington, DE 19801, and the name of the registered agent of the Corporation whose office address will be the same as the registered office is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the
DGCL
), as from time to time amended.
FOURTH: The total number of shares
of capital stock which the Corporation shall have authority to issue is 1,000, all of which shares shall be Common Stock having a par value per share of $0.01.
FIFTH: In furtherance and not in limitation of the powers conferred by law, subject to any limitations contained elsewhere in this certificate
of incorporation, bylaws of the Corporation may be adopted, amended or repealed by a majority of the board of directors of the Corporation. Election of directors need not be by written ballot.
SIXTH: No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of his or her
fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under the DGCL as currently in effect or as the same may hereafter be amended. Any amendment, repeal or modification of this
ARTICLE SIXTH shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, repeal or modification. If the DGCL is amended after the
filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the DGCL, as so amended.
Exhibit B
BOARD OF DIRECTORS OF PARENT FOLLOWING THE EFFECTIVE TIME
4.
|
Three directors selected by the Company from the Company Board
|
Appendix B
February 12, 2018
The Board of Directors
The Audit Committee of the Board Of
Directors
WMIH Corp.
800 Fifth Avenue, Suite 4100
Seattle, Washington 98104
Members of the Board of Directors
(the Board) and the Audit Committee of the Board:
You have requested the opinion of Keefe, Bruyette & Woods, Inc.
(KBW or we) as investment bankers as to the fairness, from a financial point of view, to WMIH Corp. (WMIH) of the Aggregate Merger Consideration (as defined below) in the proposed acquisition of Nationstar
Mortgage Holdings Inc. (Nationstar) by WMIH, through the merger of Wand Merger Corporation, a wholly-owned subsidiary of WMIH (Merger Sub), with and into Nationstar (the Merger), pursuant to the Agreement and Plan
of Merger (the Agreement) to be entered into by and among WMIH, Merger Sub and Nationstar. Pursuant to the Agreement and subject to the terms, conditions and limitations set forth therein, at the Effective Time (as defined in the
Agreement), by virtue of the Merger, each share of common stock, par value $0.01 per share, of Nationstar (Nationstar Common Stock), that is issued and outstanding immediately prior to the Effective Time (other than (i) shares of
Nationstar Common Stock held by WMIH, Nationstar or Merger Sub or (ii) Appraisal Shares (as defined in the Agreement)) shall be converted into the right to receive, at the election of the holder thereof (subject to proration and reallocation as
set forth in the Agreement, as to which we express no opinion), either: (A) $18.00 in cash (the Cash Consideration) or (B) 12.7793 shares (the Stock Consideration) of common stock, par value $0.00001 per share, of
WMIH (WMIH Common Stock), except that the Agreement provides that the aggregate amount of Cash Consideration to be paid to the holders of such shares of Nationstar Common Stock in the Merger shall equal $1,225,885,248.00 (the
Aggregate Cash Amount). The Aggregate Cash Amount and the aggregate Stock Consideration, taken together, are referred to herein as the Aggregate Merger Consideration. The terms and conditions of the Merger are more fully set
forth in the Agreement.
We understand that, in connection with the Merger, (a) WMIH will obtain debt financing to fund, among other
things, a portion of the Aggregate Cash Amount (the Debt Financing), (b) all or substantially all of the outstanding preferred stock of WMIH will be converted, either mandatorily or at the option of the holders thereof, into WMIH
Common Stock and WMIH will make a special distribution of additional shares of WMIH Common Stock to the holders Series B Convertible Preferred Stock of WMIH (the WMIH Preferred Stock Transactions), and (c) certain warrants to
acquire WMIH Common Stock held by KKR Wand Holdings Corporation will be exchanged for shares of WMIH Common Stock (the WMIH Warrant Exchange). At the direction of WMIH, we have assumed the occurrence of the Debt Financing, the WMIH
Preferred Stock Transactions and the WMIH Warrant Exchange, as described to us by WMIH, for purposes of certain of our analyses.
KBW has
acted as a financial advisor to WMIH as further described herein and not as an advisor to or agent of any other person. As part of our investment banking business, we are continually engaged in the valuation of
Keefe, Bruyette & Woods, a Stifel
Company 787 Seventh Avenue, Floor 5, New York, NY 10019
(212) 887-7777 www.kbw.com
B-1
The Board of Directors and its Audit Committee WMIH Corp.
February 12, 2018
Page
2
of 6
securities in the financial services industry in connection with acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and
valuations for various other purposes. We and our affiliates, in the ordinary course of our and their broker-dealer businesses (and further to certain existing sales and trading relationships that are maintained by KBW and its broker-dealer
affiliates with WMIH, Nationstar and their respective affiliates), may from time to time purchase securities from, and sell securities to, WMIH and Nationstar. In addition, as market makers in securities, we and our affiliates may from time to time
have long or short positions in, and buy or sell, debt or equity securities of WMIH or Nationstar for our and their own respective accounts and for the accounts of our and their respective customers and clients. KBW currently maintains a long
position of 14,316 shares of WMIH Common Stock. We have acted exclusively for the Board and its Audit Committee in rendering this opinion and will receive a fee from WMIH for our services. A portion of our fee is payable upon the rendering of this
opinion, and a portion is contingent upon the successful completion of the Merger. In addition, WMIH has agreed to indemnify us for certain liabilities arising out of our engagement.
In addition to this present engagement, in the past two years, KBW has provided investment banking and financial advisory services to WMIH and
received compensation for such services. KBW acted as a financial advisor to the Finance Committee of the Board in connection with the amendment by WMIH of the terms of the existing Series B Convertible Preferred Stock of WMIH in December 2017. In
the past two years, KBW has not provided investment banking and financial advisory services to Nationstar. We may in the future provide investment banking and financial advisory services to WMIH or Nationstar and receive compensation for such
services.
In connection with this opinion, we have reviewed, analyzed and relied upon material bearing upon the financial and operating
condition of WMIH and Nationstar and bearing upon the Merger, including among other things, the following: (i) the execution version of the Agreement dated as of February 12, 2018; (ii) the audited financial statements and the Annual
Reports on
Form 10-K
for the three fiscal years ended December 31, 2016 of WMIH; (iii) the unaudited quarterly financial statements and Quarterly Reports on
Form 10-Q
for the fiscal quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 of WMIH; (iv) the audited financial statements and the Annual Report on
Form 10-K
for the three fiscal years ended December 31, 2016 of Nationstar; (v) the unaudited quarterly financial statements and Quarterly Reports on
Form 10-Q
for the fiscal quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 of Nationstar; (vi) certain other interim reports and other communications of WMIH and
Nationstar to their respective stockholders; and (vii) other financial information concerning the businesses and operations of WMIH and Nationstar that was furnished to us by WMIH and Nationstar or that we were otherwise directed to use for
purposes of our analysis. Our consideration of financial information and other factors that we deemed appropriate under the circumstances or relevant to our analyses included, among others, the following: (i) the historical and current
financial position and results of operations of WMIH and Nationstar; (ii) the assets and liabilities of WMIH and Nationstar; (iii) the nature and terms of certain other merger transactions and business combinations in the financial
services industry; (iv) a comparison of certain financial and stock market information of Nationstar with similar information for certain other companies, the securities of which are publicly traded; (v) financial and operating forecasts
and projections of Nationstar with respect to fiscal years 2018 through 2021 (as adjusted to give effect to an assumed tax rate provided to us by WMIH management) that were prepared by, and provided to us and discussed with us by, Nationstar
management, and assumed Nationstar growth rates with respect to periods thereafter that were provided to and discussed with us by WMIH management, all of which information was used and relied upon by us, based on such discussions, at the direction
of WMIH management and with the consent of
Keefe, Bruyette & Woods, a
Stifel Company 787 Seventh Avenue, Floor 5, New York, NY 10019
(212) 887-7777 www.kbw.com
B-2
The Board of Directors and its Audit Committee WMIH Corp.
February 12, 2018
Page
3
of 6
the Board; (vi) adjusted balance sheet and capital data of WMIH, giving effect to WMIHs estimates and assumptions regarding the WMIH Preferred Stock Transactions and the WMIH Warrant
Exchange, that was prepared by WMIH management, provided to and discussed with us by such management and used and relied upon by us at the direction of WMIH management and with the consent of the Board; (vii) valuation assumptions regarding the
potential future utilization of WMIHs net operating loss carry-forward (which were based on an assumed tax rate and assumptions regarding the future taxable income that WMIH could generate after a hypothetical acquisition with the same
characteristics as the Merger, using the financial and operating forecasts and projections of Nationstar with respect to fiscal years 2018 through 2021 and assumed Nationstar growth rates referred to above) provided to and discussed with us by WMIH
management, and used and relied upon by us at the direction of such management and with the consent of the Board; and (viii) estimates regarding certain pro forma financial effects of the Merger on WMIH (including without limitation the
potential tax benefits expected to result or be derived from the Merger through future utilization of WMIHs net operating loss carry-forward) that were prepared by WMIH management, provided to and discussed with us by such management, and used
and relied upon by us at the direction of such management and with the consent of the Board. We have also performed such other studies and analyses as we considered appropriate and have taken into account our assessment of general economic, market
and financial conditions and our experience in other transactions, as well as our experience in securities valuation and knowledge of the financial services industry generally. We have also participated in discussions that were held with the
managements of WMIH and Nationstar regarding the past and current business operations, regulatory relations, financial condition and future prospects of their respective companies and such other matters as we have deemed relevant to our inquiry. As
part of our engagement as financial advisor to WMIH, we have advised and assisted WMIH, to the extent requested by WMIH, in its considering the desirability of the Merger and in its developing a general strategy for accomplishing the Merger.
However, we note that we have not been requested to participate directly, and did not participate directly, in negotiating or structuring the Merger.
In conducting our review and arriving at our opinion, we have relied upon and assumed the accuracy and completeness of all of the financial
and other information that was provided to us or that was publicly available and we have not independently verified the accuracy or completeness of any such information or assumed any responsibility or liability for such verification, accuracy or
completeness. We have relied upon the management of Nationstar, with the consent of WMIH, as to the reasonableness and achievability of the financial and operating forecasts and projections of Nationstar with respect to fiscal years 2018 through
2021 (and the assumptions and bases therefor) referred to above, and we have assumed that such forecasts and projections were reasonably prepared and represent the best currently available estimates and judgments of such management, and that such
forecasts and projections will be realized in the amounts and in the time periods currently estimated by such management. We have relied upon the management of WMIH as to the reasonableness and achievability of the assumed tax rates and Nationstar
growth rates, the valuation assumptions regarding the potential future utilization of WMIHs net operating loss carry-forward, and the estimates regarding certain pro forma financial effects of the Merger on WMIH (including, without limitation,
the potential tax benefits expected to result or be derived from the Merger through future utilization of WMIHs net operating loss carry-forward), all as referred to above, as well as the assumptions set forth in and the bases for all such
information. We have assumed, at the direction of WMIH, that all of such information provided to us by WMIH management was reasonably prepared and represents the best currently available estimates and judgments of WMIH management, and that the
forecasts, projections and estimates reflected in such information will be realized in the amounts and in the time periods currently estimated. Our analysis of WMIH for purposes of considering the stock portion of the Aggregate Merger Consideration
was primarily based on analyzing the present value of WMIHs net operating
Keefe, Bruyette & Woods, a Stifel Company 787 Seventh Avenue, Floor 5, New York, NY 10019
(212) 887-7777 www.kbw.com
B-3
The Board of Directors and its Audit Committee WMIH Corp.
February 12, 2018
Page
4
of 6
loss carry-forward using the valuation assumptions regarding the potential future utilization of WMIHs net operating loss carry-forward referred to above that were used and relied upon by
us at the direction of WMIH management and with the consent of the Board.
It is understood that the portion of the foregoing financial
information of Nationstar and WMIH that was provided to us was not prepared with the expectation of public disclosure, that all of the foregoing financial information is based on numerous variables and assumptions that are inherently uncertain,
including, without limitation, factors related to general economic and competitive conditions and that, accordingly, actual results could vary significantly from those set forth in such information. We have assumed, based on discussions with the
respective managements of WMIH and Nationstar and with the consent of WMIH, that all such information provides a reasonable basis upon which we could form our opinion and we express no view as to any such information or the assumptions or bases
therefor. We have relied on all such information without independent verification or analysis and do not in any respect assume any responsibility or liability for the accuracy or completeness thereof.
We also have assumed that there have been no material changes in the assets, liabilities, financial condition, results of operations, business
or prospects of either WMIH or Nationstar since the date of the last financial statements of each such entity that were made available to us. We are not experts in the independent verification of the adequacy of reserves for losses and loss
adjustment expenses and we have assumed, without independent verification and with your consent, that the aggregate reserves for loss and loss adjustment expenses for WMIH and Nationstar are adequate to cover such losses. We also are not experts in
the evaluation of the fair value of mortgage servicing rights. In rendering our opinion, we have not made or obtained any evaluations or appraisals or physical inspection of the property, assets or liabilities (contingent or otherwise) of WMIH or
Nationstar, the collateral securing any of such assets or liabilities, or the collectability of any such assets, nor have we examined any individual loan or credit files, nor did we evaluate the solvency, financial capability or fair value of WMIH
or Nationstar under any state or federal laws, including those relating to bankruptcy, insolvency or other matters. Estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or
assets may actually be sold. Because such estimates are inherently subject to uncertainty, we assume no responsibility or liability for their accuracy. We have not reviewed Nationstars servicing agreements, nor have we evaluated
Nationstars ability to perform its obligations thereunder, including making servicing advances (if required), or its ability to recover any such servicing advances.
We have assumed, in all respects material to our analyses, the following: (i) that the Merger and any related transactions (including,
without limitation, the Debt Financing, the WMIH Preferred Stock Transactions and the WMIH Warrant Exchange) will be completed substantially in accordance with the terms set forth in the Agreement or as otherwise described to us by representatives
of WMIH, with no adjustments to the Aggregate Merger Consideration and with no other consideration or payments in respect of Nationstar Common Stock; (ii) that the representations and warranties of each party in the Agreement and in all related
documents and instruments referred to in the Agreement are true and correct; (iii) that each party to the Agreement or any of the related documents will perform all of the covenants and agreements required to be performed by such party under
such documents; (iv) that there are no factors that would delay or subject to any adverse conditions, any necessary regulatory or governmental approval for the Merger or any related transaction and that all conditions to the completion of the
Merger and any related transaction will be satisfied without any waivers or modifications to the Agreement or any related documents; and (v) that in the course of obtaining the necessary regulatory, contractual, or other consents or approvals
for the Merger and any related transactions, no restrictions, including
Keefe,
Bruyette & Woods, a Stifel Company 787 Seventh Avenue, Floor 5, New York, NY 10019
(212) 887-7777 www.kbw.com
B-4
The Board of Directors and its Audit Committee WMIH Corp.
February 12, 2018
Page
5
of 6
any divestiture requirements, termination or other payments or amendments or modifications, will be imposed that will have a material adverse effect on the future results of operations or
financial condition of WMIH or Nationstar, or the contemplated benefits of the Merger, including without limitation the tax benefits expected to result or be derived from the Merger. We have assumed that the Merger will be consummated in a manner
that complies with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations and the respective governing
organizational documents of WMIH and Nationstar. We have further been advised by representatives of WMIH that WMIH has relied upon advice from its advisors (other than KBW) or other appropriate sources as to all legal, financial reporting, tax,
accounting and regulatory matters with respect to WMIH, Nationstar, the Merger and any related transaction, and the Agreement. KBW has not provided advice with respect to any such matters.
This opinion addresses only the fairness, from a financial point of view, as of the date hereof, of the Aggregate Merger Consideration in the
Merger to WMIH. We express no view or opinion as to any other terms or aspects of the Merger or any terms or aspects of any related transaction (including, without limitation, the Debt Financing, the WMIH Preferred Stock Transactions or the WMIH
Warrant Exchange), including the form or structure of the Merger (including, without limitation, the form of Aggregate Merger Consideration or the allocation thereof between cash and stock) or any such related transaction, any consequences of the
Merger or any such related transaction to WMIH, its stockholders, creditors or otherwise (including, without limitation, the WMIH Preferred Stock Transactions and the WMIH Warrant Exchange), or any terms, aspects, merits or implications of any
employment, retention, consulting, voting, support, cooperation, stockholder or other agreements, arrangements or understandings contemplated or entered into in connection with the Merger, any such related transaction, or otherwise. Our opinion is
necessarily based upon conditions as they exist and can be evaluated on the date hereof and the information made available to us through the date hereof. It is understood that subsequent developments may affect the conclusion reached in this opinion
and that KBW does not have an obligation to update, revise or reaffirm this opinion. Our opinion does not address, and we express no view or opinion with respect to, (i) the underlying business decision of WMIH to engage in the Merger or any
related transaction or enter into the Agreement, (ii) the relative merits of the Merger or any related transaction as compared to any strategic alternatives that are, have been or may be available to or contemplated by WMIH or the Board,
(iii) any business, operational or other plans with respect to WMIH or Nationstar that may be currently contemplated by WMIH or the Board or that may be implemented by WMIH or the Board subsequent to the closing of the Merger, (iv) the
fairness of the amount or nature of any compensation to any of WMIHs officers, directors or employees, or any class of such persons, relative to any compensation to the holders of WMIH Common Stock or relative to the Aggregate Merger
Consideration, (v) the effect of the Merger or any related transaction on, or the fairness of the Aggregate Merger Consideration or any other consideration or payment to, holders of any class of securities of WMIH (including, without
limitation, WMIH Common Stock, WMIH preferred stock or WMIH warrants), Nationstar or any other party to any transaction contemplated by the Agreement, (vi) any election by holders of Nationstar Common Stock to receive the Cash Consideration or
the Stock Consideration or any combination thereof, or the actual allocation among such holders between cash and stock (including, without limitation, any reallocation thereof as a result of proration or otherwise pursuant to the Agreement) or the
relative fairness of the Cash Consideration and the Stock Consideration, (vii) whether WMIH has sufficient cash, available lines of credit or other sources of funds to enable it to pay the Aggregate Cash Amount to the holders of Nationstar
Common Stock at the closing of the Merger, (viii) the actual value of WMIH Common Stock to be issued in the Merger or any related transaction, (ix) the prices, trading range or volume at which WMIH Common Stock or Nationstar Common Stock
will trade following the public
Keefe, Bruyette & Woods, a Stifel
Company 787 Seventh Avenue, Floor 5, New York, NY 10019
(212) 887-7777 www.kbw.com
B-5
The Board of Directors and its Audit Committee WMIH Corp.
February 12, 2018
Page
6
of 6
announcement of the Merger or the prices, trading range or volume at which WMIH Common Stock will trade following the consummation of the Merger, (x) any advice or opinions provided by any
other advisor to any of the parties to the Merger or any other transaction contemplated by the Agreement, or (xi) any legal, regulatory, accounting, tax or similar matters relating to Holdco, WMIH, Nationstar, any of their respective
stockholders, or relating to or arising out of or as a consequence of the Merger or any related transaction, including whether the Merger would not result in an ownership change of WMIH under Section 382(g) of the Internal Revenue Code or
whether WMIHs net operating loss carry-forward would not be subject to limitations under Treasury Regulations
sections 1.1502-15,
1.1502-21
or
1.1502-22.
This opinion is for the information of, and is directed to, the Board (in its capacity as
such) and its Audit Committee (in its capacity as such) in connection with their respective consideration of the financial terms of the Merger. This opinion does not constitute a recommendation to the Board or its Audit Committee as to how they
should vote or act on the Merger or any related transaction or to any holder of WMIH Common Stock or any stockholder of any other entity as to how to vote or act in connection with the Merger, any related transaction or any other matter (including,
with respect to holders of Nationstar Common Stock, what election any such stockholder should make with respect to the Cash Consideration or the Stock Consideration), nor does it constitute a recommendation as to whether or not any such stockholder
should enter into a voting, shareholders, affiliates or other agreement with respect to the Merger or any related transaction or exercise any dissenters or appraisal rights that may be available to such stockholder.
This opinion has been reviewed and approved by our Fairness Opinion Committee in conformity with our policies and procedures established under
the requirements of Rule 5150 of the Financial Industry Regulatory Authority.
Based upon and subject to the foregoing, it is our
opinion that, as of the date hereof, the Aggregate Merger Consideration in the Merger is fair, from a financial point of view, to WMIH.
Very truly yours,
Keefe, Bruyette & Woods, Inc.
Keefe, Bruyette & Woods, a Stifel
Company 787 Seventh Avenue, Floor 5, New York, NY 10019
(212) 887-7777 www.kbw.com
B-6
Appendix C
[LETTERHEAD OF CITIGROUP GLOBAL MARKETS INC.]
February 12, 2018
Nationstar Mortgage Holdings Inc.
8950 Cypress Waters Blvd.
Coppell, Texas 75019
Attention: Board of Directors
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of view, to the holders other than the Excluded Holders (defined below), of
Nationstar Common Stock (defined below) of the Minimum Average Per Share Consideration (defined below) to be received by such holders, after giving effect to the Mandatory Election (defined below), in the Merger (defined below) pursuant to the
Agreement and Plan of Merger (the Merger Agreement) proposed to be entered into among Nationstar Mortgage Holdings Inc. (Nationstar), WMIH Corp. (WMIH) and Wand Merger Corporation, a wholly owned subsidiary of
WMIH (Merger Sub). We understand that, as more fully described in the Merger Agreement, (a) Merger Sub will be merged with and into Nationstar (the Merger), Nationstar will become a wholly owned subsidiary of WMIH, and
each outstanding share of the common stock, par value $0.01 per share (Nationstar Common Stock), of Nationstar will be converted into the right to receive, at the election of the holder thereof (i) 12.7793 shares of common stock,
par value $0.00001 per share (WMIH Common Stock), of WMIH (the Per Share Stock Consideration) or (ii) $18.00 in cash (the Per Share Cash Consideration and, together with the Per Share Stock Consideration, as
applicable, the Per Share Consideration), subject, in each case, to the procedures and limitations set forth in the Merger Agreement, as to which we express no view or opinion. We further understand that each holder of Nationstar Common
Stock that does not elect to receive either the Per Share Stock Consideration or the Per Share Cash Consideration will be deemed to have elected to receive the Per Share Stock Consideration, subject to the procedures and limitations set forth in the
Merger Agreement. In addition, you have advised us, and for purposes of our analyses and opinion we have assumed, that certain of the Excluded Holders have committed to elect to receive the Per Share Cash Consideration with respect to 34,052,368 of
their shares of Nationstar Common Stock (the Mandatory Election) and that, as a result of the Mandatory Election, and assuming no holders of Nationstar Common Stock elect to receive the Per Share Cash Consideration with respect to
additional shares of Nationstar Common Stock, holders of Nationstar Common Stock other than the Excluded Holders that have committed to make the Mandatory Election will receive the Per Share Stock Consideration with respect to approximately 48% of
their shares of Nationstar Common Stock and will receive the Per Share Cash Consideration with respect to 52% of their shares of Nationstar Common Stock in the Merger pursuant to the Merger Agreement (an average Per Share Consideration consisting of
48% Per Share Stock Consideration and 52% Per Share Cash Consideration is referred to herein as the Minimum Average Per Share Consideration). We note that, if in addition to the Mandatory Election, holders of Nationstar Common Stock
elect to receive the Per Share Cash Consideration with respect to additional shares of Nationstar Common Stock, the Average Per Share Consideration to be received by the holders other than the Excluded Holders of Nationstar Common Stock in the
Merger pursuant to the Agreement would consist of more than 48% Per Share Stock Consideration and less than 52% Per Share Cash Consideration. As a consequence, with your agreement, we have only evaluated the fairness, from a financial point of view,
to the holders other than the Excluded Holders of Nationstar Common Stock of the Minimum Average Per Share Consideration to be received by such holders after giving effect to the Mandatory Election in the Merger pursuant to the Merger Agreement and
this opinion does not address whether the consideration to be received by the holders of Nationstar Common Stock that elect to receive the Per Share Cash Consideration in the Merger is fair, from a financial point of view, to such holders. For
purposes of our opinion, the term Excluded Holders means FIF HE Holdings LLC (FIF) and its affiliates, including without limitation Fortress Investment Group, LLC (Fortress) and the investment funds and
companies, including
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Board of Directors
Nationstar Mortgage Holdings Inc.
February 12, 2018
portfolio companies, affiliated or associated with Fortress (collectively with FIF and Fortress, the Fortress Group).
In arriving at our opinion, we reviewed a draft dated February 11, 2018 of the Merger Agreement and held discussions with certain senior officers,
directors and other representatives and advisors of Nationstar and certain senior officers and other representatives and advisors of WMIH concerning the businesses, operations and prospects of Nationstar and WMIH. We examined certain publicly
available business and financial information relating to Nationstar and WMIH as well as certain financial forecasts and other information and data relating to Nationstar and WMIH which were provided to or discussed with us by the respective
managements of Nationstar and WMIH including financial forecasts relating to Nationstar prepared and provided to us by the management of Nationstar (the Nationstar Projections), financial forecasts relating to WMIH on a standalone basis
prepared and provided to us by the management of WMIH (the WMIH Projections), financial forecasts relating to WMIH after giving effect to the Merger prepared and provided to us by the management of Nationstar (the Proforma
Projections), estimates prepared and provided to us by the management of WMIH of WMIHs net operating loss tax carryforwards (NOLs) and estimates prepared and provided to us by the management of Nationstar with respect to the
ability of WMIH to utilize those NOLs to achieve future tax savings after giving effect to the Merger (the Estimated NOL Tax Savings). We reviewed the financial terms of the Merger as set forth in the Merger Agreement in relation to,
among other things: current and historical market prices and trading volumes of Nationstar Common Stock; the historical and projected earnings and other operating data of Nationstar and, after giving effect to the Merger, WMIH; and the
capitalization and financial condition of Nationstar, WMIH on a standalone basis and WMIH after giving effect to the Merger. We analyzed certain financial, stock market and other publicly available information relating to the businesses of other
companies whose operations we considered relevant in evaluating those of Nationstar and WMIH. We also evaluated certain potential pro forma financial effects of the Merger on WMIH. In connection with our engagement and at the direction of
Nationstar, we were requested to approach, and on behalf of Nationstar we held discussions with, third parties to solicit indications of interest in the possible acquisition of Nationstar. In addition to the foregoing, we conducted such other
analyses and examinations and considered such other information and financial, economic and market criteria as we deemed appropriate in arriving at our opinion. We note that, for purposes of this opinion, we did not rely upon a review of the
publicly available financial terms of other transactions because we did not identify a sufficient number of relevant transactions in which we deemed the acquired companies to be sufficiently similar to Nationstar. The issuance of our opinion has
been authorized by our fairness opinion committee.
In rendering our opinion, we have assumed and relied, without independent verification, upon the
accuracy and completeness of all financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with us and upon the assurances of the managements of Nationstar and WMIH that they are not aware of
any relevant information that has been omitted or that remains undisclosed to us. In addition, the management of Nationstar has advised us, and we have assumed, that the Nationstar Projections were reasonably prepared on bases reflecting the best
currently available estimates and judgments of such management as to the future financial performance of Nationstar, the management of WMIH has advised us, and we have assumed, that the WMIH Projections were reasonably prepared on bases reflecting
the best currently available estimates and judgments of such management as to the future financial performance of WMIH, the management of Nationstar has advised us, and we have assumed, that the Proforma Projections were reasonably prepared on bases
reflecting the best currently available estimates and judgments of such management as to the future financial performance of WMIH after giving effect to the Merger, the management of WMIH has advised us, and we have assumed, that the NOLs have been
reasonably prepared on bases reflecting the best currently available estimates and judgments of such management as to the amount of such NOLs, and the management of Nationstar has advised us, and we have assumed, that the Estimated NOL Tax Savings
have been reasonably
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Board of Directors
Nationstar Mortgage Holdings Inc.
February 12, 2018
prepared on bases reflecting the best currently available estimates and judgments of such management as to the amount of such Estimated NOL Tax Savings. At your direction, we have assumed that
the Nationstar Projections, the Proforma Projections and the Estimated NOL Tax Savings provide a reasonable basis on which to evaluate Nationstar, WMIH after giving effect to the proposed Merger and the proposed Merger. We express no view or opinion
with respect to the Nationstar Projections, the WMIH Projections, the Proforma Projections, the NOLs, the Estimated NOL Tax Savings or the assumptions on which they are based. The management of Nationstar has advised us, and we have assumed, that
the Nationstar Projections, the Proforma Projections and the Estimated NOL Tax Savings reflect the best currently available views and assessments of Nationstar management regarding the potential impact of recent changes in U.S. tax laws and
regulations pursuant to H.R. 1, Tax Cuts and Jobs Act, enacted on December 22, 2017 (the Tax Cuts and Jobs Act) on the future financial performance of Nationstar and WMIH after giving effect to the Proposed Merger and the
Estimated NOL Tax Savings, and we have, at your direction, used and relied upon the Nationstar Projections, the Proforma Projections and the Estimated NOL Tax Savings for purposes of our analyses and this opinion. We further note that the actual and
estimated financial and operating performance and the share price data we reviewed for the companies with publicly traded equity securities that we deemed to be relevant might not, in whole or in part, reflect the potential impact of the Tax Cuts
and Jobs Act.
We have assumed, with your consent, that the Merger will be consummated in accordance with its terms, without waiver, modification or
amendment of any term, condition or agreement material to our analyses or this opinion and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the Merger, no delay, limitation, restriction or
condition will be imposed that would have an adverse effect on Nationstar, WMIH or the contemplated benefits of the Merger. Representatives of Nationstar have advised us, and we further have assumed, that the final terms of the Merger Agreement will
not vary in any respect material to our analyses or this opinion from those set forth in the draft reviewed by us. We are not expressing any opinion as to what the value of the WMIH Common Stock actually will be when issued pursuant to the Merger or
the prices at which the WMIH Common Stock will trade at any time. We have assumed that the shares of WMIH Common Stock to be issued in the Merger to the holders of Nationstar Common Stock will be listed on the NASDAQ Stock Market LLC. We have not
made or been provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Nationstar or WMIH nor have we made any physical inspection of the properties or assets of Nationstar or WMIH. We are not
experts in the evaluation of mortgage servicing rights, loans, mortgage loans, reverse mortgage loans and or other portfolios of assets for purposes of assessing the adequacy of allowances for losses with respect thereto, and we have not made an
independent evaluation of the adequacy of such allowances of Nationstar and WMIH, nor have we reviewed any individual loan, mortgage loan, or reverse mortgage loan files or any credit memos or asset values. In addition, we have undertaken no
independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Nationstar or WMIH is or may be a party or is or may be subject, or of any governmental investigation
of any possible unasserted claims or other contingent liabilities to which Nationstar or WMIH is or may be a party or is or may be subject.
Our opinion
is limited to the fairness, from a financial point of view, to the holders of Nationstar Common Stock other than the Excluded Holders of the Minimum Average Per Share Consideration to be received by such holders after giving effect to the Mandatory
Election in the Merger pursuant to the Merger Agreement in the manner provided herein and does not address any other aspect or implication of the Merger or any agreement, arrangement or understanding entered into in connection therewith or otherwise
including, without limitation, whether the consideration to be received by the Excluded Holders in the Merger is fair, from a financial point of view, to such holders. Our opinion does not address the underlying business decision of Nationstar to
effect the Merger, the relative merits of the Merger as compared to any alternative business strategies that might exist for Nationstar or the effect of any other transaction in which Nationstar might engage. We also express no view as
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Board of Directors
Nationstar Mortgage Holdings Inc.
February 12, 2018
to, and our opinion does not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties
to the Merger, or any class of such persons, relative to the Per Share Stock Consideration, the Per Share Cash Consideration, the Minimum Average Per Share Consideration or otherwise. Our opinion is necessarily based upon information available to
us, and financial, stock market and other conditions and circumstances existing, as of the date hereof. We have not undertaken, and are under no obligation, to update, revise, reaffirm or withdraw our opinion, or otherwise comment on or consider
events occurring or coming to our attention after the date hereof.
Citigroup Global Markets Inc. has acted as financial advisor to Nationstar in
connection with the proposed Merger and will receive a fee for such services, a significant portion of which is contingent upon the consummation of the Merger. We and our affiliates in the past have provided, and currently provide, services to
Nationstar, WMIH, members of the Fortress Group and Kohlberg Kravis Roberts & Co. L.P., a significant stockholder of WMIH (KKR), and investment funds and companies, including portfolio companies, affiliated or associated with
KKR (collectively with KKR, the KKR Group), for which services we and our affiliates have received and expect to receive compensation, including, without limitation, as previously disclosed to the of Directors of Nationstar (the
Board), having acted or acting as (i) with respect to WMIH, bookrunner in connection with an offering of equity securities by WMIH, (ii) with respect to the Fortress Group, financial advisor to members of the Fortress Group in
connection with various mergers, acquisitions and other strategic transactions by members of the Fortress Group, bookrunner in connection with various offerings of equity securities by members of the Fortress Group, joint lead arranger and
book-running manager of a revolving credit facility for Fortress and certain related entities, and (iii) with respect to the KKR Group, financial advisor to members of the KKR Group in connection with various mergers, acquisitions and other
strategic transactions by members of the KKR Group, bookrunner in connection with various offerings of equity securities by members of the KKR Group, and bookrunner in connection with various issuances of notes by members of the KKR Group. We and/or
certain of our affiliates are also a lender to or participant in certain credit facilities of Nationstar, certain members of the Fortress Group and certain members of the KKR Group. In addition, as previously disclosed to the Board, in March 2017
New Residential Investment Corp., a member of the Fortress Group, acquired certain mortgage servicing rights from CitiMortgage, Inc., an affiliate of Citigroup Global Markets Inc.
In the ordinary course of our business, we and our affiliates may actively trade or hold the securities of Nationstar, WMIH or other members of the Fortress
Group for our own account or for the account of our customers and, accordingly, may at any time hold a long or short position in such securities. In addition, we and our affiliates (including Citigroup Inc. and its affiliates) may maintain
relationships with Nationstar, WMIH, the Fortress Group, KKR and their respective affiliates.
Our advisory services and the opinion expressed herein are
provided for the information of the Board of Directors of Nationstar in connection with its evaluation of the proposed Merger, and our opinion is not intended to be and does not constitute a recommendation to any stockholder as to how such
stockholder should vote or act on any matters relating to the proposed Merger, including whether such stockholder should elect to receive the Per Share Stock Consideration or the Per Share Cash Consideration.
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Board of Directors
Nationstar Mortgage Holdings Inc.
February 12, 2018
Based upon and subject to the foregoing, our experience as investment bankers, our work as described above
and other factors we deemed relevant, we are of the opinion that, as of the date hereof, the Minimum Average Per Share Consideration to be received by the holders of Nationstar Common Stock other than the Excluded Holders after giving effect to the
Mandatory Election in the Merger pursuant to the Merger Agreement is fair, from a financial point of view, to such holders.
Very truly yours,
/s/ Citigroup Global Markets Inc.
CITIGROUP GLOBAL MARKETS
INC.
C-5
Appendix D
February 12, 2018
Special Committee of the Board of Directors
Nationstar Mortgage
Holdings, Inc.
8950 Cypress Waters Blvd
Coppell, TX 75019
Members of the Special Committee:
We understand that
Nationstar Mortgage Holdings, Inc., a Delaware corporation (the
Company
), proposes to enter into an Agreement and Plan of Merger (the
Agreement
), among the Company, WMIH Corp., a Delaware corporation
(
Parent
), and Wand Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
), pursuant to which (collectively, the
Transaction
) Merger Sub will merge with
and into the Company (the
Merger
), with the Company surviving as a wholly owned subsidiary of Parent and with each share of common stock, par value $0.01 per share, of the Company (other than shares of common stock of the Company
owned directly or indirectly by Parent or the Company, or as to which the holder thereof has properly exercised appraisal rights) (the
Shares
) being converted into the right to receive at the election of the holder thereof, either
$18.00 in cash (the
Cash Consideration
) or 12.7793 (the
Exchange Ratio
) shares of common stock, par value $0.00001 per share, of Parent (
Parent Common Stock
) (the
Stock
Consideration
and in the aggregate together with the Cash Consideration to be issued in the Merger, the
Consideration
). The Consideration may be subject to certain limitations and proration procedures as set forth in the
Agreement. The terms and conditions of the Transaction are fully set forth in the Agreement.
We further understand that, in connection with the Agreement
(collectively, the
Ancillary Agreements
):
|
(i)
|
Parent will enter into a voting and support agreement with FIF HE Holdings LLC, a stockholder of the Company (together with its affiliates, including Fortress Investment Group, LLC (
Fortress
) and the
investment funds and companies, including portfolio companies, affiliated or associated with Fortress, the
Company Principal Stockholder
), pursuant to which the Company Principal Stockholder will agree to vote certain of its
Shares in favor of the Merger and the adoption of the Agreement as provided in such voting and support agreement;
|
|
(ii)
|
the Company will enter into a letter agreement with the Company Principal Stockholder pursuant to which the Company Principal Stockholder has agreed to elect to receive the Cash Consideration with respect to 50% of its
Shares (the
Principal Stockholder Cash Election
); and
|
|
(iii)
|
the Company will enter into a voting and support agreement with the stockholders of Parent signatory thereto, pursuant to which such stockholders of Parent will agree to vote their shares of Parent Common Stock in favor
of the issuance of shares of Parent Common Stock in connection with the Transaction as provided in such voting and support agreement.
|
You
have asked us whether, in our opinion, as of the date hereof, taking into account the Principal Stockholder Cash Election, the Consideration to be received in the Transaction by the holders of Shares (other than the Company Principal Stockholder) is
fair to such holders from a financial point of view. In arriving at the opinion set forth below, we have, among other things:
|
(i)
|
reviewed certain publicly available information concerning the business, financial condition and operations of the Company and Parent;
|
280 Park Avenue | New York, NY 10017 | t.
+1.212.364.7800 | pjtpartners.com
D-1
Special Committee of the Board of Directors
Nationstar Mortgage Holdings, Inc.
February 12, 2018
|
(ii)
|
reviewed certain internal information concerning the business, financial condition and operations of the Company and Parent prepared and furnished to us by the management of the Company and approved for our use by the
Special Committee;
|
|
(iii)
|
reviewed certain internal financial analyses, estimates and forecasts relating to the Company, including projections for fiscal years 2017 through 2021 that were prepared by or at the direction of the management of the
Company and approved for our use by the Special Committee (collectively, the
Projections
);
|
|
(iv)
|
reviewed certain estimates relating to the utilization of the pro forma net operating losses and certain other tax attributes of Parent following completion of the Transaction, as prepared by or at the direction of
management of the Company, including extrapolations made by us to such projections, and in each case approved for our use by the Special Committee (the
Pro Forma Tax Projections
);
|
|
(v)
|
held discussions with members of senior management of the Company and a discussion with members of senior management of Parent concerning, among other things, their respective evaluations of the Transaction and the
Companys and Parents respective business, operating and regulatory environment, financial condition, prospects and strategic objectives;
|
|
(vi)
|
reviewed the historical market prices and trading activity for the Shares and shares of Parent Common Stock;
|
|
(vii)
|
compared certain publicly available financial and stock market data for the Company with similar information for certain other companies that we deemed to be relevant;
|
|
(viii)
|
reviewed the publicly available financial terms of certain other business combinations that we deemed to be relevant;
|
|
(ix)
|
reviewed drafts, dated February 12, 2018, of the Agreement and the Ancillary Agreements; and
|
|
(x)
|
performed such other financial studies, analyses and investigations, and considered such other matters, as we deemed necessary or appropriate for purposes of rendering this opinion.
|
In preparing this opinion, with your consent, we have relied upon and assumed the accuracy and completeness of the foregoing information and all other
information discussed with or reviewed by us, without independent verification thereof; provided, that certain data underlying our financial analyses may not fully reflect the relevant effects of the Tax Cuts and Jobs Act. We have assumed with your
consent that the Projections and the assumptions underlying the Projections, and all other financial analyses, estimates and forecasts provided to us by the Companys management and approved for our use by the Special Committee, have been
reasonably prepared in accordance with industry practice and represent the Company managements best currently available estimates and judgments as to the business and operations and future financial performance of the Company. We have assumed,
with your consent, that the estimates of the tax effects set forth in the Pro Forma Tax Projections have been reasonably prepared and represent the Company managements best currently available estimates and judgments, and that the net
operating losses and other tax attributes described therein will be utilized in accordance with such estimates. We assume no responsibility for and express no opinion as to the Projections, the Pro Forma Tax Projections, the assumptions upon which
they are based or any other financial analyses, estimates and forecasts provided to us by the Companys management. We have also assumed that there have been no material changes in the assets, financial condition, results of operations,
business or prospects of the Company since the respective dates of the last financial statements made available to us. We have relied on managements representations and/or projections regarding taxable income, standalone net operating loss
D-2
Special Committee of the Board of Directors
Nationstar Mortgage Holdings, Inc.
February 12, 2018
utilization and other tax attributes of the Company and Parent. We have further relied with your consent upon the assurances of the management of the Company that they are not aware of any facts
that would make the information and projections provided by them inaccurate, incomplete or misleading.
We have not been asked to undertake, and have not
undertaken, an independent verification of any information provided to or reviewed by us, nor have we been furnished with any such verification and we do not assume any responsibility or liability for the accuracy or completeness thereof. We did not
conduct a physical inspection of any of the properties or assets of the Company. We did not make an independent evaluation or appraisal of the assets or the liabilities (contingent or otherwise) of the Company, nor have we been furnished with any
such evaluations or appraisals, nor have we evaluated the solvency of the Company under any applicable laws.
We also have assumed, with your consent,
that the final executed forms of the Agreement and the Ancillary Agreements will not differ in any material respects from drafts reviewed by us and the consummation of the Transaction will be effected in accordance with the terms and conditions of
the Agreement, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary regulatory or third party consents and approvals (contractual or otherwise) for the
Transaction, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on the Company or Parent or the contemplated benefits of the Transaction. We do not express any opinion as to any tax or other consequences
that might result from the Transaction, nor does our opinion address any legal, tax, regulatory or accounting matters, as to which we understand that the Company obtained such advice as it deemed necessary from qualified professionals. We are not
legal, tax or regulatory advisors and have relied upon without independent verification the assessment of the Company and its legal, tax and regulatory advisors with respect to such matters.
In arriving at our opinion, we were not asked to solicit, and did not solicit, interest from any party with respect to any sale, acquisition, business
combination or other extraordinary transaction involving the Company or its assets. We have not considered the relative merits of the Transaction as compared to any other business plan or opportunity that might be available to the Company or the
effect of any other arrangement in which Company might engage and our opinion does not address the underlying decision by the Company to engage in the Transaction. Our opinion is limited to the fairness as of the date hereof, from a financial point
of view, to the holders of Shares (other than the Company Principal Stockholder) of the Consideration to be received by such holders in the Transaction, taking into account the Principal Stockholder Cash Election, and our opinion does not address
any other aspect or implication of the Transaction, the Agreement, or any other agreement or understanding entered into in connection with the Transaction or otherwise. We further express no opinion or view as to the fairness of the Transaction to
the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the Transaction. We also express no opinion as to the fairness of the amount or nature of the
compensation to any of the Companys officers, directors or employees, or any class of such persons, relative to the Consideration or otherwise. Our opinion is necessarily based upon economic, market, monetary, regulatory and other conditions
as they exist and can be evaluated, and the information made available to us, as of the date hereof. We express no opinion as to the prices or trading ranges at which the Shares or shares of Parent Common Stock will trade at any time.
This opinion does not constitute a recommendation to any holder of Shares as to how any stockholder should vote or act with respect to the Transaction or any
other matter. We assume no responsibility for updating or revising our opinion based on circumstances or events occurring after the date hereof. This opinion has been approved by a fairness committee of PJT Partners LP in accordance with established
procedures.
D-3
Special Committee of the Board of Directors
Nationstar Mortgage Holdings, Inc.
February 12, 2018
This opinion is provided to the Special Committee of the Board of Directors of the Company, in its capacity
as such, in connection with and for the purposes of its evaluation of the Transaction only and is not a recommendation as to any action the Special Committee or the Board of Directors should take with respect to the Transaction or any aspect
thereof. This opinion is not to be quoted, summarized, paraphrased or excerpted, in whole or in part, in any registration statement, prospectus or proxy or information statement, or in any other report, document, release or other written or oral
communication prepared, issued or transmitted by the Special Committee, the Board of Directors, including any committee thereof, or the Company, without our prior consent, not to be unreasonably withheld, conditioned or delayed. However, a copy of
this opinion may be included, in its entirety, as an exhibit to any disclosure document the Company is required to file with the Securities and Exchange Commission in connection with the Transaction. Our additional consent shall not be required for
any references or disclosures that are substantially identical to, in all material respects, prior disclosures or references. Any summary of or reference to this opinion or the analysis performed by us in connection with the rendering of this
opinion in such documents shall require our prior written approval, not to be unreasonably withheld, conditioned or delayed.
We are acting as financial
advisor to the Special Committee of the Board of Directors of the Company with respect to the Transaction and will receive fees from the Company for our services, a portion of which was payable upon the execution of our engagement letter and the
remainder of which is payable upon the rendering of this opinion. In addition, the Company has agreed to reimburse us for
out-of-pocket
expenses and to indemnify us for
certain liabilities arising out of the performance of such services (including the rendering of this opinion).
In the ordinary course of our and our
affiliates businesses, we and our affiliates may provide investment banking and other financial services to the Company and may receive compensation for the rendering of these services. During the two years preceding the date of this opinion,
we and certain of our affiliated entities are advising or have advised (i) an entity in which the Company Principal Stockholder and its affiliates maintain a significant investment on matters unrelated to the Transaction, for which we may in
the future receive customary compensation, and (ii) a significant stockholder of Parent and certain entities in which the significant stockholder of Parent has an investment, in each case on matters unrelated to the Transaction, for which we
have received or may in the future receive customary compensation.
T
T
T
D-4
Special Committee of the Board of Directors
Nationstar Mortgage Holdings, Inc.
February 12, 2018
Based on and subject to the foregoing, we are of the opinion, as investment bankers, that, as of the date
hereof, taking into account the Principal Stockholder Cash Election, the Consideration to be received by holders of Shares (other than the Company Principal Stockholder) in the Transaction is fair to such holders from a financial point of view.
Very truly yours,
PJT Partners LP
D-5
Appendix E
Section 262 of the General Corporation Law of the State of Delaware
§ 262. Appraisal Rights
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(a)
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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.
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(b)
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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:
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(1)
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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.
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(2)
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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:
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a.
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Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
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b.
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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;
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c.
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Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
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d.
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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.
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(3)
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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.
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(4)
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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 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.
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(c)
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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.
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(d)
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Appraisal rights shall be perfected as follows:
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(1)
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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
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(2)
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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
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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 § 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.
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(e)
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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.
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(f)
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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.
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(g)
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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 (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.
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(h)
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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.
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(i)
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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.
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(j)
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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.
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(k)
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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
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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.
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(l)
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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.
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