Company Stock Incentive Plans (whether or
not presently exercisable), (B) 25,650,760 shares of Company Common Stock are subject to outstanding Company RSUs, (C)
875,000 shares of Company Common Stock are subject to outstanding Company Performance Awards, and (D) aggregate contributions
of $1,350,560.70 received by the Company for the current offering period pursuant to the ESPP. All of the issued and
outstanding shares of capital stock of the Company are duly authorized and validly issued and are fully paid, non-assessable
and free of preemptive rights. No Subsidiary of the Company owns any shares of Company Common Stock.
(g) The Company and the Company Subsidiaries
do not own, directly or indirectly, any capital stock or equity interests of any other Person (other than the Company Subsidiaries).
(a) The Company has all requisite
corporate power and authority to execute and deliver this Agreement, to perform its obligations under this Agreement and,
subject to obtaining the Company Stockholder Approval, to consummate the Merger and the other transactions contemplated
hereby. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the
Merger and the other transactions contemplated hereby have been duly authorized by all necessary corporate action on the part
of the Company, subject, in the case of the effectuation of the Merger, to receipt of the Company Stockholder Approval. The
Company has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by Parent
and Merger Sub of this Agreement, this Agreement constitutes the Company’s legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or similar
Laws affecting creditors’ rights generally and by general principles of equity.
(b) The Company Board, at a meeting duly
called and held, adopted resolutions (i) declaring that this Agreement and the transactions contemplated hereby, including the
Merger, the Holding Company Merger, the Conversion and the Sirius XM Radio Merger, are fair to and in the best interests of the
Company and the Company’s stockholders, (ii) approving and declaring this Agreement and the transactions contemplated hereby,
including the Merger, the Holding Company Merger, the Conversion and the Sirius XM Radio Merger, advisable and (iii) recommending
that the Company’s stockholders adopt this Agreement (the “
Company Recommendation
”).
(a) No consent, approval, clearance,
permit or authorization of, or registration or filing with, or notice to, any Governmental Entity is required to be made or obtained
by the Company or any Company Subsidiary in connection with the execution or delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement, except for (i) any notices or filings by the Company required under the HSR Act
and, assuming the accuracy of the representations and warranties of Parent in
Section 4.4(a)(i)
,
any required filings or notifications under
the applicable Competition Laws of the countries and jurisdictions listed in
Section 3.4(a)
of the Company Disclosure Letter
and the expiration or termination of any applicable waiting periods (or approval) thereunder, (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL, (iii) the filing with the SEC of the
Proxy Statement in accordance with Regulation 14A promulgated under the Exchange Act and such reports under and such other compliance
with the Exchange Act and the Securities Act as may be required in connection with this Agreement and the transactions contemplated
by this Agreement, (iv) compliance with the securities or “blue sky” laws of various states in connection with the
issuance of the Merger Consideration, (v) compliance with NYSE rules and regulations to permit the consummation of the Merger and
the listing of the Parent Common Stock to be issued in the Merger, and (vi) such other consents, approvals, clearances, permits,
authorizations, registrations, filings or notices that, individually or in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect.
(b) The execution, delivery and
performance of this Agreement by the Company does not, and the consummation by the Company of the transactions contemplated
hereby will not, (i) conflict with or violate any provision of the Constituent Documents of the Company or any Company
Subsidiary (assuming the Company Stockholder Approval is obtained), or (ii) assuming the filings, consents, approvals and
waiting periods referred to in
Section 3.4(a)
are duly made, obtained or satisfied and the Company Stockholder
Approval is obtained (A) violate any Law or Order, in either case, applicable to the Company or any Company Subsidiaries or
any of their respective properties or assets or (B) violate, conflict with, result in the loss of any benefit under, require
a payment or incur a penalty under, constitute a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Lien upon any of the respective properties or assets of the Company
or any Company Subsidiaries under, any Company Material Contract to which the Company or any Company Subsidiary is a party,
or by which they or any of their respective properties or assets may be bound or affected, except, in the case of the
foregoing clause (ii), for such matters as, individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(a) The Company has filed with or furnished
to the SEC all reports, schedules, forms, statements, registration statements, prospectuses and other documents (including exhibits
and other information incorporated therein) required to be filed or furnished by the Company under the Securities Act or the Exchange
Act with the SEC since January 1, 2016 (such documents, together with any other documents filed or furnished during such period
by the Company to the SEC, the “
Company SEC Documents
”). No Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act or is otherwise required to make filings with the SEC.
(b) As of its respective date of filing
with the SEC, or, if amended or supplemented by a filing prior to the date of this Agreement, as of the date of the last such filing,
each of the Company SEC Documents complied in all material respects with the requirements of
the Securities Act, the Exchange Act and the
Sarbanes-Oxley Act, as applicable, and the rules and regulations thereunder, and none of the Company SEC Documents when filed or
furnished (or in the case of a registration statement under the Securities Act, at the time it was declared effective) contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they were made, not misleading.
(c) As of the date of this Agreement,
there are no outstanding or unresolved comments in letters received from the SEC staff with respect to any Company SEC Documents,
and none of the Company SEC Documents filed with the SEC prior to the date of this Agreement is, to the Knowledge of the Company,
the subject of ongoing SEC review. Since January 1, 2017, the Company has been in compliance in all material respects with the
applicable listing and corporate governance rules and regulations of the New York Stock Exchange and the applicable provisions
of the Sarbanes-Oxley Act.
(d) The Company maintains “internal
controls over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and
that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors
of the Company and that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of the Company’s assets that could have a material effect on the Company’s financial statements. The
Company maintains “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange
Act) that ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.
(e) Since January 1, 2017, the Company
has not identified and has not been advised by the Company’s auditors of (i) significant deficiencies or material weaknesses
(as defined by the Public Company Accounting Oversight Board) in the design or operation of internal controls over financial reporting,
which could reasonably be expected to adversely affect the Company’s ability to record, process, summarize and report financial
information or (ii) any fraud or allegation of fraud, whether or not material, that involves management or other employees who
have a role in the Company’s internal controls over financial reporting.
(a) The financial statements of the Company
(including any related notes and schedules thereto) included in the Company SEC Documents (i) have been derived from the accounting
books and records of the Company and the Company Subsidiaries, (ii) as of their respective dates of filing with the SEC complied
in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect
thereto, (iii) have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and (iv) fairly present, in all material respects, the consolidated financial position of
the Company and the Company Subsidiaries and the consolidated results of operations, stockholders’ equity and cash flows
as of
the dates and for the respective periods indicated
(subject, in the case of the unaudited statements, to normal year-end audit adjustments and the absence of notes, none of which
individually or in the aggregate are material).
(b) The Company and the Company Subsidiaries
do not have any liabilities or obligations of any nature (whether absolute, contingent, accrued or otherwise) required by GAAP
to be reflected or reserved against in a consolidated balance sheet (or the notes thereto) of the Company, except for those liabilities
and obligations (i) that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect, (ii) reflected or reserved against in the most recent consolidated balance sheet of the Company (including
the notes thereto) included in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2018, (iii)
incurred since June 30, 2018 in the ordinary course of business consistent with past practice and which, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect or (iv) incurred in accordance
with this Agreement.
(a) Since December 31, 2017 through the
date of this Agreement, there has not been any event, change, condition, occurrence or effect, that, individually or in the aggregate,
has had or would reasonably be expected to have a Company Material Adverse Effect.
(b) Since December 31, 2017, the Company
and the Company Subsidiaries have conducted their businesses in all material respects in the ordinary course of business consistent
with past practice.
Section 3.8.
Legal Proceedings
.
There are no Proceedings pending, or to the Knowledge of the Company, threatened against the Company or any of the Company Subsidiaries
or any of their respective assets, rights or properties or any of the executive officers or directors of the Company in each such
Person’s capacity as such, except, in each case, for those that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect. Neither the Company nor any of the Company Subsidiaries nor
any of their respective properties, rights or assets is or are subject to any Order, except for those that, individually or in
the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
Section 3.9.
Compliance with Laws;
Permits
.
(a) The Company and the Company Subsidiaries
are, and since January 1, 2017 have been, in compliance with all (and have not violated any) applicable Laws, Orders, Privacy Policies
and the Payment Card Industry Data Security Standards, except as, individually or in the aggregate, has not had and would not reasonably
be expected to have a Company Material Adverse Effect.
(b) Since January 1, 2017 through the
date of this Agreement, neither the Company nor any Company Subsidiary has received any written notice, subpoena, written demand,
written inquiry or written information requests from a Governmental Entity alleging or seeking information to determine whether
the Company or any Company Subsidiary is or was in
non-compliance with or violation of any Law,
Order, Privacy Policy or Permit except as has not had and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. To the Knowledge of the Company, no investigation (whether civil, criminal, administrative,
investigative, formal or informal) or review by any Governmental Entity with respect to any non-compliance with or violation of
any Law, Order, Privacy Policy or Permit by the Company or any Company Subsidiary is pending or threatened, in each case, would
reasonably be expected to have a Company Material Adverse Effect.
(c) The Company and each of the Company
Subsidiaries hold and are in compliance with, and since January 1, 2017 have held and have been in compliance with, all Permits
necessary for the lawful conduct of their business and the ownership and use of their properties and assets and each of such Permits
is valid and in full force and effect, except where the failure to so hold or be in compliance with such Permit, individually or
in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.
(d) Prior to the date of this Agreement,
the Company or the Company Subsidiaries have validly transferred, in accordance with all applicable Law and Orders, all licenses,
permits and authorizations from the Federal Communications Commission previously held or owned by the Company or the Company Subsidiaries.
Section 3.10.
Company Material
Contracts
.
(a) Except as set forth in
Section
3.10(a)
of the Company Disclosure Letter and other than any Contracts, including amendments thereto, required to be filed as
an exhibit to any report of the Company filed pursuant to the Exchange Act of the type described in Item 601(b)(10) of Regulation
S-K promulgated by the SEC, neither the Company nor any of the Company Subsidiaries is, as of the date of this Agreement, a party
to or bound by any Contract:
(i) with any Person (including
artists, music labels, composers, publishers, collection and performance societies and organizations and rights administrators)
that owns, controls or licenses any rights to sound recordings, music, graphics, video, other content or rights in any media (“
Content
Rights
”) that are downloaded, distributed, performed, reproduced, broadcast or otherwise used or exploited in the operation
of the business of the Company or the Company Subsidiaries, which Contract is material to the Company and the Company Subsidiaries,
taken as a whole, and requires the Company or the Company Subsidiaries to pay consideration of more than $15,000,000 annually;
(ii) that relates to any joint
venture, partnership, limited liability or other similar agreements or arrangements relating to the formation, creation, operation,
management or control of any joint venture or partnership (other than with or among wholly-owned Company Subsidiaries);
(iii) that (A) is an indenture,
credit agreement, loan agreement, security agreement, guarantee, note, mortgage or other Contract providing for or securing Indebtedness
(or guaranteeing the Indebtedness of another Person) in excess of $10,000,000, (B) grants a Lien (other than a Permitted Lien)
or restricts the granting of
Liens on any property or asset that
is material to the Company and the Company Subsidiaries, taken as a whole, (C) provides for or relates to any interest, currency
or hedging, derivatives or similar Contracts or (D) restricts payment of dividends or any distributions in respect of the equity
interests of the Company or any of the Company Subsidiaries;
(iv) that relates to, involves
or provides for the settlement of any current or former Claim (A) which Contract is with any Governmental Entity (except settlements
for an immaterial monetary fine), (B) which Contract materially restricts or imposes material obligations upon the Company and
the Company Subsidiaries, taken as a whole, or (C) which Contract would require the Company or the Company Subsidiaries to pay
consideration of more than $10,000,000 after the date of this Agreement;
(v) that is between (A) the
Company or any of the Company Subsidiaries, on the one hand, and (B) any of directors or executive officers of the Company (including
any employment agreements and related Contracts with such officers) or stockholders who own five percent (5%) or more of the outstanding
Company Common Stock, on the other hand;
(vi) that contains covenants
that (A) purport to limit or restrict the ability of the Company or any Company Subsidiaries (or Parent or its Affiliates
after the Effective Time) to compete with any person in any business or in any geographic area, including any non-compete covenant
or (B) grant to the other party to such Contract (or a third party) exclusivity or “most favored nation” status (whether
in terms of pricing or otherwise);
(vii) that grants any rights
of first refusal, rights of first offer or other similar rights to any Person with respect to any material asset of the Company
and the Company Subsidiaries, taken as a whole, or that contains a put, call or similar right pursuant to which the Company or
any Company Subsidiary would be required to purchase or sell, as applicable, any equity interests of any Person or assets of any
Person, in each case that would require payments by or to the Company or the Company Subsidiaries of more than $10,000,000 after
the date of this Agreement;
(viii) that is for the acquisition
or disposition, directly or indirectly (by merger or otherwise), of all or substantially all of the assets or at least a majority
of capital stock or other equity interests of any Person, pursuant to which the Company or any Company Subsidiary has continuing “earn out” or other similar contingent payment obligations, indemnification or other obligations outstanding;
(ix) that obligates the Company
or any of the Company Subsidiaries to make any capital expenditure or investment not contemplated by the Capital Expenditure Budget
in excess of $10,000,000;
(x) that requires the Company
or any of the Company Subsidiaries to provide any funds to or make any investment in (in each case, in the form
of a loan, capital contribution or
similar transaction) any Person (other than any Company Subsidiary) in excess of $10,000,000;
(xi) that is a (A) material
Contract that relates to Intellectual Property (excluding non-exclusive commercially available software licenses with annual fees
of less than $1,000,000, licenses for sound recordings or music publishing and non-exclusive licenses to customers in the ordinary
course of business, but including any “open source” licenses that would require material proprietary source code to
be licensed or made available if the applicable software is distributed, conveyed or made available to others) or (B) Privacy Policy
that is externally posted and obligates the Company or any Company Subsidiaries to their customers and users; or
(xii) except to the extent such
Contract is described in clauses (i)-(xi) above, that requires annual aggregate payments by, or other consideration from (or annual
aggregate payments, or other consideration, to) the Company or the Company Subsidiaries of more than $10,000,000 annually.
(b) The Contracts filed or required to
be filed as exhibits to the Company SEC Documents of the type described in Item 601(b)(10) of Regulation S-K promulgated by the
SEC or listed or required to be listed in
Section 3.10(a)
of the Company Disclosure Letter are together referred to herein
as the “
Company Material Contracts
.” The Company has made available to Parent true, correct and complete copies
of each Company Material Contract, including any schedules, exhibits and amendments thereto.
(c) (i) Each Company Material Contract
is valid and binding on the Company or a Company Subsidiary and is in full force and effect, and, to the Knowledge of the Company,
is valid and binding on the other parties thereto, (ii) the Company and each Company Subsidiary and, to the Knowledge of the Company,
each of the other parties thereto, has performed all obligations required to be performed by it to date under each Company Material
Contract, and (iii) no event or condition exists which constitutes or, after notice or lapse of time or both, would constitute
a breach or default on the part of the Company or any Company Subsidiary under any Company Material Contract or, to the Knowledge
of the Company, any other party thereto, except, in each case of clauses (i) through (iii), as, individually or in the aggregate,
has not had and would not reasonably be expected to have a Company Material Adverse Effect.
(d) Since January 1, 2017 through the
date of this Agreement, neither the Company nor any Company Subsidiary has received any written notice of a material breach or
material default from a counterparty to any Company Material Contract and no counterparty to a Company Material Contract has notified
the Company or any Company Subsidiary in writing (or, to the Knowledge of the Company, otherwise) that it intends to terminate
or not renew a Company Material Contract.
Section 3.11.
Company Benefit Plans
.
(a)
Section 3.11(a)
of the Company
Disclosure Letter sets forth a true, correct and complete list of all material Company Benefit Plans. With respect to each such
Company Benefit Plan, to the extent applicable,
the Company has made available to Parent true, correct and complete copies of (or, to the extent no such copy exists, an accurate
description thereof, to the extent applicable): (i) the most recent annual report on Form 5500 required to have been filed
with the U.S. Internal Revenue Service for each Company Benefit Plan, including all schedules thereto and any audited financial
statements and actuarial valuation reports; (ii) the most recent determination letter, if any, from the Internal Revenue Service
for any Company Benefit Plan that is intended to qualify pursuant to Section 401(a) of the Code or, if such Company Benefit
Plan is a prototype or volume submitter plan, the opinion, advisory or notification letter which covers each such Company Benefit
Plan, if applicable; (iii) the plan documents, including all amendments thereto, and the most recent summary plan descriptions
and the most recent summaries of material modifications; (iv) any related trust agreements, insurance contracts, insurance
policies or other documents of any funding arrangements; and (v) any notices to or from the U.S. Internal Revenue Service or any
office or representative of the United States Department of Labor or any similar Governmental Authority relating to any material
compliance issues in respect of any such Company Benefit Plan.
(b) Neither the Company, any Company
Subsidiary nor any of their respective ERISA Affiliates has previously maintained, sponsored, contributed to (or had an obligation
to contribute to) or currently maintains, sponsors or participates in, contributes to (or has an obligation to contribute to) or
otherwise has any liability with respect to (i) any defined benefit pension plan or plan subject to Section 302 or Title IV of
ERISA or Section 412 or Section 4971 of the Code or (ii) any multiemployer plan within the meaning of Section 3(37) of ERISA, any
multiple employer plan within the meaning of Section 413 of the Code, or any multiple employer welfare arrangement within the meaning
of Section 3(40) of ERISA.
(c) Except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, each Company Benefit Plan
which is intended to be qualified within the meaning of Section 401(a) of the Code is so qualified and has received a favorable
determination letter as to its qualification, or if such Company Benefit Plan is a prototype or volume submitter plan, the opinion,
advisory or notification letter for each such Company Benefit Plan, and, to the Knowledge of the Company, there are no circumstances,
whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification. Except as, individually
or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, (i) each Company
Benefit Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations, including ERISA and the Code, which are applicable to such Company Benefit Plan, (ii) there are no pending
or, to the Knowledge of the Company, threatened Proceedings against any Company Benefit Plan, any fiduciary thereof, or the Company
or any Company Subsidiary with respect to any Company Benefit Plan and no facts or circumstances exist that could reasonably be
expected to give rise to any such Proceedings, and (iii) all contributions required to be made by the Company, any Company Subsidiary
or any of its ERISA Affiliates to any Company Benefit Plan have been made on or before their applicable due dates. Except as, individually
or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, no event has occurred
and no condition exists that would subject the Company or any Company Subsidiary, either directly or by reason of their affiliation
with any ERISA Affiliate, to any Tax, fine, Lien, penalty or other liability imposed by ERISA, the Code or any other applicable
Law
with respect to any Company Benefit Plan.
Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse
Effect, no Company Benefit Plan that is a “welfare benefit plan” (within the meaning of Section 3(1) of ERISA)
provides post-termination or retiree life insurance, health or other welfare benefits or coverage to any person, except as may
be required by Section 4980B of the Code or any similar Law.
(d) Except as otherwise contemplated
under this Agreement, neither the execution nor delivery of this Agreement, shareholder approval of this Agreement, nor the consummation
of the transactions contemplated hereby would reasonably be expected to, whether alone or in combination with any other event(s):
(i) result in the accelerated vesting or payment of, or any increase in, or the funding (through a grantor trust or otherwise)
of, any compensation or benefits to any Company Employee; (ii) result in the entitlement of any Company Employee to severance or
termination pay or benefits; (iii) limit or restrict the right of the Company to merge, amend or terminate any of the Company Benefit
Plans; or (iv) result in any payment under any of the Company Benefit Plans or any other arrangement that would not be deductible
under Section 280G of the Code. No Company Benefit Plan provides for a “gross-up” or similar payment, including in
respect of any amount of “excise tax” or “additional tax” that may become payable under Section 409A of
the Code or Section 4999 of the Code.
(e) Except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, neither the Company nor
any Company Subsidiary has made any commitment (i) to create, incur liability with respect to or cause to exist any other compensation,
benefit, fringe benefit or other plan, program, arrangement or agreement or to enter into any contract or agreement to provide
compensation or benefits to any individual, in each case other than required by the terms of the Company Benefit Plans as in effect
as of the date hereof or (ii) to modify, change or terminate any Company Benefit Plan, other than a modification, change or termination
required by applicable Law.
(f) In addition to the foregoing, with
respect to each Non-U.S. Company Benefit Plan:
(i) all employer and employee
contributions to each Non-U.S. Company Benefit Plan required by Law or by the terms of such Non-U.S. Company Benefit Plan or pursuant
to any contractual obligation (including contributions to all mandatory provident fund schemes) have been made or, if applicable,
accrued in accordance with generally accepted accounting practices in the applicable jurisdiction applied to such matter, except
as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect;
and
(ii) each Non-U.S. Company Benefit
Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities,
except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse
Effect.
Section 3.12.
Labor Matters
.
(a) There is no effort currently being
made or, to the Knowledge of the Company, threatened by or on behalf of any labor union, works council, employee committee or representative
or other labor organization to authorize representation of any employees of the Company or any Company Subsidiary by any labor
organization. No petition has been filed, nor has any Proceeding been instituted by any employee of the Company or any Company
Subsidiary, group of employees of the Company or any Company Subsidiary, or labor organization with any labor relations board or
commission seeking recognition of a collective bargaining or similar representative in the past three years. Neither the Company
nor any Company Subsidiary is a party to or otherwise bound by any collective bargaining agreement or other contract or agreement
with any labor organization or other representative of any employees of the Company or any Company Subsidiary, nor is any such
contract or agreement presently being negotiated.
(b) Except as set forth in
Section
3.12(b)
of the Company Disclosure Letter, neither the Company nor any Company Subsidiary has closed any plant or facility,
effectuated any layoffs of employees or implemented any early retirement, separation or window program since January 1, 2017, nor
has the Company or any Company Subsidiary planned or announced any such action or program for the future.
Section 3.13.
Taxes
.
Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse
Effect (provided that the foregoing exception shall not apply to clause (j) below):
(a) The Company and the Company Subsidiaries
have timely filed (or caused to be timely filed) all Tax Returns required to be filed by them, and all such Tax Returns are true,
correct and complete in all material respects. The Company and the Company Subsidiaries have paid (or caused to be paid) all Taxes
due and payable by them and have withheld and paid all Taxes that the Company or any of the Company Subsidiaries are obligated
to withhold from amounts owing to any employee, former employee, independent contractor, shareholder, creditor or third party,
except, in each case, for Taxes that are being contested in good faith and for which adequate reserves are provided on the financial
statements of the Company in accordance with GAAP.
(b) No deficiency for any Tax has been
asserted or assessed against the Company or any of the Company Subsidiaries by a Tax authority in writing, other than any deficiency
that has been fully paid, settled or withdrawn. Neither the Company nor any Company Subsidiary has waived any statute of limitations
or agreed in writing to any extension of time with respect to a material Tax assessment or deficiency which waiver or extension
is currently in force. There are no Liens for Taxes on the assets of the Company or any Company Subsidiary other than Permitted
Liens.
(c) No audit, examination, investigation
or other proceeding in respect of any Taxes or any Tax Return of the Company or any of the Company Subsidiaries is currently pending
or, to the Knowledge of the Company, threatened in writing, other than for which adequate reserves are provided on the financial
statements of the Company in accordance with GAAP.
(d) Neither the Company nor any of the
Company Subsidiaries (i) is or has been a member of a group (other than a group the common parent of which is the Company or any
of the Company Subsidiaries and which includes or included only the Company and/or Company Subsidiaries) filing a consolidated,
combined, affiliated, unitary or similar income Tax Return or (ii) has any liability for Taxes of any Person (other than the Company
or any Company Subsidiary) arising from the application of Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or non-U.S. Law), as a transferee or successor, or otherwise by operation of Law.
(e) Neither the Company nor any of the
Company Subsidiaries is a party to or bound by or has any obligation under any Tax allocation, sharing, indemnity, reimbursement
or similar agreement or arrangement (other than (i) any agreement or arrangement solely among the Company/or any of the Company
Subsidiaries or (ii) ordinary course commercial agreements or arrangements the primary subject matter of which is not Tax matters).
(f) No written claim has been made by
any Tax authority in a jurisdiction where the Company or any of the Company Subsidiaries has not filed a Tax Return that it is
or may be subject to Tax by, or required to file Tax Returns in, such jurisdiction, other than any such claims that have been fully
resolved or for which adequate reserves are provided on the financial statements of the Company in accordance with GAAP.
(g) Neither the Company nor any of the
Company Subsidiaries has participated in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2)
(or any similar provision of state, local or non-U.S. Law).
(h) Neither the Company nor any of the
Company Subsidiaries will be required to include a material item of income (or exclude a material item of deduction) in any taxable
period (or portion thereof) beginning after the Closing Date as a result of (i) a change in or incorrect method of accounting occurring
prior to the Closing Date, (ii) a prepaid amount received, or paid, prior to the Closing Date, (iii) a “closing agreement”
as described in Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law) executed on or prior to the
Closing Date, or (iv) an election under Section 108(i) of the Code (or any similar provision of state, local or non-U.S. Law).
(i) Within the past two years, neither
the Company nor any of the Company Subsidiaries has constituted a “distributing corporation” or a “controlled
corporation” in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code
(or any similar provision of state, local, or non-U.S. Law).
(j) Neither the Company nor any Company
Subsidiary has taken any action or knows of any fact or circumstance that would reasonably be expected to prevent or impede (i)
the Merger and the Sirius XM Radio Merger, taken together, or (ii) the Holding Company Merger and the Conversion, taken together,
from in each case qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(k) Neither the Company nor any Company
Subsidiary has made an election pursuant to Section 965(h) of the Code.
Notwithstanding anything herein to the contrary,
the representations and warranties contained in this
Section 3.13
and, to the extent expressly referring to Code sections,
Section 3.11
, are the sole and exclusive representations of the Company with respect to Taxes and Tax matters.
Section 3.14.
Intellectual Property
and Privacy
.
(a)
Section 3.14(a)
of the Company
Disclosure Letter lists all Intellectual Property registered with any Governmental Entity (and all applications for any of the
foregoing) that is owned by the Company or the Company Subsidiaries (collectively, the “
Registered IP
”).
(b) Except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, (i) the Company and the
Company Subsidiaries exclusively own the Owned Intellectual Property, free and clear of all Liens (including claims of current
and former employees and contractors), and all such registrations and applications for Registered IP are subsisting and unexpired
and, to the Knowledge of the Company, valid and enforceable; (ii) the operation of the Company’s and the Company Subsidiaries’
businesses does not infringe, misappropriate or otherwise violate (“
Infringe
”) (and has not done so since January
1, 2017) the Intellectual Property or other proprietary rights of any other Person and, since January 1, 2017, no Person has alleged
the same in writing (including in “cease and desist” letters, invitations to take a patent license or statutory “takedown”
notices), other than claims that have since been resolved without material liability; (iii) since January 1, 2017, no Person has
made a compliant in writing to the Company or the Company Subsidiaries as to the advertising, marketing or privacy practices of
the Company or the Company Subsidiaries, other than claims that have since been resolved without material liability or that would
not result in material liability even if unresolved; (iv) to the Knowledge of the Company, no Person is Infringing any Owned Intellectual
Property or Intellectual Property exclusively licensed to the Company or the Company Subsidiaries; (v) since January 1, 2017, no
Person has demanded in writing that the Company or the Company Subsidiaries remove from their systems or services and/or pay royalties
for (other than royalties due under existing written agreements) any content in which such Person has or claims rights; (vi) no
third Person has the current or contingent right to access or possess any material proprietary source code of the Company or the
Company Subsidiaries; and (vii) the Company and the Company Subsidiaries’ material proprietary software does not contain
and is not distributed, conveyed or otherwise used together with any “open source” or similar software in any manner
that would require any such material proprietary source code to be licensed or made available to others if the applicable software
is conveyed, distributed or made available to others.
(c) Except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, the Company and the Company
Subsidiaries take, and since January 1, 2017 have taken, actions to maintain and protect (i) the integrity, security and continuous
operation of IT Assets owned or, to Knowledge of the Company, controlled by the Company or the Company Subsidiaries and used in
the
operation of their business, and, to the Knowledge
of the Company, there have been no material breaches, violations, unplanned outages or unauthorized uses of same; (ii) all nonpublic
sensitive data relating to the Company and the Company Subsidiaries’ current and former subscribers and customers (including
trial subscribers and customers), including any Private Data; (iii) their trade secrets and confidential information included in
the Owned Intellectual Property; and (iv) their qualification for the “safe harbors” of the U.S. Digital Millennium
Copyright Act, 17 U.S.C. § 512, and the U.S. Communications Decency Act, 47 U.S.C. § 230 (the “
IP Safe Harbors
”).
(d) Except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, all IT Assets owned or,
to Knowledge of the Company, controlled by the Company and used in the operation of the Company and the Company Subsidiaries’
business (i) are free from any material defect, bug, virus, malware, error or other corruptant and (ii) operate in material compliance
with their documentation.
Section 3.15.
Environmental
Matters
. Except as would not have or reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, (a) there are no Materials of Environmental Concern present at or affecting any real property currently or formerly
owned, leased or operated by the Company or the Company Subsidiaries, (b) neither the Company nor the Company Subsidiaries nor
any of their predecessors or other entities for the acts or omissions of which they are liable has caused any condition at any
location that has resulted in or would reasonably be expected to result in liability or other obligation (i) under any applicable
Laws protecting the environment, quality of the ambient air, soil, surface water or groundwater, or natural resources or protecting
human health and safety (“
Environmental Laws
”) or (ii) regarding any Materials of Environmental Concern and
(c) neither the Company nor any of the Company Subsidiaries has assumed or retained, by contract or operation of law, any liabilities
under any Environmental Laws or concerning any Materials of Environmental Concern.
Section 3.16.
Real Property
.
(a)
Section 3.16(a)
of the Company
Disclosure Letter identifies all leases, subleases, licenses and other occupancy agreements in effect as of the date hereof, pursuant
to which the Company or a Company Subsidiary occupies real property for the annual rent payment of more than $5,000,000 (the “
Leases
”).
Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse
Effect: (i) each Lease is valid, in full force and effect and enforceable against the Company or Company Subsidiary that is party
thereto and (ii) the Company and the Company Subsidiaries are not in default (and there is no event or condition that after notice
or lapse of time or both would constitute a default by the Company or any Company Subsidiary) under any Lease and, to the Knowledge
of the Company, there is no default (or event or condition that after notice or lapse of time or both would constitute a default)
by any other party thereto under any Lease.
(b) Neither the Company nor any of the
Company Subsidiaries owns any real property or interests in real property or any options to acquire such real property or interests
therein, except pursuant to the leases, subleases, licenses and other occupancy agreements to which the Company or any Company
Subsidiary is a party.
Section 3.17.
Insurance
.
Section 3.17
of the Company Disclosure Letter sets forth a list (including name of insurer, agent, coverage and expiration
date) of all insurance policies in force on the date hereof with respect to the business and assets of the Company and the Company
Subsidiaries. Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect, (a) the Company and the Company Subsidiaries are in compliance with their insurance policies and are
not in breach or default under any of the terms thereof, and (b) each such policy is outstanding and in full force and effect
and no insurer has refused, denied or disputed coverage of any claim made thereunder. All premiums and other payments due under
any such policy have been paid, and all claims thereunder have been filed in due and timely fashion.
Section 3.18.
Information Supplied
.
None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in
(i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, and at any time it is amended or supplemented or 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 not misleading and (ii) the Proxy Statement will,
at the date it or any amendment or supplement is mailed to holders of the shares of Company Common Stock and at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made, not misleading (except that no representation or
warranty is made by the Company regarding such portions thereof that relate expressly to Parent, Merger Sub or any of their Subsidiaries
or to statements made therein to the extent based on information supplied by or on behalf of Parent or Merger Sub for inclusion
or incorporation by reference therein).
Section 3.19.
Transactions with Affiliates
.
Neither the Company, nor any of the Company Subsidiaries, is party to any Contract with any (i) officer or director of the Company
or any of the Company Subsidiaries or, other than as directly related to such person’s employment or service with the Company
or any Company Subsidiary, (ii) Person that is the beneficial owner of five percent (5%) or more of the outstanding Company Common
Stock or (iii) Affiliate or family member of any such officer, director or stockholder, other than in the case of clause (ii) or
(iii), any Contract with Parent or its Affiliates.
Section 3.20.
Takeover
Laws
. Assuming the accuracy of the representations and warranties of Parent in
Section 4.12
, neither Section 203 of
the DGCL nor any other Takeover Law is applicable with respect to this Agreement, the Merger or the other transactions contemplated
hereby.
Section 3.21.
Stockholder Vote Required
.
The Company Stockholder Approval is the only vote of holders of any class or series of securities of the Company necessary to
adopt this Agreement or to approve the Merger and the other transactions contemplated hereby.
Section 3.22.
Brokers
.
Other than as set forth on
Section 3.22
of the Company Disclosure Letter, neither the Company nor any of the Company Subsidiaries
has engaged any financial advisor, broker or finder or incurred any liability for any financial advisory fee, broker’s fee,
commission or finder’s fee in connection with any of the transactions contemplated
hereby. True, correct and complete copies
of all agreements with those persons set forth on
Section 3.22
of the Company Disclosure Letter relating to any such fees
or commissions (or otherwise relating to the transactions contemplated by this Agreement) have been furnished to Parent prior
to the date hereof.
Section 3.23.
Opinions of Financial
Advisors
. The Company Board has received the written opinions of Centerview Partners LLC and LionTree Advisors LLC, financial
advisors to the Company Board, dated as of the date hereof, that, as of the date of such opinions and based upon and subject to
the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken
in preparing such opinions as set forth in their respective opinions, the Exchange Ratio provided for pursuant to this Agreement
is fair, from a financial point of view, to the holders of Company Common Stock (other than Excluded Shares and shares of Company
Common Stock held by any Affiliate of the Company or Parent). The Company will make executed copies of such opinions available
to Parent solely for informational purposes promptly following the execution of this Agreement, and it is agreed and understood
that such opinions may not be relied on by Parent or Merger Sub.
Section 3.24.
No Other
Representations or Warranties
. Except for the representations and warranties of Parent and Merger Sub contained in
Article
IV
, the Company acknowledges that neither Parent, Merger Sub, nor any Person acting on their behalf makes any other express
or any implied representations or warranties whatsoever and specifically (but without limiting the generality of the foregoing)
that neither Parent, Merger Sub, nor any Person acting on their behalf makes any representation or warranty with respect to (i)
Parent or any Parent Subsidiaries, any of their businesses, operations, assets, liabilities, condition (financial or otherwise)
or prospects or any other matter relating to Parent or the Parent Subsidiaries or (ii) any documentation, forecasts, budgets,
projections, estimates or other information provided by Parent or any Person acting on its behalf to the Company, any Affiliate
of the Company or any Person acting on any of their behalf, including in any “data rooms” or management presentations.
The Company has not relied on any such information or any representation or warranty not set forth in
Article IV
.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF
PARENT AND MERGER SUB
Except as otherwise disclosed in (a) the
Parent SEC Documents filed with or furnished to the SEC prior to the date of this Agreement, but excluding disclosures set forth
in any risk factors, “forward looking statements” or other statements included in such Company SEC Documents to the
extent they are predictive or forward looking in nature, or (b) the corresponding section of the letter (the “
Parent Disclosure
Letter
”) delivered to the Company by Parent at the time of the execution of this Agreement (it being agreed that disclosure
of any item in any section or subsection of the Parent Disclosure Letter shall be deemed disclosure with respect to any other section
or subsection to which the relevance of such item is reasonably apparent), Parent and Merger Sub represent and warrant to the Company
as follows:
Section 4.1.
Organization and Corporate
Power
.
(a) 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 and has all requisite
corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted,
except where the failure to have such power or authority, individually or in the aggregate, has not had and would not reasonably
be expected to have a Parent Material Adverse Effect. Each of Parent and Merger Sub is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except for those jurisdictions in which the failure to be so qualified
or licensed or to be in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b) Parent has made available to the
Company copies of the Constituent Documents of Parent and Merger Sub in effect on the date of this Agreement. Each of Parent and
Merger Sub is not in violation of any provision of its Constituent Documents, except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(c) Merger Sub was formed solely for
the purposes of engaging in the transactions contemplated by this Agreement and Merger Sub has not carried on any business or conducted
any operations other than the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto.
All of the issued and outstanding shares of common stock of Merger Sub have been validly issued, are fully paid and non-assessable
and are owned directly or indirectly by Parent, free and clear of any Lien.
Section 4.2.
Parent Capitalization
.
(a) As of the date of this Agreement,
the authorized capital stock of Parent consists of 9,000,000,000 shares of Parent Common Stock and 50,000,000 shares of Parent
Preferred Stock. As of the close of business on September 20, 2018, (i) 4,452,964,967 shares of Parent Common Stock were issued
and outstanding; (ii) no shares of Parent Preferred Stock were issued and outstanding; (iii) 2,324,114 shares of Parent Common
Stock were owned by Parent as treasury stock; (iv) 278,902,853 shares of Parent Common Stock were reserved for issuance pursuant
to the Parent Stock Incentive Plans. All of the issued and outstanding shares of capital stock of Parent are duly authorized and
validly issued and are fully paid, non-assessable and free of preemptive rights.
(b) Except as set forth in
Section
4.2(a)
, as of the close of business on September 20, 2018: (i) Parent does not have any other shares of Parent Common Stock,
Parent Preferred Stock or other capital stock or equity interests outstanding, (ii) Parent has not issued, granted or is bound
by any outstanding options, equity-based awards, equity-linked securities, warrants, puts, calls, subscription rights, preemptive
rights, redemption rights or securities convertible or exchangeable into capital stock or equity securities of Parent and (iii)
Parent is not party to any Contract obligating Parent to (A) issue, transfer or sell any shares of capital stock or other equity
interests of Parent or securities convertible into or exchangeable or exercisable for such capital stock or equity interests, (B)
issue, grant or be bound by any options, equity-based
awards, equity-linked securities, warrants,
puts, calls, subscription rights, preemptive rights, redemption rights or securities convertible or exchangeable into capital stock
or equity securities of Parent or (C) redeem, repurchase or otherwise acquire any capital stock or equity securities of Parent.
Section 4.3.
Authority
. Each of
Parent and Merger Sub has all requisite power and authority to execute and deliver this Agreement, to perform its obligations under
this Agreement and, subject to, in the case of Merger Sub, the adoption of this Agreement by the sole stockholder of Merger Sub,
to consummate the Merger, the Parent Stock Issuance and the other transactions contemplated hereby. The execution, delivery and
performance by each of Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Merger Sub, subject,
in the case of the Merger with regard to Merger Sub, the adoption of this Agreement by the sole stockholder of Merger Sub. Each
of Parent and Merger Sub has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery
by the Company of this Agreement, this Agreement constitutes Parent’s and Merger Sub’s legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or similar Laws
affecting creditors’ rights generally and by general principles of equity.
Section 4.4.
Consents and Approvals;
No Conflicts
.
(a) No consent, approval, clearance,
permit or authorization of, or registration or filing with, or notice to, any Governmental Entity is required to be made or obtained
by Parent or any Parent Subsidiary in connection with the execution or delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for (i) any notices or filings by Parent required under the HSR Act, and, assuming the accuracy
of the representations and warranties of the Company in
Section 3.4(a)(i)
, any required filings or notifications under the
applicable Competition Laws of the countries and jurisdictions listed in
Section 4.4(a)
of the Parent Disclosure Letter
and the expiration or termination of any applicable waiting periods (or approval) thereunder, (ii) the filing with the SEC of the
Form S-4 and such reports under and such other compliance with the Exchange Act and the Securities Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement, (iii) compliance with the securities or “blue sky”
laws of various states in connection with the issuance of the Merger Consideration, (iv) compliance with Nasdaq rules and regulations
to permit the consummation of the Merger and the listing of the Parent Common Stock to be issued in the Merger, and (v) such other
consents, approvals, clearances, permits, authorizations, registrations, filings or notices that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) The execution, delivery and performance
of this Agreement by each of Parent and Merger Sub does not and the consummation by each of Parent and Merger Sub of the transactions
contemplated hereby will not (i) conflict with or violate any provision of the Constituent Documents of Parent or Merger Sub, or
(ii) assuming the filings, consents, approvals and waiting periods referred to in
Section 4.4(a)
are duly made, obtained
or satisfied and the adoption of this Agreement by the sole stockholder of Merger Sub is obtained (A) violate any Law or Order,
in either case, applicable to Parent or any Parent Subsidiary or any of their
respective properties or assets or (B) violate,
conflict with, result in the loss of any benefit under, require a payment or incur a penalty under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of
the respective properties or assets of Parent or any Parent Subsidiary under, any Contract to which Parent or any Parent Subsidiary
is a party, or by which they or any of their respective properties or assets may be bound or affected, except, in the case of the
foregoing clause (ii), for such matters as, individually or in the aggregate, have not had and would not reasonably be expected
to have a Parent Material Adverse Effect.
Section 4.5.
SEC Documents
.
(a) Parent has filed with or furnished
to the SEC all reports, schedules, forms, statements, registration statements, prospectuses and other documents (including exhibits
and other information incorporated therein) required to be filed or furnished by Parent with the SEC since January 1, 2016 (such
documents, together with any other documents filed or furnished during such period by Parent to the SEC, the “
Parent SEC
Documents
”). No Parent Subsidiary is subject to the periodic reporting requirements of the Exchange Act or is otherwise
required to make filings with the SEC.
(b) As of its respective date of filing
with the SEC, or, if amended or supplemented by a filing prior to the date of this Agreement, as of the date of the last such filing,
each of the Parent SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act
and the Sarbanes-Oxley Act, as applicable, and the rules and regulations thereunder, and none of the Parent SEC Documents when
filed or furnished (or in the case of a registration statement under the Securities Act, at the time it was declared effective)
contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(c) Parent maintains “internal
control over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and
that receipts and expenditures of Parent are being made only in accordance with authorization of management and directors of Parent
and that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of Parent’s assets that could have a material effect on the Company’s financial statements. Parent maintains “disclosure
controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that ensure that information required
to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the SEC’s rules and forms.
(d) Since January 1, 2017, Parent has
not identified and has not been advised by Parent’s auditors of (i) significant deficiencies or material weaknesses (as defined
by the Public Company Accounting Oversight Board) in the design or operation of internal control over financial reporting, which
reasonably could adversely affect Parent’s ability to record,
process, summarize and report financial information
or (ii) any fraud or allegation of fraud, whether or not material, that involves management or other employees who have a role
in Parent’s internal control over financial reporting.
Section 4.6.
Financial Statements and
Undisclosed Liabilities
.
(a) The
financial statements of Parent (including any related notes and schedules thereto) included in the Parent SEC Documents (a) have
been derived from the accounting books and records of Parent and Parent Subsidiaries, (b) as of their respective dates of filing
with the SEC complied in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, (c) have been prepared in accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and (d) fairly present, in all material respects, the consolidated
financial position of Parent and the Parent Subsidiaries and the consolidated results of operations, stockholders’ equity
and cash flows as of the dates and for the respective periods indicated (subject, in the case of the unaudited statements, to
normal year-end audit adjustments and the absence of notes).
(b) Parent
and Parent Subsidiaries do not have any liabilities or obligations of any nature (whether absolute, contingent, accrued or otherwise)
required by GAAP to be reflected or reserved against in a consolidated balance sheet (or the notes thereto) of Parent, except
for those liabilities and obligations (i) that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect, (ii) reflected or reserved against in the most recent consolidated balance
sheet of Parent (including the notes thereto) included in Parent’s Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2018, (iii) incurred since June 30, 2018 in the ordinary course of business consistent with past practice and which,
individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect or
(iv) incurred in accordance with this Agreement.
Section 4.7.
Absence of Certain Changes
or Events
.
(a) Since December 31, 2017 through the
date of this Agreement, there has not been any event, change, condition, occurrence or effect, that, individually or in the aggregate,
has had or would reasonably be expected to have a Parent Material Adverse Effect.
(b) Since December 31, 2017, Parent and
the Parent Subsidiaries have conducted their businesses in all material respects in the ordinary course of business consistent
with past practice.
Section 4.8.
Legal Proceedings
.
There are no Proceedings pending, or to the Knowledge of Parent, threatened against Parent or any of the Parent Subsidiaries or
any of their respective assets, rights or properties or any of the officers or directors of Parent, except, in each case, for those
that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
Neither Parent nor any of Parent Subsidiaries nor any of their respective properties, rights or assets is or are subject to any
Order, except for
those that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
Section 4.9.
Taxes
. Neither Parent
nor any Parent Subsidiary has taken any action or knows of any fact or circumstance that could reasonably be expected to prevent
or impede (a) the Merger and the Sirius XM Radio Merger, taken together, or (b) the Holding Company Merger and the Conversion,
taken together, from in each case qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 4.10.
Compliance with Laws
.
Parent and the Parent Subsidiaries are, and since January 1, 2017 have been, in compliance with all (and have not violated any)
applicable Laws and Orders, except as, individually or in the aggregate, has not had and would not reasonably be expected to have
a Parent Material Adverse Effect.
Section 4.11.
Information Supplied
.
None of the information supplied or to be supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference
in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, and at any time it is amended or supplemented or 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 not misleading, and (ii) the Proxy Statement will,
at the date it or any amendment or supplement is mailed to holders of the shares of Company Common Stock and at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made, not misleading (except that no representation or
warranty is made by Parent or Merger Sub regarding such portions thereof that relate expressly to the Company or any Company Subsidiaries
or to statements made therein to the extent based on information supplied by or on behalf of the Company for inclusion or incorporation
by reference therein).
Section 4.12.
Ownership of Company
Common Stock
. Except for the Company Preferred Stock (including all accrued but unpaid dividends thereon), neither Parent
nor any Parent Subsidiary owns any shares of Company Common Stock.
Section 4.13.
No Vote of Parent Stockholders
. No vote of
holders of Parent Common Stock is necessary to approve this Agreement, the Merger, the Parent Stock Issuance and the other transactions
contemplated hereby. The adoption of this Agreement by the sole stockholder of Merger Sub is the only vote of holders of any capital
stock of Merger Sub necessary to adopt this Agreement and approve the Merger and the other transactions contemplated hereby.
Section 4.14.
Brokers
. Other than
Allen & Company LLC and Bank of America Merrill Lynch, no broker, finder or investment banker will be entitled to any
brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub.
Section 4.15.
No Other
Representations or Warranties
. Except for the representations and warranties of the Company contained in
Article III
,
each of Parent and
Merger Sub acknowledges that neither the
Company nor any Person acting on its behalf makes any other express or any implied representations or warranties whatsoever and
specifically (but without limiting the generality of the foregoing) that neither the Company nor any Person acting on its behalf
makes any representation or warranty with respect to (i) the Company or any Company Subsidiaries, any of their businesses, operations,
assets, liabilities, condition (financial or otherwise) or prospects or any other matter relating to the Company or the Company
Subsidiaries or (ii) any documentation, forecasts, budgets, projections, estimates or other information provided by the Company
or any Person acting on its behalf to Parent or Merger Sub, any Affiliate of Parent or any Person acting on any of their behalf,
including in any “data rooms” or management presentations. Neither Parent nor Merger Sub has relied on any such information
or any representation or warranty not set forth in
Article III
.
ARTICLE
V
COVENANTS
Section 5.1.
Company
Conduct of Business Prior to the Effective Time
. Except (i) as set forth in
Section 5.1
of the Company Disclosure Letter,
(ii) as expressly contemplated by this Agreement, (iii) as required by applicable Law or (iv) with the prior written consent of
Parent (such consent not to be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement
to the earlier of the Effective Time and the termination of this Agreement, (A) the Company shall, and shall cause the Company
Subsidiaries to: (1) conduct its business in the ordinary course consistent with past practice and (2) use commercially reasonable
efforts to maintain and preserve its present business organization, maintain in effect all Contracts and Permits as necessary
to operate their businesses, keep available the services of officers and key employees and maintain relationships with customers,
suppliers and others having material business relationships with it and (B) in furtherance of, and without limiting the generality
of the foregoing, the Company shall not, and shall cause the Company Subsidiaries to not:
(a) (A) amend or otherwise change the
Company’s Constituent Documents and (B) with respect to any Company Subsidiaries, amend or otherwise change their Constituent
Documents in any material respect;
(b) adjust, split, combine or reclassify
any capital stock or other equity interest or enter into any agreement or plan to effect a merger, consolidation, share exchange,
reorganization, dissolution or liquidation (provided that for the avoidance of doubt, nothing in this clause (b) (or clause (s)
as it relates to this clause (b)) shall prohibit the exercise by the Company of its rights under
Section 5.5(g)
);
(c) except as permitted in
Section
5.1(k)(D)
, issue, grant, sell, dispose of, redeem or repurchase any equity securities or equity-based award in the Company
or any Company Subsidiaries, or securities convertible into, or exchangeable or exercisable for, any such equity securities or
awards, or any rights of any kind to acquire any such equity securities or such convertible or exchangeable securities, other than
the issuance of shares of Company Common Stock (x) upon the exercise of Company Stock Options and options under the ESPP, in each
case outstanding as of the date hereof in accordance with their terms, (y) to satisfy the vesting and settlement of any Company
RSUs or Company Performance Awards outstanding as
of the date hereof in accordance with their
terms or (z) to satisfy the conversion of any Company Convertible Notes in accordance Company Notes Indenture;
(d) declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of Company Common Stock or other
shares of capital stock or equity interests (except for any dividend or distribution on the Company Preferred Stock or by a wholly-owned
Company Subsidiary to the Company or another wholly-owned Company Subsidiary);
(e) sell, license, transfer, subject
to a Lien, abandon or allow to lapse or expire or otherwise dispose of (whether by merger, consolidation or sale of stock or assets
or otherwise), any assets, rights (including Intellectual Property) or businesses of the Company or the Company Subsidiaries (including
any capital stock of any Company Subsidiaries), in each case other than dispositions of (x) equipment and other assets in the ordinary
course of business consistent with past practice, (y) any assets, rights or businesses not exceeding $10,000,000
individually
or $20,000,000 in the aggregate or (z) non-exclusive licenses to Intellectual Property granted in the ordinary course of business
consistent with past practice;
(f) acquire (whether by merger, consolidation
or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof
or any assets, in each case other than (A) purchases of equipment and other assets in the ordinary course of business consistent
with past practice or (B) acquisitions not exceeding $10,000,000
individually or $20,000,000 in the aggregate;
(g) (A) incur, assume, refinance or guarantee
any Indebtedness (other than Indebtedness between wholly owned Company Subsidiaries or between the Company and wholly owned Company
Subsidiaries) or issue any debt securities, or assume or guarantee any Indebtedness of any person, except for borrowings in the
ordinary course of business consistent with past practice under the Company’s revolving credit facility (as set forth in
the Credit Agreement) or (B) enter into (or terminate) any swap or hedging transaction or other derivative agreement;
(h) make any loans, advances or capital
contributions to, or investments in, any other person (other than to any wholly-owned Company Subsidiary) in excess of $5,000,000
individually or $10,000,000 in the aggregate;
(i) enter into, amend in any material
respect, waive compliance with any material rights with respect to, or cancel, fail to renew or terminate any Company Material
Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract, other than any Contract
relating to licenses of the Content Rights;
(j) except for expenditures contemplated
by and consistent with the capital expenditure budgets set forth on
Section 5.1(j)
of the Company Disclosure Letter (the “
Capital Expenditure Budget
”), make, or commit to make, or otherwise authorize any capital expenditures in excess
of $10,000,000 in the aggregate;
(k) except as may be required by the
terms of any Company Benefit Plan disclosed on
Section 3.11(a)
of the Company Disclosure Letter as in effect as of the date
hereof: (A) increase the compensation or benefits
of any Company Employee, except for increases in compensation or benefits for the Company Employees below the level of the Company’s
Senior Leadership Team to the extent that such increases are in the ordinary course of business and consistent with past practice;
(B) grant any rights to change-in-control, retention, severance or termination pay or other termination benefits to any Company
Employee, except for making severance, termination pay or other termination benefits in the ordinary course of business and consistent
with past practice to Company Employees below the level of the Company’s Senior Leadership Team in connection with promotions
or the hiring of a new Company Employee below the level of the Company’s Senior Leadership Team or the filling of a vacancy
for a position below the level of the Company’s Senior Leadership Team; (C) establish, adopt, enter into, amend, terminate
or grant any waiver or consent under any Company Benefit Plan or any plan, agreement, program, policy, trust, fund or other arrangement
that would be a Company Benefit Plan if it were in existence as of the date of this Agreement except for amendments to Company
Benefit Plans made in the ordinary course of business consistent with past practice that do not increase the cost to the Company
or any of the Company Subsidiaries of such arrangements;
provided
that no such action shall be taken which extends a Company
Benefit Plan beyond December 31, 2019; (D) grant any equity or equity-based awards other than in connection with the hiring of
any new Company Employee or promotion awards made to any Company Employee in the ordinary course of business and consistent with
past practice (it being understood that no such awards shall contain any acceleration of vesting solely as a result of the transactions
contemplated hereby); (E) terminate the employment of any executive officers (other than for cause) or hire any new employees unless
such hiring is in the ordinary course of business and consistent with past practice and is with respect to employees having an
annual base salary and annual target cash incentive opportunity not to exceed $400,000 in the aggregate for such employee; (F)
take any action to accelerate the vesting or time of payment of any compensation or benefit under any Company Benefit Plan or pay
any cash bonus; or (G) loan or advance any money or other property to any Company Employee (other than routine advancement of business
expenses in the ordinary course of business and consistent with past practice);
(l) enter into any Contract involving
or providing for the settlement of any Claim or threatened Claim (or series of related Claims): (A) which Contract is with a Governmental
Entity (except settlements for an immaterial monetary fine); (B) which Contract materially restricts or imposes material obligations
on the Company or any Company Subsidiary; or (C) which Contract involves payments by the Company or any Company Subsidiaries after
the date hereof in excess of $1,000,000 individually or $5,000,000 in the aggregate (excluding any amounts that may be paid under
existing insurance policies), provided that this clause (l) shall not apply to any settlement of any Proceeding described in
Section
5.6
or
Section 5.13
, which shall be governed by the respective provisions thereof;
(m) (i) announce, implement or effect
any reduction in force, layoff or other program resulting in the termination of Company Employees, in each case, that would trigger
the WARN Act or (ii) recognize any union or other labor organization as the representative of any Company Employees, or enter into
any new or amended collective bargaining agreement with any union or other labor organization;
(n) make any changes in its methods,
practices or policies of financial accounting, except as may be required under applicable Law, rule, regulation or U.S. GAAP, in
each case following consultation with the Company’s independent public accountants;
(o) (i) make, change or revoke any Tax
election, except where such election would not have a material effect on the Tax position of the Company or any Company Subsidiary
(ii) file any amended material Tax Returns, (iii) settle or compromise any Tax liability of the Company or any Company Subsidiary
(other than with respect to settlements or compromises of any Tax liability for an amount that does not materially exceed the amount
specifically disclosed, reflected or reserved with respect to such Tax liability in accordance with GAAP in the consolidated financial
statements included in the Company SEC Documents with respect to the relevant Tax matter at issue, (iv) agree to an extension or
waiver of the statute of limitations with respect to the assessment or determination of a material amount of Taxes of the Company
or any Company Subsidiaries, (v) enter into any closing agreement with respect to any material Tax or surrender any right to claim
a material Tax refund, or (vi) fail to file when due (taking into account any available extensions) any material Tax Return;
(p) (i) take any action or cause any
action to be taken that would reasonably be expected to prevent (x) the Merger and the Sirius XM Radio Merger, taken together,
or (y) the Holding Company Merger and the Conversion, taken together, from in either case constituting a reorganization under Section
368(a) and related provisions of the Code or (ii) fail to take any commercially reasonable action or fail to cause any commercially
reasonable action to be taken that is reasonably expected to be necessary to cause (x) the Merger and the Sirius XM Radio Merger,
taken together, and (y) the Holding Company Merger and the Conversion, taken together, to in each case constitute a reorganization
under Section 368(a) and related provisions of the Code;
(q) fail to use its reasonable best efforts
to maintain in full force and effect the existing insurance policies of the Company and the Company Subsidiaries or to replace
such insurance policies with comparable insurance policies covering the Company, the Company Subsidiaries and their respective
properties, assets and businesses;
(r) make any material changes to any
Privacy Policy (except as is reasonably determined by the Company to be necessary or advisable to comply with applicable Law) or
its actions to qualify for the IP Safe Harbors; or
(s) agree, resolve or commit to take
any of the actions prohibited by this
Section 5.1
.
Nothing contained in this Agreement is intended
to give Parent, directly or indirectly, the right to control or direct the Company’s or the Company Subsidiaries’ operations
prior to the Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision over its and the Company Subsidiaries’ respective operations.
Section 5.2.
Parent
Conduct of Business Prior to the Effective Time
. Except as (i) set forth in
Section 5.2
of the Parent Disclosure Letter,
(ii) as expressly contemplated by this
Agreement, (iii) as required by applicable
Law or (iv) with the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed),
during the period from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement: (A)
Parent shall, and shall cause the Parent Subsidiaries to: (1) conduct its business in the ordinary course consistent with past
practice and (2) use commercially reasonable efforts to maintain and preserve its present business organization, maintain in effect
all Contracts and Permits as necessary to operate their businesses, keep available the services of officers and key employees and
maintain relationships with customers, suppliers and others having material business relationships with it and (B) in furtherance
of, and without limiting the generality of the foregoing, Parent shall not:
(a) amend or otherwise change the Constituent
Documents of Parent in any manner that would adversely affect the holders of Company Common Stock who would receive Parent Common
Stock at the Effective Time in a manner different from holders of Parent Common Stock prior to the Effective Time;
(b) adjust, split, combine or reclassify
the Parent Common Stock, any capital stock or other equity interest of Parent or enter into any agreement or plan to effect a reorganization,
dissolution or liquidation;
(c) declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of Parent Common Stock or other
shares of capital stock or equity interests (except for (i) regular quarterly cash dividends by Parent or (ii) any dividend or
distribution by a wholly-owned Parent Subsidiary to Parent or another wholly-owned Parent Subsidiary);
(d) (i) take any action or cause any
action to be taken that would reasonably be expected to prevent (x) the Merger and the Sirius XM Radio Merger, taken together,
or (y) the Holding Company Merger and the Conversion, taken together, in either case from constituting a reorganization under Section
368(a) and related provisions of the Code or (ii) fail to take any commercially reasonable action or fail to cause any commercially
reasonable action to be taken that is reasonably expected to be necessary to cause the (x) Merger and the Sirius XM Radio Merger,
taken together, and (y) the Holding Company Merger and the Conversion, taken together, to in each case constitute a reorganization
under Section 368(a) and related provisions of the Code; or
(e) agree, resolve or commit to take
any of the actions prohibited by this
Section 5.2
.
Nothing contained in this Agreement is intended
to give the Company, directly or indirectly, the right to control or direct Parent’s or the Parent Subsidiaries’ operations
prior to the Effective Time. Prior to the Effective Time, Parent shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its and the Parent Subsidiaries’ respective operations.
Section 5.3.
Access to Information
.
(a)
From
the date of this Agreement through the earlier of the Effective Time and the termination of this Agreement, each Party shall afford
to the other Party and its Affiliates (and its and their Representatives), upon reasonable notice by such other Party, reasonable
access during normal business hours to all its and its Subsidiaries’ properties, books, contracts, commitments and records,
and to its and its Subsidiaries’ officers, employees, accountants, counsel and other Representatives and each Party shall
promptly make available to the other Party all information concerning its business, properties and personnel as the other Party
may reasonably request;
provided
that a Party shall not be required to provide such access or furnish such information if
such Party in good faith reasonably believes that doing so would reasonably be expected to (i) breach or violate any applicable
Law relating to the exchange of information, (ii) result in the loss of attorney-client privilege or attorney work product privilege
or (iii) violate any confidentiality obligation (existing on the date hereof) with respect to such information;
provided
,
further
, that the Parties agree to collaborate in good faith to make alternative arrangements to allow for such access or
disclosure in a manner that does not result in the events set out in clauses (i), (ii) or (iii) above. No investigation by any
of the Parties or their respective Representatives shall constitute a waiver of or otherwise affect the representations, warranties,
covenants or agreements of any other Party set forth herein or otherwise affect any condition to the obligations of the Parties
under this Agreement.
(b)
All
information furnished by a Party or any of its Representatives to another Party or its Representatives pursuant to this Agreement
(including
Section 5.3(a)
) shall be subject to the confidentiality provisions of the Investment Agreement (with respect
to information provided to Parent, its Affiliates and their respective Representatives) or the nondisclosure agreement, dated January
25, 2016, as amended, by and among Sirius XM Radio, Liberty Media Corporation and the Company (the “
Confidentiality Agreement
”)
(with respect to information provided to the Company, Company Subsidiaries and their respective Representatives), as if the Confidentiality
Agreement has a term lasting until the second anniversary of the date of this Agreement.
Section 5.07
(other than clause
(a) therein and the last sentence therein) of the Investment Agreement shall be of no force and effect for so long as this Agreement
remains in effect (or, in the event the Company has terminated this Agreement to enter into an agreement with respect to a Superior
Proposal, for so long as such agreement for the acquisition of the Company is otherwise in effect).
Section 5.4.
Preparation
of the Form S-4 and the Proxy Statement
.
(a)
As
promptly as practicable after the date of this Agreement, (i) the Company shall prepare and file with the SEC the Proxy Statement
to be sent to the stockholders of the Company in connection with the Company Stockholders Meeting and (ii) Parent shall prepare
and file with the SEC the Form S-4, in which the Proxy Statement will be included, in connection with the registration under the
Securities Act of the Parent Common Stock to be issued in the Merger. The respective Parties will cause the Proxy Statement and
the Form S-4 to comply as to form in all material respects with the applicable provisions of the Securities Act and the Exchange
Act. Prior to filing the Form S-4 and Proxy Statement (or any amendment or supplement thereto) or responding to any comments of
the SEC (or the staff of the SEC) with respect thereto following such filing, each Party shall provide the other Parties a reasonable
opportunity to review and to comment on such document or response and shall take into account in good faith any such comments as
reasonably proposed. Parent shall use its reasonable best
efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such filing (including by responding, after consultation with the Company,
to comments of the SEC), to keep the Form S-4 effective as long as is necessary to consummate the Merger and the other transactions
contemplated hereby and Parent shall take all actions reasonably required to be taken under any applicable state securities Laws
in connection with the Parent Stock Issuance.
(b)
The
Company shall, as soon as practicable following effectiveness of the Form S-4, mail the Proxy Statement to the holders of record
of Company Common Stock and duly call, give notice of, convene and hold the Company Stockholders Meeting;
provided
,
however
,
that no breach of this
Section 5.4(b)
shall be deemed to have occurred if the Company adjourns or postpones the Company
Stockholders Meeting for a reasonable period of time, each such period of time not to exceed ten (10) Business Days;
provided
that (x) at the time of such adjournment or postponement the Company Board shall be prohibited by the terms of this Agreement from
making a Change of Recommendation, and the Company Stockholders Meeting is then scheduled to occur within three (3) Business Days
of the time of such adjournment or postponement or (y) at the time the Company Board announces a Change of Recommendation, the
Company Stockholders Meeting is then scheduled to occur no later than ten (10) Business Days from the date of such Change of Recommendation;
provided further that the Company may not adjourn or postpone the Company Stockholders Meeting pursuant to this
Section 5.4(b)
more than two (2) times or for more than twenty (20) Business Days in the aggregate. Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to this
Section 5.4(b)
shall not be affected by the commencement, public
proposal, public disclosure or communication to the Company or any other Person of any Company Acquisition Proposal or the occurrence
of any Change of Recommendation (whether or not made in accordance with this Agreement).
(c)
Each
of Parent and the Company shall furnish all information as may be reasonably requested by the other in connection with any such
action and the preparation, filing and distribution of the Form S-4 and the Proxy Statement. Each Party shall notify the other
promptly of (i) the receipt of any comments from the SEC or the staff of the SEC on the Form S-4 or the Proxy Statement, (ii) any
request by the SEC or the staff of the SEC for amendments or supplements to the Proxy Statement or the Form S-4 or for additional
information and (iii) the issuance of any stop order or suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction. Each Party shall supply the other with copies of all written
correspondence between it or any of its Representatives, on the one hand, and the SEC or its staff, on the other hand, with respect
to the Proxy Statement, the Form S-4 or the Merger. Each Party shall use its reasonable best efforts to respond as promptly as
practicable to any comments from the SEC or its staff with respect to the Proxy Statement or the Form S-4 (with each Party to provide
the other Parties a reasonable opportunity to review and to comment on such response and shall take into account in good faith
any such comments as reasonably proposed) and to have any such stop order or suspension lifted, reversed or otherwise terminated.
(d)
No
filing of, or amendment or supplement to, the Form S-4 will be made by Parent, and no filing of, or amendment or supplement to,
the Proxy Statement will be made by the Company, in each case without providing the other Party with a reasonable
opportunity to review and comment thereon. If
at any time prior to the Effective Time any information relating to Parent or the Company or any of their respective Affiliates,
directors or officers, should be discovered by Parent or the Company which should be set forth in an amendment or supplement to
either the Form S-4 or the Proxy Statement, so that either such document would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they are
made, not misleading, the Party that discovers such information shall promptly notify the other Parties and an appropriate amendment
or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated
to the stockholders of Parent and the Company.
(e)
Unless
the Company Board has made a Change of Recommendation in accordance with and subject to
Section 5.5
, the Company shall include
the Company Recommendation in the Proxy Statement and the Company shall use its reasonable best efforts to solicit from its stockholders
proxies in favor of approval of the Merger and secure any other approval of stockholders of the Company that is required by applicable
Law in connection with the Merger. The Company shall keep Parent reasonably updated with respect to proxy solicitation results.
The obligation of the Company to mail the Proxy Statement to the holders of Company Common Stock and to call, give notice of, convene
and hold the Company Stockholders Meeting, shall not be affected by a Change of Recommendation (whether or not made in accordance
with this Agreement).
Section 5.5.
Go-Shop
and No Solicitation by the Company
.
(a)
Notwithstanding
anything to the contrary contained in this Agreement, during the period beginning on the date of this Agreement and continuing
until 12:01 a.m. (New York City time) on October 24, 2018 (the “
No-Shop Period Start Date
”), the Company, the
Company Subsidiaries and their respective Representatives shall have the right to (i) initiate, solicit, facilitate and encourage
any inquiry or the making of any proposal or offer that constitutes a Company Acquisition Proposal, (ii) furnish to any Person
any information which is reasonably requested by such Person in connection with their potentially making a Company Acquisition
Proposal and (iii) participate or engage in discussions or negotiations with such Person regarding a Company Acquisition Proposal;
provided
that (A) prior to participating or engaging in such discussions or negotiations or furnishing such information,
the Company shall have entered into an Acceptable Confidentiality Agreement with such Person and (B) the Company will provide to
Parent any information relating to the Company or any of the Company Subsidiaries that was not previously provided or made available
to Parent prior to or concurrently with the time it is furnished to such Person. Prior to the No-Shop Period Start Date, the Company
will provide a written report to Parent every ten (10) Business Days setting forth (1) the total number of parties contacted to
date pursuant to this
Section 5.5(a)
, (2) the number of parties that have affirmatively declined to receive information
or enter into discussions regarding a Company Acquisition Proposal, (3) the number of parties that have affirmatively expressed
interest in receiving information or entering into discussions regarding a Company Acquisition Proposal and (4) the number of parties
that have executed an Acceptable Confidentiality Agreement. On the No-Shop Period Start Date, the Company shall notify Parent in writing
of the identity of each Excluded Party from whom the Company received a written Company Acquisition Proposal after the execution
of this Agreement and prior to the No-Shop Period Start
Date, which notice shall include copies of drafts of proposed agreements,
term sheets or letters of intent related thereto provided to the Company or any of its Representatives and a summary of all material
terms of such Company Acquisition Proposals that were not made in writing.
(b)
On
the No-Shop Period Start Date, the Company shall, and shall cause the Company Subsidiaries and its and their Representatives to,
immediately cease and cause to be terminated any discussions or negotiations conducted with any Persons other than Parent (and
its Representatives) and any Excluded Party (and its Representatives) with respect to any Company Acquisition Proposal, including
immediately revoking or withdrawing access of any Person other than Parent (and its Representatives) and any Excluded Party (and
its Representatives) to any data room (virtual or actual) containing any non-public information with respect to the Company or
the Company Subsidiaries and request the prompt return or destruction of all confidential information previously furnished to any
such Person and its Representatives other than Parent (and its Representatives) and any Excluded Party (and its Representatives).
The Company shall not terminate, waive, amend or modify any provision of any standstill or confidentiality agreement to which the
Company or any Company Subsidiary is a party with respect to a Company Acquisition Proposal, except to permit the applicable party
to make a confidential Company Acquisition Proposal to the Company or the Company Board.
(c)
Except
as expressly permitted by
Section 5.5
, the Company shall not, and the Company shall cause the Company Subsidiaries to not,
and shall use reasonable best efforts to cause its and their respective Representatives not to, directly or indirectly (i) initiate,
solicit, knowingly facilitate or encourage or take any other action designed to result in or facilitate (including by way of providing
information) any inquiry, proposal or offer (or the making or announcement of any inquiry, proposal or offer) with respect to any
Company Acquisition Proposal, (ii) participate or engage in any discussions or negotiations regarding a Company Acquisition Proposal,
furnish to any Person any information or data with respect to a Company Acquisition Proposal, or otherwise cooperate with or knowingly
take any other action to facilitate any inquiry, proposal or offer may reasonably be expected to lead to a Company Acquisition
Proposal or (iii) enter into any letter of intent, agreement in principle or Contract relating to or providing for a Company Acquisition
Proposal (other than an Acceptable Confidentiality Agreement) or enter into any letter of intent, agreement in principle or Contract
requiring the Company to abandon, terminate or fail to consummate the transactions contemplated hereby or breach its obligations
hereunder (any such letter of intent or other document or Contract, an “
Alternative Acquisition Agreement
”).
(d)
Notwithstanding
anything to the contrary in this
Section 5.5
, beginning on the No-Shop Period Start Date and prior to obtaining the Company
Stockholder Approval, if the Company or any of its Representatives receives an unsolicited
bona fide
written Company Acquisition
Proposal that did not result from a breach of this
Section 5.5
and the Company Board concludes in good faith (after consultation
with the Company’s outside legal and financial advisors) that such Company Acquisition Proposal constitutes a Company Superior
Proposal or is reasonably likely to result in a Company Superior Proposal, the Company and its Representatives may (i) participate
or engage in discussions or negotiations with such Person or its Representatives regarding such Company Acquisition Proposal and
(ii) furnish information to the Person making such Company Acquisition Proposal which is reasonably requested by such Person in
connection with such Company Acquisition Proposal;
provided
that (A) prior to
participating or engaging in such discussions
or negotiations or furnishing such information, the Company shall have entered into an Acceptable Confidentiality Agreement with
such Person and (B) the Company will provide to Parent any information relating to the Company or any of the Company Subsidiaries
that was not previously provided or made available to Parent prior to or concurrently with the time it is furnished to such Person
making such Company Acquisition Proposal. For the avoidance of doubt, notwithstanding the commencement of the No-Shop Period Start
Date, prior to obtaining the Company Stockholder Approval, the Company is permitted to engage in the activities described in this
Section 5.5(d)
with respect to any Excluded Party, subject to the proviso in the previous sentence, unless such Excluded
Party ceases to be an Excluded Party in accordance with the definition thereof.
(e)
From
and after the No-Shop Period Start Date, the Company will notify Parent orally and in writing promptly (and in any event within
one Business Day) (i) after receipt of any Company Acquisition Proposal or any request for non-public information or to engage
in discussions or negotiations that could reasonably be expected to lead to a Company Acquisition Proposal), which notice shall
include the material terms and conditions of such Company Acquisition Proposal, the identity of the Person making any such Company
Acquisition Proposal and copies of drafts of proposed agreements, commitment letters, term sheets or letters of intent related
thereto (including any cover letter with respect thereto) that are exchanged between such Person and the Company (such materials,
the “
Proposal Documents
”) and (ii) of any change to the financial or other material terms and conditions of
any Company Acquisition Proposal (including any Company Acquisition Proposal from an Excluded Party). The Company shall keep Parent
reasonably informed on a reasonably current basis of material changes in the status of any such Company Acquisition Proposal (including
from an Excluded Party), including by providing Parent with copies of all Proposal Documents promptly (and in any event within
one Business Day) upon receipt by the Company of such written documents or upon delivery by the Company, the Company Board or their
counsel of such written documents to such Person making such Company Acquisition Proposal. Without limiting the foregoing, from
and after the No-Shop Period Start Date, the Company will notify Parent orally and in writing promptly (and in any event within
one Business Day) after receipt of any request for non-public information relating to the Company or any Company Subsidiary or
for access to any properties, books or records by any Person (including from an Excluded Party) in connection with a Company Acquisition
Proposal and shall in no event begin providing such information or access prior to providing such notice.
(f)
Except
as provided in
Section 5.5(g)
, neither the Company nor the Company Board (or any committee thereof) shall, directly or indirectly,
(i) fail to make or withdraw (or modify or qualify in any manner adverse to Parent or publicly propose to withdraw, modify or qualify
in any manner adverse to Parent) the Company Recommendation or (ii) adopt, approve, or publicly recommend, endorse or otherwise
declare advisable the adoption of any Company Acquisition Proposal (each such action being referred to herein as an “
Change
of Recommendation
”).
(g)
At
any time prior to obtaining the Company Stockholder Approval (whether before or after the No-Shop Period Start Date), and only
following compliance with the other provisions in this
Section 5.5
, the Company Board may terminate this Agreement in
accordance with
Section 7.1(f)
(and effect
a Change of Recommendation with respect thereto), if:
(i)
the
Company received a bona fide written Company Acquisition Proposal (including a Company Acquisition Proposal from an Excluded Party)
after the date of this Agreement that did not result from a breach of this
Section 5.5
that the Company Board has determined
in good faith (after consultation with the Company’s outside legal and financial advisors) constitutes a Company Superior
Proposal;
(ii)
the
Company shall have provided Parent with written notice (“
Superior Proposal Notice
”) advising Parent it intends
to terminate this Agreement pursuant to
Section 7.1(f)
, which notice shall include the material terms and conditions of
such Company Acquisition Proposal, the identity of the Person making any such Company Acquisition Proposal and copies of all written
agreements, or, if not final, the most recent draft thereof, reflecting such Company Acquisition Proposal (including drafts (or
final versions) of any agreements, commitment letters, term sheets or letters of intent related thereto (including any cover letter
with respect thereto));
(iii)
for
at least a three (3) Business Day period commencing on the Business Day following the date Parent receives the Superior Proposal
Notice (the “
Company Negotiation Period
”), the Company has negotiated, and has caused its financial and legal
advisors (and other Representatives) to negotiate, with Parent in good faith (to the extent Parent desires to negotiate) changes
to the terms of this Agreement such that the Company Acquisition Proposal would no longer constitute a Company Superior Proposal
(it being understood that any revisions to the financial terms (including to the amount or form of consideration) or other material
terms of the Company Acquisition Proposal shall require the Company to comply again with the procedures set forth in this
Section
5.5(g)
, including providing a new Superior Proposal Notice and a new Company Negotiation Period, which period shall be shortened
to two (2) Business Days, with respect thereto); and
(iv)
following
11:59 p.m., New York City time, on the last Business Day of the applicable Company Negotiation Period(s) referred to in clause
(iii) above, the Company Board determines in good faith (after consultation with the Company’s outside legal and financial
advisors) that such Company Acquisition Proposal still constitutes a Company Superior Proposal after giving effect to all of the
changes to this Agreement which have been proposed by Parent.
(h)
At
any time prior to obtaining the Company Stockholder Approval (whether before or after the No-Shop Period Start Date), the Company
Board may effect a Change of Recommendation if:
(i)
there
shall occur or arise after the date of this Agreement a material development or material change in circumstances (or if such material
development or material change in circumstances occurred or arose on or prior to the date of this Agreement, the material consequences
of which are not known to the Company
Board as of the date of this Agreement
and only become known to the Company Board prior to obtaining the Company Stockholder Approval), in each case, that was not reasonably
foreseeable and that relates to the Company or the Company Subsidiaries but does not relate to any Company Acquisition Proposal
(as to which
Section 5.5(g)
shall apply) (any such material development or material change in circumstances unrelated to
an Company Acquisition Proposal being referred to as an “
Intervening Event
”); provided, however, that in no
event shall (A) any action taken by the Company in order to comply with the covenants set forth in this Agreement, and the consequences
of any such action, constitute an Intervening Event and (B) any changes in the market price or trading volume of shares of Company
Common Stock or Parent Common Stock constitute an Intervening Event;
(ii)
the
Company Board determines in good faith (after consultation with the Company’s outside legal and financial advisors) that,
in light of such Intervening Event, the failure to withdraw or modify the Company Recommendation in a manner adverse to Parent
would be inconsistent with the Company Board’s fiduciary obligations to the Company’s stockholders under applicable
Law;
(iii)
the
Company shall have provided Parent with written notice (an “
Intervening Event Notice
”) advising Parent that
the Company Board intends to make a Change of Recommendation, which notice shall describe in reasonable detail the Intervening
Event (it being agreed that the delivery of such notice by the Company shall not constitute a Change of Recommendation);
(iv)
for
at least a three (3) Business Day period commencing on the Business Day following the date Parent receives the Intervening Event
Notice, the Company has negotiated, and has caused its financial and legal advisors (and other Representatives) to negotiate, with
Parent in good faith (to the extent Parent desires to negotiate) to make such adjustments in the terms and conditions of this Agreement
so that the need for making such Change of Recommendation would be obviated; and
(v)
at
the end of the period referred to in clause (iv) above, after taking into account any changes to the terms of this Agreement offered
by Parent in writing to the Company, the Company Board has determined in good faith (after consultation with the Company’s
outside legal and financial advisors) that the failure to withdraw or modify the Company Recommendation would be inconsistent with
the Company Board’s fiduciary obligations to the Company’s stockholders under applicable Law in light of such Intervening
Event.
(i)
Nothing
contained in this
Section 5.5
will prohibit the Company or the Company Board from (i) complying with its disclosure obligations
under applicable Law with respect to a Company Acquisition Proposal, including taking and disclosing to the stockholders of the
Company a position contemplated by Rule 14e-2(a) or Rule 14d-9 under the Exchange Act or making a statement contemplated by Item
1012(a) of Regulation M-A (or any similar communication to stockholders) or (ii) making a “stop, look and listen” or
similar communication to stockholders of the type contemplated by Rule 14d-9(f) under the Exchange Act;
provided
that (x)
this paragraph shall in no way eliminate or modify the effect that any such
action taken or disclosure made would otherwise
have under this Agreement, (y) any such action taken or disclosure made that relates to a Company Acquisition Proposal shall be
deemed to be a Change in Recommendation unless the Company Board reaffirms the Company Recommendation in connection with such action
or disclosure and (z) in no event shall the Company or the Company Board make a Change of Recommendation except in compliance with
Section 5.5(f)
.
Section 5.6.
Reasonable
Best Efforts
.
(a)
Subject
to the terms and conditions of this Agreement, each of Parent, Merger Sub and the Company shall use their reasonable best efforts
to take, or cause to be taken, all actions necessary, proper or advisable to (i) consummate the transactions contemplated hereby
and to cause the conditions set forth in
Article VI
to be satisfied as promptly as practicable (and in any event prior to
the Outside Date); (ii) prepare as promptly as practicable all necessary applications, notices, filings, requests and other documents
to be made or filed by such Party (and cooperate with the other Parties with respect to any applications, notices, filings, requests
and other documents to be made or filed by the other Parties) in connection with the transactions contemplated by this Agreement;
(iii) obtain as promptly as practicable all consents, approvals, clearances, permits, authorizations, registrations, filings or
notices from any Governmental Entity (or other Person) which is required to be obtained in connection with the transactions contemplated
by this Agreement; (iv) comply promptly with all requirements under applicable Law which may be imposed on such Party with respect
to the transactions contemplated by this Agreement; (v) defend all lawsuits or other Proceedings to which it (or with respect to
the Company, the Company Subsidiaries is) a party challenging or affecting this Agreement or the consummation of the transactions
contemplated by this Agreement, in each case until the issuance of a final, non-appealable order with respect to each such lawsuit
or other Proceeding; (vi) have lifted or rescinded any injunction or restraining Order which may adversely affect the ability of
the Parties to consummate the transactions contemplated by this Agreement, in each case until the issuance of a final, non-appealable
Order with respect thereto and (vii) resolve any objection or assertion by any Governmental Entity challenging this Agreement or
the transactions contemplated hereby.
(b)
In
furtherance of the foregoing, the Company, Parent and Merger Sub agree to, as promptly as practicable after the date hereof: (i)
make (or cause to be made) an appropriate filing of a Notification and Report Form pursuant to the HSR Act, which filing shall
in any event be made within twenty (20) Business Days following the date hereof, and (ii) make such filings and submissions contemplated
by applicable foreign Competition Laws as set forth on
Section 5.6(b)
of the Company Disclosure Letter.
(c)
Subject
to the other provisions of this Agreement, including those set forth elsewhere in this
Section 5.6
, each of the Company,
on the one hand, and Parent and Merger Sub, on the other hand, shall (i) to the extent permitted by applicable Law, promptly inform
the other Party of any substantive communication (oral and written) received by such party from, or given by such Party to, any
Governmental Entity with respect to any applications, notices, filings or requests made (or any consents, approvals or clearances
sought to be obtained) in connection with the transaction contemplated by this Agreement (including keeping the other Parties apprised,
on a current basis of the status thereof); (ii) to the extent permitted by
applicable Law, promptly inform the other Party
of any substantive communication (oral and written) received by such Party from, or given by such Party to, any Person that is
not a Governmental Entity in connection with any Proceeding (or threatened Proceeding) by such Person regarding or arising out
of this Agreement or the transactions contemplated by this Agreement; (iii) consult with the other Parties (subject to applicable
Law relating to the exchange of information) in connection with any analyses, appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any Party relating to any applications, notices, filings or requests
made (or any consents, approvals or clearances sought to be obtained) in connection with the transaction contemplated by this Agreement;
(iv) use reasonable best efforts to furnish to the other Party and, upon request, to any Governmental Entities such information
and assistance as may be reasonably requested in connection with the foregoing, including by responding promptly to and using reasonable
best efforts to comply fully with any request for additional information or documents under any applicable Law; and (v) not independently
participate in any meeting (including telephonic meetings) with any Governmental Entity in connection with the foregoing without
giving the other Party sufficient prior notice of the meeting (including telephonic meetings) and, to the extent permitted by such
Governmental Entity, the opportunity to attend and/or participate in such meeting (including telephonic meetings). Notwithstanding
anything in this
Section 5.6
to the contrary, materials provided by or on behalf of Parent to the Company or its counsel
or the Company to Parent or its counsel may be redacted to the extent necessary (a) to remove references concerning Parent’s
or the Company’s valuation analyses with respect to the Company and the Company Subsidiaries, (b) as necessary to comply
with Contracts in effect on the date hereof, (c) to address reasonable concerns regarding attorney-client privilege or (d) to remove
personal, proprietary and other confidential business information. Neither Parent nor the Company shall acquire, or agree to acquire,
any business, entity or undertaking, where that acquisition, if completed, will or is reasonably likely to have a materially adverse
effect on the prospects of obtaining any regulatory approval to be sought in relation to the Agreement.
(d)
Notwithstanding
anything to the contrary in this Agreement (i) in no case shall the Company, Parent or Merger Sub be obligated to (and the Company
shall not, without the written consent of Parent, and in no event shall Parent or Merger Sub be deemed to have breached any representation,
warranty, covenant or agreement for refusing to) become subject to, consent to or agree to, or otherwise take any action with respect
to, any requirement, condition, understanding, agreement or order to sell, to hold separate or otherwise dispose of, or to conduct,
restrict, operate, invest or otherwise change its respective assets or business (including those of its respective Affiliates (but
for the avoidance of doubt excluding any Specified Persons, as to whom no such requirements, conditions, understandings, agreements
or order shall apply in any event)) in any manner that, either individually or in the aggregate, (A) materially adversely affects
the financial condition, business, or the operations of (x) the Company and the Company Subsidiaries, on a consolidated basis,
or (y) Parent and its Affiliates or (B) prohibits or materially limits the ownership, control or operation by (x) the Company and
the Company Subsidiaries or (y) Parent and its Affiliates of any material portion of its or their respective businesses or assets,
or compels the Company or Parent or any of its Affiliates to dispose of or hold separate any of its material businesses or assets
or any portion thereof.
(e)
For
the avoidance of doubt, Parent and the Parent Subsidiaries and the Company and the Company Subsidiaries shall not be required (and
without the prior consent
of Parent, the Company and the Company Subsidiaries
shall not) to take any action with respect to any order or any applicable Law or in order to obtain any approval, consent or clearance
which is not conditioned upon the consummation of the Merger.
(f)
Without
limiting the generality of anything contained in this
Section 5.6
but subject in all respects to
Section 5.6(d)
,
each Party shall use their respective reasonable best efforts to obtain any consents or approvals from any Persons (other than
Governmental Entities) that are necessary or advisable in connection with the transactions contemplated by this Agreement. In the
event that the Parties hereto shall fail to obtain any such third party consent, the Company shall use its reasonable best efforts,
and shall take such actions as are reasonably requested by Parent, to minimize any adverse effect upon the Company and the Company
Subsidiaries resulting, or which would reasonably be expected to result, after the Effective Time, from the failure to obtain such
consent. Notwithstanding anything to the contrary in this Agreement, in connection with obtaining any such approval or consent
with respect to any transaction contemplated by this Agreement, (i) none of the Company or any Company Subsidiary shall be required
to, or, without the prior written consent of Parent, shall, pay or commit to pay to such Person whose approval or consent is being
solicited any cash or other consideration, make any commitment or incur any liability or other obligation due to such person and
(ii) none of Parent, Merger Sub or any of their Affiliates shall be required to pay or commit to pay to such person whose approval
or consent is being solicited any cash or other consideration, make any commitment or incur any liability or other obligation.
Section 5.7.
Notification
of Certain Matters
. Each Party shall give reasonably prompt written notice to the other Party, if to such Party’s Knowledge,
(a) any representation or warranty made by it contained in this Agreement becomes untrue or inaccurate such that it would be reasonable
to expect that the applicable closing conditions would be incapable of being satisfied by the Outside Date or (b) it fails to comply
with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this
Agreement;
provided
that (i) nothing in this
Section 5.7
shall be deemed to affect, modify or condition the obligations
of each party to effect the Closing and (ii) each Party’s obligations, actions or inactions pursuant to this
Section 5.7
shall be deemed excluded for purposes of determining whether the conditions set forth in either
Section 6.2
or
Section
6.3
have been satisfied.
Section 5.8.
Publicity
.
Except with respect to any Change of Recommendation made by the Company in accordance with
Section 5.5
, so long as this
Agreement is in effect, each of Parent and the Company shall consult with each other before issuing any press release or public
statement with respect to this Agreement, the Merger or the other transactions contemplated hereby and shall not issue any such
press release or make any such public statement without the prior consent (not to be unreasonably withheld, delayed or conditioned)
of the other Party;
provided
that a Party may, without obtaining the prior consent of the other party (but after prior consultation,
to the extent practicable in the circumstances), issue such press release or make such public statement as may upon the advice
of outside counsel be required by applicable Law or the rules and regulations of Nasdaq or NYSE, as applicable. Without limiting
the foregoing, Parent and the Company shall use reasonable efforts to cooperate to develop all public announcement materials and
make appropriate management available at presentations related to the transactions contemplated by this Agreement as reasonably
requested by the other
Party, and the Company shall consult with Parent
regarding communications with customers, stockholders and employees related to the transactions contemplated hereby.
Section 5.9.
Indemnification
.
(a)
From
and after the Effective Time, Parent will cause the Surviving Company to indemnify, defend and hold harmless, to the fullest extent
permitted by the certificate of incorporation and bylaws of the Company as in effect on the date of this Agreement and as permitted
under applicable Law, all past and present directors and officers of the Company and any Company Subsidiary (each, together with
such person’s heirs, executors or administrators, a “
Company Indemnified Party
”) against any liabilities,
damages, costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with any Proceeding
(whether asserted before or after the Effective Time) arising out of acts or omissions occurring at or prior to the Effective Time
in connection with such Company Indemnified Party having served as a director or officer of the Company or a Company Subsidiary
or having served at the request of the Company or a Company Subsidiary as a director, officer or employee of any other corporation,
limited liability company, partnership, joint venture, employee benefit plan, trust or other business (and including any acts or
omissions with respect to this Agreement or the consummation of the transactions contemplated hereby), and, to the same extent
that such Company Indemnified Parties have the right to advancement of expenses from the Company or a Company Subsidiary as of
the date of this Agreement, to provide advancement of expenses to any such Company Indemnified Party, subject to receipt of an
undertaking from such Company Indemnified Party to repay such advanced amounts if it is determined by a court of competent jurisdiction
in a final judgment that such Company Indemnified Person was not entitled to indemnification. Such rights set forth in this
Section
5.9(a)
shall continue in full force and effect until the expiration of the applicable statute of limitations with respect to
any such Proceedings against any Company Indemnified Party, except as otherwise required by applicable Law, and Parent shall cause
the Surviving Company (or any successor) to include and maintain in effect, for a period of six (6) years after the Effective Time,
the provisions regarding elimination of liability of directors that are in the Company’s certificate of incorporation as
in effect as of the date of this Agreement.
(b)
For
a period of six (6) years after the Effective Time, Parent shall maintain or cause the Surviving Company to maintain for the benefit
of each Company Indemnified Party a directors’ and officers’ liability insurance policy that provides coverage for
acts or omissions occurring prior to the Effective Time (the “
D&O Insurance
”) with terms and conditions
which are, in the aggregate, not less advantageous to such Company Indemnified Party than the terms and conditions of the existing
directors’ and officers’ liability insurance policy of the Company;
provided
that, at Parent’s option,
in lieu of the foregoing insurance coverage, Parent or, with Parent’s consent, the Company may at or prior to the Effective
Time substitute therefor a single premium tail coverage with respect to the D&O Insurance that provides coverage for period
of six (6) years after the Effective Time, with terms and conditions which are, in the aggregate, not less advantageous to such
Company Indemnified Party than (and otherwise comparable to) the terms and conditions of the existing directors’ and officers’
liability insurance policy of the Company. Notwithstanding the foregoing, in no event will Parent be required to expend (and in
no event shall the Company expend), in the aggregate, an amount in excess of 300% of the most recent annual premium paid by the
Company for the existing
directors’ and officers’ liability
insurance policy of the Company (the “
Insurance Amount
”), and if Parent is unable to maintain or obtain the
insurance called for by this
Section 5.9(b)
for an amount equal to or less than the Insurance Amount, Parent shall obtain
as much comparable insurance as may be available for the Insurance Amount.
(c)
In
the event that the Surviving Company or any of its successors or assigns (i) consolidates with or merges into any other Person
and is not the continuing or surviving company or 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, in each such case to the extent so required, Parent shall cause
proper provision to be made so that such successor or assign of the Surviving Company assumes the obligations set forth in this
Section 5.9
.
(d)
The
provisions of this
Section 5.9
are intended to be for the benefit of, and will be enforceable by, the Company Indemnified
Parties following the Closing and are in addition to, and not in substitution for, any other rights to indemnification, advancement
or contribution that any such Person may have by Law, Contract or otherwise.
Section 5.10.
Employee
Matters
.
(a)
For
a period commencing on the Effective Time, and ending on December 31, 2019, the Surviving Company will provide individuals who
are employees of the Company or any Company Subsidiary immediately prior to the Effective Time and continue to be employees of
Parent or one of the Parent Subsidiaries (including the Surviving Company) immediately following the Effective Time, but only for
so long as such individuals are so employed (each, a “
Continuing Employee
”), (i)
a
base salary, regular hourly wage, or commission opportunities, as applicable, that are not less than the base salary, regular hourly
wage, or commission opportunities, as applicable, provided to such Continuing Employees by the Company and the Company Subsidiaries
on the date of this Agreement, (ii) target cash incentive compensation opportunities (excluding equity-based incentive compensation
opportunities) that are
not less than the target cash incentive compensation opportunities (excluding equity-based incentives)
provided to such Continuing Employees by the Company and the Company Subsidiaries on the date of this Agreement, and (iii) employee
benefits (other than equity-based awards) that are either (A) substantially comparable to the employee benefits (other than equity-based
awards, including under the ESPP) provided by the Company or any Company Subsidiary on the date of this Agreement or (B) substantially
comparable to the employee benefits (other than equity-based awards) provided to similarly-situated employees of Parent and the
Parent Subsidiaries.
(b)
As
of the Effective Time, Parent shall, and shall cause the Surviving Company and any applicable Company Subsidiary to, (i) give Continuing
Employees credit for purposes of eligibility, benefit accrual, vesting and entitlement to benefits where length of service is relevant
(but not for any purposes under any employee benefit plan that is a defined benefit pension plan) under any employee benefit and
compensation plans or arrangements maintained by Parent or an applicable Parent Subsidiary that such employees may be eligible
to participate in after the Effective Time (“
New Plans
”) for such Continuing Employees’ service with the
Company or any Company Subsidiaries to the same extent that such service
was credited for purposes of any comparable employee benefit plan of the Company or a Company
Subsidiary immediately prior to the
Effective Time and in no event shall service prior to the Effective Time be required to be taken into account if such service credit
would result in the duplication of benefits with respect to the same period. In addition, and without limiting the generality of
the foregoing, Parent shall provide that (i) each Company Employee shall be immediately eligible to participate, without any waiting
time, in any and all New Plans to the extent coverage under such New Plan replaces coverage under a comparable Company Benefit
Plan in which such Company Employee participated immediately before the replacement, and (ii) for purposes of each New Plan
providing medical, dental, pharmaceutical and/or vision benefits to any Company Employee, all pre-existing condition limitations,
exclusions, actively-at-work requirements or waiting periods of such New Plan be waived for such employee and his or her covered
dependents to the extent waived or not applicable under a comparable Company Benefit Plan in which such Company Employee Participated
immediately before the replacement, and any eligible expenses incurred by such employee and his or her covered dependents under
a Company Benefit Plan during the portion of the plan year prior to the Effective Time to taken into account under such New Plan
for purposes of satisfying all deductible, co-insurance, co-payment and maximum out-of-pocket requirements applicable to such employee
and his or her covered dependents for the remainder of the applicable plan year during which the Effective Time occurs as if such
amounts had been paid in accordance with such New Plan.
(c)
F
rom
and after the Effective Time, the Company or the Surviving
Company
, as applicable,
will, and Parent will cause the Company or the Surviving
Company
, as applicable, to,
honor, in accordance with their terms, (i) the 2018 Corporate Incentive Plan and the Executive Leadership Team 2018 Supplemental
Bonus Program and (ii) all employment, severance, income continuity and change of control programs, plans or agreements between
the Company or any Company Subsidiary and the Continuing Employees including bonuses, incentives, severance payments or deferred
compensation in existence on the date hereof, in each case, in accordance with their terms as in effect immediately prior to the
date of this Agreement or to the extent amended in accordance with the terms of this Agreement or in accordance with the terms
of such programs, plans or agreements as in effect prior to the Effective Time, including with respect to any payments, benefits
or rights arising as a result of the transactions contemplated by this Agreement (either alone or in combination with any other
event).
(d)
No
provision of this
Section 5.10
shall be construed as a limitation on the right of Parent, or to cause any Parent Subsidiary
to, amend or terminate any specific employee benefit plan that Parent or a Parent Subsidiary would otherwise have under the terms
of such employee benefit plan, nor shall any provision of this
Section 5.10
be construed to require the continuation of
the employment of any particular Continuing Employee. The provisions of this
Section 5.10
are solely for the benefit of
the Parties, and no Company Employee or any other Person shall be a third-party beneficiary of this
Section 5.10
, and nothing
herein shall be construed as an amendment to any employee benefit plan of Parent or any Parent Subsidiary or other compensation
or benefit plan or arrangement for any purpose.
Section 5.11.
Stock
Exchange Listing
. Parent shall use its reasonable best efforts to cause the shares of Parent Common Stock to be issued in connection
with the Merger to be listed on Nasdaq, subject to official notice of issuance, prior to the Closing Date.
Section 5.12.
Section
16 Matters
. Prior to the Effective Time, Parent and the Company shall take all such steps as may be required to cause any acquisitions
or dispositions of Company Common Stock (including derivative securities with respect to Company 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 with respect
to the Company or will become subject to such reporting requirements with respect to Parent, to be exempt under Rule 16b-3 promulgated
under the Exchange Act, to the extent permitted by applicable Law.
Section 5.13.
Stockholder
Litigation
. Prior to the Effective Time, in the event that any litigation or other Proceeding of any stockholder related to
this Agreement, the Merger or the other transactions contemplated by this Agreement is brought, or to the Knowledge of the Company,
threatened against any of the Company and/or the members of the Company Board prior to the Effective Time, the Company shall promptly
notify Parent of any such litigation or other Proceeding and shall keep Parent reasonably informed on a reasonably current basis
with respect to the status thereof. The Company shall consult with Parent on a regular basis with respect to, and shall give Parent
the opportunity to participate, at Parent’s expense, in the defense or settlement of, any such litigation or Claims, and
no such settlement or compromise shall be agreed to without Parent’s prior written consent (which consent shall not be unreasonably
withheld, delayed or conditioned).
Section 5.14.
Takeover
Laws
. If any Takeover Law becomes applicable to any of the transactions contemplated by this Agreement, the Company shall take
all action reasonably necessary to enable the transactions contemplated by this Agreement to be consummated as promptly as practicable
on the terms contemplated by this Agreement and otherwise minimize the effect of such Takeover Law on the transactions contemplated
by this Agreement.
Section 5.15.
Company
Cooperation on Certain Matters
. After the date hereof and prior to the earlier of the Effective Time and the termination of
this Agreement, Parent and the Company shall establish procedures, subject to applicable Law, reasonably acceptable to both Parties
by which the Parties will confer on a regular and continued basis regarding the general status of the ongoing operations of the
Company and the Company Subsidiaries and integration planning matters and communicate and consult with specific Persons to be
identified by each Party to the other with respect to the foregoing.
Section 5.16.
Certain
Tax Matters
.
(a)
During
the period from the date of this Agreement to the Closing, Parent and the Company shall (and Parent shall cause the Parent Subsidiaries
(including Merger Sub) to and the Company shall cause the Company Subsidiaries and the New Holding Company to) each (i) use reasonable
best efforts to cause (x) the Merger and the Sirius XM Radio Merger, taken together, and (y) the Holding Company Merger and the
Conversion, taken together, to in each case constitute a reorganization under Section 368(a) of the Code, (ii) neither take any
action nor fail to take any action if such action or such failure could reasonably be expected to prevent or impede (x) the Merger
and the Sirius XM Radio Merger, taken together, or (y) the
Holding Company Merger and the Conversion, taken
together, in either case from qualifying as a reorganization within the meaning of Section 368(a) of the Code, and (iii) use reasonable
best efforts to obtain the opinion described in Section 6.2(f) (in the case of Parent and Merger Sub) and the opinion described
in Section 6.3(e) (in the case of the Company). The obligations of Parent and the Company pursuant to this
Section 5.16(a)
shall include negotiating in good faith such amendments to this Agreement as may be reasonably required in order to restructure
the transactions set forth herein if such restructuring would be necessary to allow Parent to obtain the opinion described in
Section
6.2(f)
or the Company to obtain the opinion described in
Section 6.3(e)
, including any other additional or alternative
steps that could be taken to preserve the intended treatment of the transactions set forth herein as a reorganization within the
meaning of Section 368(a) of the Code and that do not adversely affect Parent, the Company or any of their respective Affiliates.
(b)
Parent
and the Company shall (and Parent shall cause the Parent Subsidiaries (including Merger Sub) to and the Company shall cause the
Company Subsidiaries and the New Holding Company to) execute and deliver officer’s certificates containing appropriate representations
at such time or times as may be reasonably requested by counsel, including in connection with any filing of the Form S-4 and the
delivery of the opinions described in Section 6.2(f) and
Section 6.3(e)
, for purposes of rendering opinions with respect
to the tax treatment of the Merger, the Sirius XM Radio Merger, the Holding Company Merger and the Conversion.
(c)
If
the opinion described in
Section 6.2(f)
or the opinion described in
Section 6.3(e)
cannot be obtained despite the
reasonable best efforts described in
Section 5.16(a)
, the closing conditions in
Section 6.2(f)
and
Section 6.3(e)
shall not apply and the parties hereto (i) shall execute a reverse subsidiary merger of Merger Sub with and into the Company, with
the Company surviving such merger (the “
Alternative Reverse Subsidiary Merger
”) (it being understood that under
such circumstances, the Alternative Reverse Subsidiary Merger shall be structured so that it shall be treated as a taxable stock
sale by the Company shareholders (other than Parent or any Parent Subsidiaries) for U.S. federal income tax purposes), and (ii)
shall not effect the Sirius XM Radio Merger, the Holding Company Merger or the Conversion and, to the extent necessary, shall negotiate
in good faith such amendments to this Agreement as may be reasonably required in order to execute such Alternative Reverse Subsidiary
Merger and to not effect the Sirius XM Radio Merger, the Holding Company Merger or the Conversion.
Section 5.17.
Company
Convertible Notes and Credit Agreement
.
(a)
Prior
to the Closing, the Company shall take all actions required in order to comply with, and discharge its obligations under, the terms
of the Convertible Notes Indenture, including (i) giving any notices and the filings that may be required in connection with any
conversions of Convertible Notes occurring as a result of the transactions contemplated by this Agreement; (ii) executing and delivering
to Citibank, N.A., as trustee under the Convertible Notes Indenture, a supplemental indenture effective as of the Effective Time
complying with the requirements of Article 10 and Article 11 and Section 14.07 of the Convertible Notes Indenture, together with
any related certificates, legal opinions and other documents required by the Convertible Notes Indenture to be delivered in connection
with such supplemental indenture; (iii) delivering any other supplemental indentures, legal opinions,
officers certificates or other documents or instruments
required in connection with the consummation of the Merger or otherwise reasonably requested by Parent and (iv) taking such actions
as necessary to ensure that, at the Effective Time, each outstanding Convertible Note shall no longer be convertible into shares
of Company Common Stock and shall instead be determined by reference to the Merger Consideration, in each case of clauses (i),
(ii), (iii) or (iv) in accordance with, and subject to, the provisions of the Convertible Notes Indenture (including the time periods
specified therein). The Company shall provide Parent a reasonable opportunity to review and to comment on such documents or instruments
and shall take into account in good faith any such comments as reasonably proposed by Parent or its counsel.
(b)
The
Company shall use its reasonable best efforts to deliver to Parent, on or prior to the third business day prior to the Closing
Date, a copy of a payoff letter (subject to delivery of funds as arranged by Parent), from the requisite creditors or agents under
the Credit Agreement setting forth the amount required to pay off in full on the Closing Date the Credit Agreement and the commitment
of the relevant creditors or agent to release any liens and terminate all guarantees in connection therewith following satisfaction
of the terms set forth in such payoff letter.
Section 5.18.
Parent
Vote
. Parent shall or shall cause to be voted, all of the shares of Company Common Stock and Company Preferred Stock owned
beneficially or of record by Parent or any of its Affiliates, at any meeting of the holders of capital stock of the Company or,
if applicable, pursuant to any consent of the stockholders of the Company in lieu of a meeting or otherwise, in favor of this Agreement
and the Merger.
ARTICLE
VI
CONDITIONS
TO THE MERGER
Section 6.1.
Conditions
to Obligations of Each Party
. The respective obligations of each Party to consummate the Closing are subject to the satisfaction
of the following conditions (which may be waived, in whole or in part, to the extent permitted by Law, by the applicable Party):
(a)
Stockholder
Approval
. The Company Stockholder Approval shall have been obtained.
(b)
Nasdaq
Listing
. The shares of Parent Common Stock to be issued in the Merger and any such other shares of Parent Common Stock to be
reserved for issuance in connection with the Merger shall have been approved for listing on Nasdaq, subject to official notice
of issuance.
(c)
No
Legal Restraints
. No Law or Order (whether temporary, preliminary or permanent) shall have been promulgated, enacted or issued
by any Governmental Entity of competent jurisdiction that prohibits or makes illegal the consummation of the Merger;
provided
that prior to a Party asserting this condition with respect to any Order such Party shall have used its reasonable best efforts
to oppose any such Order and to have such Order vacated or made inapplicable to such Merger, as the case may be.
(d)
Form
S-4
. The Form S-4 shall have become effective by the SEC under the Securities Act, shall not be the subject of any stop order
in effect and no Proceedings seeking a stop order shall be pending before the SEC.
(e)
Regulatory
Matters
. (i) The waiting period (and any extensions thereof) under the HSR Act applicable to the Merger shall have expired
or been terminated and (ii) the decisions, orders, consents or expiration of any waiting periods required to consummate the transaction
contemplated by this Agreement under the Competition Laws of the countries or jurisdictions listed on
Section 6.1(e)
of
the Company Disclosure Letter shall have occurred or been granted.
Section 6.2.
Conditions
to Obligations of Parent and Merger Sub to Effect the Merger
. The obligations of Parent and Merger Sub to consummate the Closing
are subject to the satisfaction (or waiver by Parent) of the following conditions:
(a)
Representations
and Warranties
. (i) The representations and warranties of the Company contained in
Section 3.3
,
Section 3.7(a)
,
Section 3.20
,
Section 3.21
and
Section 3.23
shall be true and correct in all respects as of the date of this
Agreement and at and as of the Closing Date as if made on and as of the Closing Date (or, in the case of representations and warranties
that address matters only as of a particular date, as of such date), (ii) the representations and warranties of the Company contained
in
Sections 3.2(a),
Section
3.2(b)
and
Section 3.22
shall be true and correct in all but
de minimis
respects as of the date of this Agreement and at and as of the Closing Date as if made on and as of the Closing Date (or, in the
case of representations and warranties that address matters only as of a particular date, as of such date) and (iii) the other
representations and warranties of the Company set forth in this Agreement shall be true and correct (in each case without giving
effect to any materiality or Company Material Adverse Effect qualifier therein), as of the date of this Agreement and at and as
of the Closing Date as though made on or as of such date (or, in the case of representations and warranties that address matters
only as of a particular date, as of such date), except in the case of this clause (iii) where the failure of such representations
and warranties to be so true and correct, individually or in the aggregate, has not had and would not reasonably be expected to
have a Company Material Adverse Effect.
(b)
Covenants
.
The Company shall have performed or complied in all material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it prior to the Closing.
(c)
No
Company Material Adverse Effect
. Since the date of this Agreement, there has not been any event, change, condition, occurrence
or effect, that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.
(d)
Officer’s
Certificate
. Parent shall have received a certificate signed on behalf of the Company by an executive officer certifying that
the conditions set forth in
Section 6.2(a)
,
(b)
and
(c)
have been satisfied.
(e)
FIRPTA
Certificate
. Parent shall have received from the Company a certificate, dated as of the Closing Date and duly executed by an
executive officer of the Company, in accordance with Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3).
(f)
Tax
Opinion
. Subject to
Section 5.16(c)
, Parent shall have received from Simpson Thacher & Bartlett LLP, counsel to
Parent, or another nationally recognized law firm, a written opinion dated the Closing Date to the effect that for U.S. federal
income tax purposes (x) the Merger and the Sirius XM Radio Merger, taken together, and (y) the Holding Company Merger and the Conversion,
taken together, will in each case constitute a “reorganization” within the meaning of Section 368(a) of the Code. In
rendering such opinion, counsel shall be entitled to rely upon customary assumptions and representations reasonably satisfactory
to such counsel, including representations set forth in certificates of officers of Parent, Merger Sub, the New Holding Company
and the Company.
Section 6.3.
Conditions
to Obligations of the Company to Effect the Merger
. The obligation of the Company to consummate the Merger is subject to the
satisfaction at or prior to the Closing of the following conditions (which may be waived in whole or in part by the Company):
(a)
Representations
and Warranties
. (i) The representations and warranties of Parent and Merger Sub contained in
Section 4.3
,
Section
4.7(a)
and
Section 4.13
shall be true and correct in all respects as of the date of this Agreement and at and as of
the Closing Date as if made on and as of the Closing Date (or, in the case of representations and warranties that address matters
only as of a particular date, as of such date), (ii) the representations and warranties of Parent and Merger Sub contained in
Section
4.2
,
Section 4.12
and
Section 4.14
shall be true and correct in all but
de minimis
respects as of the
date of this Agreement and at and as of the Closing Date as if made on and as of the Closing Date (or, in the case of representations
and warranties that address matters only as of a particular date, as of such date) and (iii) the other representations and warranties
of Parent and Merger Sub set forth in this Agreement shall be true and correct (in each case without giving effect to any materiality
or Parent Material Adverse Effect qualifier therein), as of the date of this Agreement and at and as of the Closing Date as though
made on or as of such date (or, in the case of representations and warranties that address matters only as of a particular date,
as of such date), except in the case of this clause (iii) where the failure of such representations and warranties to be true and
correct, individually or in the aggregate, would not reasonably be expected to have a Parent Material Adverse Effect.
(b)
Covenants
.
Parent and Merger Sub shall have performed or complied in all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by each of them prior to the Closing.
(c)
No
Parent Material Adverse Effect
. Since the date of this Agreement, there has not been any event, change, condition, occurrence
or effect, that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.
(d)
Officer’s Certificate
.
The Company shall have received a certificate signed on behalf of Parent by an executive officer certifying that the conditions
set forth in
Section 6.3(a)
,
(b)
and
(c)
have been satisfied.
(e)
Tax Opinion
. Subject to
Section
5.16(c)
, the Company shall have received from Sidley Austin LLP, counsel to the Company, or another nationally recognized law
firm, a written opinion dated the Closing Date to the effect that for U.S. federal income tax purposes (x) the Merger and the Sirius
XM Radio Merger, taken together, and (y) the Holding Company Merger and the Conversion, taken together, will in each case constitute
a “reorganization” within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel shall be entitled
to rely upon customary assumptions and representations reasonably satisfactory to such counsel, including representations set forth
in certificates of officers of Parent, Merger Sub, the New Holding Company and the Company.
ARTICLE
VII
TERMINATION
Section 7.1.
Termination
. This
Agreement may be terminated and the Merger may be abandoned at any time prior to the Closing, whether before or, except as provided
below, after the Company Stockholder Approval has been obtained (with any termination by Parent also being an effective termination
by Merger Sub):
(a) by the mutual written consent of
Parent and the Company;
(b) by either of Parent or the Company,
by written notice to the other:
(i) if any Governmental Entity
of competent jurisdiction shall have issued an Order permanently restraining, enjoining or otherwise prohibiting the Merger and
such Order shall have become final and non-appealable;
provided
that the right to terminate this Agreement pursuant to this
Section 7.1(b)(i)
shall not be available to any Party unless such Party shall have used its reasonable best efforts to oppose
any such Order and to have such Order vacated or made inapplicable to such Merger;
(ii) if the Merger shall not
have been consummated on or before the nine (9) month anniversary of the date of this Agreement (the “
Outside Date
”);
provided
,
however
, that the right to terminate this Agreement pursuant to this
Section 7.1(b)(ii)
shall not
be available to any Party whose failure to perform in all material respects its obligations under this Agreement was the primary
cause of the failure of the Merger to have been consummated by the Outside Date; or
(iii) if the Company Stockholder
Approval shall not have been obtained upon a vote taken thereon at the Company Stockholders Meeting duly convened therefor (including
at any adjournment or postponement thereof);
(c) by the Company, by written notice
to Parent, if Parent or Merger Sub shall have breached any of its representations, warranties, covenants or agreements set forth
in this Agreement, such that the conditions set forth in
Section 6.3(a)
or
Section 6.3(b)
would be
incapable of being satisfied by the Outside
Date and, if such breach is curable, following notice of such breach by the Company to Parent such breach is not cured within thirty
(30) days (or the Business Day before the Outside Date, if earlier);
provided
that the Company shall not have the right
to terminate this Agreement pursuant to this
Section 7.1(c)
if the Company is in material breach of any of its covenants
or agreements contained in this Agreement, which breach has not been cured;
(d) by Parent, by written notice to the
Company, if the Company shall have breached any of its representations, warranties, covenants or agreements set forth in this Agreement
such that the conditions set forth in
Section 6.2(a)
or
Section 6.2(b)
would be incapable of being satisfied by the
Outside Date and, if such breach is curable, following notice of such breach by the Company to Parent such breach is not cured
within thirty (30) days (or the Business Day before the Outside Date, if earlier);
provided
that Parent shall not have the
right to terminate this Agreement pursuant to this
Section 7.1(d)
if Parent or Merger Sub is in material breach of any of
its covenants or agreements contained in this Agreement, which breach has not been cured;
(e) by Parent, by written notice to the
Company, if (A) a Change of Recommendation shall have occurred, whether or not made in accordance with this Agreement; (B) the
Company shall have breached
Section 5.4
by failing to call and hold the Company Stockholders Meeting as provided therein;
(C) the Company shall have materially breached
Section 5.5
; (D) the Company has approved, adopted, publicly endorsed or
recommended or entered into an Alternative Acquisition Agreement; (E) the Company Board shall have failed to publicly recommend
against any tender offer or exchange offer that constitutes a Company Acquisition Proposal (including, for these purposes, by taking
no position with respect to the acceptance of such tender offer or exchange offer by the Company’s stockholders) within ten
(10) Business Days after the commencement (as such term is defined in Rule 14d-2 of the Exchange Act) of such tender offer or exchange
offer; or (F) after the date hereof, any Person shall have publicly announced a Company Acquisition Proposal or any plan or intention
(whether or not conditional) to make a Company Acquisition Proposal, or if any such Company Acquisition Proposal or intention shall
have otherwise become publicly disclosed, and the Company Board shall fail to publicly reaffirm the Company Recommendation within
ten (10) Business Days following Parent’s written request to do so; or
(f) by the Company, by written notice
to Parent, if (i) the Company Stockholder Approval has not been obtained, (ii) the Company Board authorizes the Company, subject
to complying with the terms of
Section 5.5
with respect to such Company Superior Proposal, to enter into a binding definitive
agreement to effect a transaction constituting a Company Superior Proposal, (iii) the Company prior to or concurrently with such
termination pays to Parent in immediately available funds the Company Termination Fee or the Go-Shop Termination Fee, as applicable,
and (iv) the Company enters into such binding definitive agreement substantially concurrently with such termination.
Section 7.2.
Effect of Termination
.
In the event of the termination of this Agreement in accordance with
Section 7.1
, this Agreement shall forthwith become
void and have no effect, and there shall not be any liability or obligation on the part of any Party hereto (or any of its Representatives
or Affiliates) to another Party, except that (i) the provisions of this
Section
7.2
,
Section 7.3
and
Article VIII
shall
survive such termination and (ii) no such termination shall relieve any Party from liability to any other Party for fraud or willful
and material breach of this Agreement. For purposes of this Agreement, “willful and material breach” shall mean a
material breach that is a consequence of an action by the breaching Party (or failure to act by the breaching Party) with the
Knowledge that the taking of such action (or failure to take such action) would, or would reasonably be expected to, cause a breach
of this Agreement.
Section 7.3.
Termination Fee
.
(a) The Company shall pay Parent or its
designee, by wire transfer of immediately available funds, $52.5 million (the “
Go-Shop Termination Fee
”) if
this Agreement is terminated by the Company pursuant to
Section 7.1(f)
in order to enter into a definitive agreement to
effect a Company Superior Proposal with an Excluded Party;
provided
that such definitive agreement is entered into by 11:59
p.m. (New York City time) on November 22, 2018.
(b) The Company will pay to Parent or
its designee, by wire transfer of immediately available funds, $105 million (the “
Company Termination Fee
”)
if this Agreement is terminated as follows:
(i) The Company terminates this
Agreement pursuant to
Section 7.1(f)
in a circumstance in which the Go-Shop Termination Fee is not payable;
(ii) (A) Parent terminates this
Agreement pursuant to clauses
(A)
,
(B)
,
(D)
,
(E)
or
(F)
of
Section 7.1(e)
in a circumstance
in which the Company is not entitled to terminate this Agreement pursuant to
Section 7.1(f)
and pay the Go-Shop Termination
Fee or (B) Parent or the Company terminate this Agreement pursuant to
Section 7.1(b)(iii)
at a time when this Agreement
was terminable pursuant to clauses
(A)
,
(B)
,
(D)
,
(E)
or
(F)
of
Section 7.1(e)
in a circumstance
in which the Company is not entitled to terminate this Agreement pursuant to
Section 7.1(f)
and pay the Go-Shop Termination
Fee; or
(iii) (A) this Agreement is
terminated by the Company or Parent pursuant to
Section 7.1(b)(ii)
or
Section 7.1(b)(iii)
, (B) after the date of this Agreement, any Person shall have made a Company Acquisition Proposal
(whether or not conditional) or shall have publicly proposed, announced or communicated any plan or intention (whether or not conditional)
to make a Company Acquisition Proposal and such Company Acquisition Proposal is not unconditionally withdrawn prior to the Outside
Date (in the case of a termination pursuant to
Section 7.1(b)(ii)
) or the time of the vote taken on the Company Stockholder
Approval at the Company Stockholders Meeting (in the case of a termination pursuant to
Section 7.1(b)(iii))
, and (C) within
twelve (12) months of the date of the termination of this Agreement, the Company enters into an agreement with respect to a Company
Acquisition Proposal or a transaction in respect of a Company Acquisition Proposal is consummated (in each case, whether or not
with a Person that made a Company Acquisition Proposal referenced in clause (B));
provided
that solely for the purposes
of
clause (C), all references in the definition of “Company Acquisition
Proposal” to “15%” shall be deemed to be references to “50%”.
(c) If the Company Termination Fee becomes
payable (except pursuant to
Section 7.3(b)(iii)
) or the Go-Shop Termination Fee becomes payable, such fee shall be paid
on the date the Agreement is terminated. If the Company Termination Fee becomes payable pursuant to
Section 7.3(a)(iii)
,
the Company Termination Fee shall be paid on the date the Company enters into an agreement with respect to a Company Acquisition
Proposal (or, if earlier, the date a transaction in respect of a Company Acquisition Proposal is consummated). The Company Termination
Fee and the Go-Shop Termination Fee shall, if payable, be paid by wire transfer of immediately available funds to an account designated
by Parent.
(d) The Company acknowledges that the
agreements contained in this
Section 7.3
are an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement. If the Company fails promptly to pay the Company Termination
Fee or the Go-Shop Termination Fee, and, in order to obtain such payment, Parent commences a suit that results in a judgment against
the Company for the payment thereof or a settlement in which the Company pays all or any portion of the Company Termination Fee
or the Go-Shop Termination Fee, the Company shall pay to Parent its reasonable costs and expenses (including reasonable attorneys’
fees and expenses) in connection with such suit, together with interest on the Company Termination Fee or the Go-Shop Termination
Fee, as applicable, from the date of the Company Termination Fee or the Go-Shop Termination Fee was payable pursuant to this Agreement
at a rate per annum equal to the prime rate as published in The Wall Street Journal on the date such payment was required to be
made.
ARTICLE
VIII
MISCELLANEOUS
Section 8.1.
Amendment and Modification
.
Subject to applicable Law, this Agreement may be amended, modified and supplemented in any and all respects, whether before or
after any vote of the stockholders of the Company contemplated hereby, by written agreement of the Parties hereto at any time prior
to the Closing Date with respect to any of the terms contained herein;
provided
, that following receipt of such stockholder
approval, no amendment, modification or supplement of this Agreement shall be made that by applicable Law or the rules or regulations
of the NYSE requires any further approval or authorization of such stockholders, without such approval or authorization by such
stockholders.
Section 8.2.
Extension; Waiver
.
At any time prior to the Closing, each Party 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 of the other Parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) waive compliance with any of the agreements or conditions of the
other Parties contained in this Agreement. Except as required by applicable Law, no such extension or waiver shall require the
approval of the stockholders of any of Parent, the Company or Merger Sub. 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.
Section 8.3.
No Survival
. None
of the representations, warranties, covenants or agreements in this Agreement or in any instrument pursuant hereto will survive
the Closing,
except
Article VIII
and the covenants
and agreements that by their terms apply or are to be performed in whole or in part after Closing (including those contained in
Article II
,
Section 5.09
and
Section 5.10
) shall survive the Closing.
Section 8.4.
Expenses
. Except as
otherwise provided in
Section 7.3
(or otherwise as expressly provided in this Agreement), all fees and expenses incurred
by the Parties hereto shall be borne solely by the Party that has incurred such fees and expenses whether or not the Merger is
consummated.
Section 8.5.
Notices
. All notices
and other communications in connection with this Agreement will be in writing and will be deemed duly given (a) on the date of
delivery if delivered personally, by facsimile or by electronic mail or (b) on the first Business Day following the date of dispatch
if delivered by a recognized next-day courier service. All notices in connection with this Agreement will be delivered as set forth
below or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:
|
(a)
|
if to Parent or Merger Sub, to:
|
|
|
|
|
|
|
|
Sirius XM Holdings Inc.
|
|
|
|
1290 Avenue of the Americas
|
|
|
|
11th Floor
|
|
|
|
New York, New York 10104
|
|
|
|
Attn: General Counsel
|
|
|
|
Email: patrick.donnelly@siriusxm.com
|
|
|
|
|
|
|
|
with a copy to:
|
|
|
|
|
|
|
|
Simpson Thacher & Bartlett LLP
|
|
|
|
425 Lexington Avenue
|
|
|
|
New York, New York 10017
|
|
|
|
Attention:
|
Eric M. Swedenburg
|
|
|
|
|
Ravi Purushotham
|
|
|
|
Facsimile No.:
|
(212) 455-2502
|
|
|
|
Email:
|
eswedenburg@stblaw.com
|
|
|
|
|
rpurushotham@stblaw.com
|
|
|
|
|
|
|
|
(b)
|
if to the Company, to:
|
|
|
|
|
|
|
|
Pandora Media, Inc.
|
|
|
|
2100 Franklin Street
|
|
|
|
Suite 700
|
|
|
|
Oakland, CA 94612
|
|
|
|
Attention: General Counsel
|
|
|
|
Email: legal@pandora.com
|
|
|
|
|
|
|
|
|
with a copy to:
|
|
|
|
|
|
|
|
Sidley Austin LLP
|
|
|
|
1001 Page Mill Road, Building 1
|
|
|
|
Palo Alto, California 94304
|
|
|
|
Attention:
|
Martin A. Wellington
|
|
|
|
|
Jennifer F. Fitchen
|
|
|
|
Facsimile No.:
|
(650) 565 7100
|
|
|
|
Email:
|
mwellington@sidley.com
|
|
|
|
|
jfitchen@sidley.com
|
|
Section 8.6.
Entire Agreement
.
This Agreement (including the Exhibits hereto), the Company Disclosure Letter, the Parent Disclosure Letter, the Confidentiality
Agreement and the Investment Agreement constitute the entire agreement and supersede all prior agreements and understandings, both
written and oral, among the Parties with respect to the subject matter hereof and thereof.
Section 8.7.
Third Party Beneficiaries
.
(a) This Agreement is not intended to
confer any rights (including the right to rely upon the representations, warranties and covenants set forth herein), benefits,
remedies, obligations or liabilities upon any Person other than the Parties hereto and their respective successors and assigns,
except that (i) following the Effective Time, the provisions of
Section 5.9
shall be enforceable by each Company Indemnified
Party and his or her heirs, executors or administrators and representatives, and (ii) following the Effective Time, the provisions
of
Article II
with respect to the rights of holders of shares of Company Common Stock to receive the Merger Consideration,
as applicable, shall be enforceable by such holders.
(b) The representations and warranties
in this Agreement are the product of negotiations among the Parties and are for the sole benefit of the Parties. Any inaccuracies
in such representations and warranties may be subject to waiver by the Parties in accordance with
Section 8.2
without notice
or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation
among the Parties of risks associated with particular matters regardless of the knowledge of any of the Parties. Consequently,
persons other than the Parties hereto may not rely upon the representations and warranties in this Agreement as characterizations
of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 8.8.
Severability
. If any
term, provision, covenant or restriction (or part thereof) of this Agreement is held by a court of competent jurisdiction or other
Governmental Entity to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions,
covenants and restrictions 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 hereto.
Section 8.9.
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;
provided
that, without the
consent of any other Party, prior to the
mailing of the Proxy Statement, Parent may designate, by written notice to the Company, another wholly-owned direct or indirect
Parent Subsidiary to be a party to the Merger in lieu of Merger Sub, in which event all references herein to Merger Sub shall
be deemed references to such other Parent Subsidiary, except that all representations and warranties made herein with respect
to Merger Sub as of the date of this Agreement shall be deemed representations and warranties made with respect to such other
Parent Subsidiary as of the date of such designation;
provided
,
further
, that any such designation not impede or delay
the Merger or the other transactions contemplated by this Agreement. For the avoidance of doubt, without the consent of any Party,
Parent may transfer the shares of common stock of Merger Sub to any one or more direct or indirect wholly-owned Subsidiaries of
Parent.
Section 8.10.
Governing Law
. This
Agreement and any claims and causes of action arising hereunder, whether in tort, contract or otherwise, shall be governed and
construed in accordance with the Laws of the State of Delaware.
Section 8.11.
Exclusive Jurisdiction
.
Each of the Parties (a) 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, (b) 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, (c) 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 (d) consents to service of process being made through the notice procedures set forth in
Section 8.5
.
Section 8.12.
Specific Performance
.
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 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 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, to the fullest extent permitted by Law, 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.
Section 8.13.
WAIVER OF JURY TRIAL
.
EACH OF THE PARTIES HERETO 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.
Section 8.14.
Counterparts
. This
Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become
effective when two or more counterparts have been signed by each of the Parties and delivered to the other Parties (including by
facsimile or via portable document format (.pdf)), it being understood that all Parties need not sign the same counterpart.
Section 8.15.
Interpretation
. The
words “include,” “includes,” and “including” shall be deemed to be followed by “without
limitation” whether or not they are in fact followed by such words or words of like import. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement. References to “this Agreement” shall include the
Parent Disclosure Letter and the Company Disclosure Letter. The word “will” shall be construed to have the same meaning
and effect as the word “shall.” All terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The Company Disclosure Letter
and the Parent Disclosure Letter are hereby incorporated in and made a part of this Agreement as if set forth in full herein. The
definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such term. Any Contract, instrument or Law defined or referred to herein means
such Contract, instrument or Law as from time to time amended, modified or supplemented in a manner consistent with this Agreement,
including (in the case of Contracts or instruments) by waiver or consent and (in the case of Laws) by succession of comparable
successor Laws and references to all attachments thereto and instruments incorporated therein. References to a Person are also
to its permitted successors and assigns. This Agreement is the product of negotiations by the Parties having the assistance of
counsel and other advisers. It is the intention of the Parties that this Agreement not be construed more strictly with regard to
one Party than with regard to the others. The descriptive headings used herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of this Agreement.
Section 8.16.
Definitions
.
(a) The
following terms and those set forth in the Index of Defined Terms shall have the meanings specified in this
Section 8.16
or on the corresponding page number of the Index of Defined Terms:
“
2015 Company Notes Indenture
”
means that certain Indenture, dated as of December 9, 2015, among Pandora Media, Inc. and Citibank, N.A., as Trustee.
“
2018 Company Notes Indenture
”
means that certain Indenture, dated as of June 1, 2018, among Pandora Media, Inc. and Citibank, N.A., as Trustee.
“
Acceptable Confidentiality Agreement
”
means a confidentiality agreement that contains terms that are no less favorable in the aggregate to the Company than those contained
in the Confidentiality Agreement, but shall not contain any standstill provision.
“
Affiliate
” of any Person
means another Person that directly or indirectly, through one or more intermediaries, Controls, is controlled by, or is under common
control with, such first Person; provided however that (i) the Company and the Company Subsidiaries shall not be deemed to be Affiliates
of Parent or any of its Affiliates and (ii) none of the Specified Persons will be treated as an Affiliate of Parent or any Parent
Subsidiaries or any of their respective Affiliates for any purpose hereunder.
“
Business Day
” means any
day except a Saturday, a Sunday or other day on which banking institutions in the New York, New York, or Oakland, California, are
authorized or required by Law to be closed.
“
Code
” means the Internal
Revenue Code of 1986, as amended.
“
Company Acquisition Proposal
”
means any inquiry, proposal, indication of interest or offer from any Person (other than Parent or any of the Parent Subsidiaries),
whether written or oral, relating to, or that could reasonably be expected to lead to, in one transaction or a series of transactions,
any direct or indirect (i) acquisition, purchase or sale of a business or assets that constitute 15% or more of the consolidated
business, revenues, net income or assets (including stock of the Company’s Subsidiaries) of the Company and the Company
Subsidiaries, (ii) merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company, or (iii) purchase or sale of, or tender or exchange offer (including
a self-tender offer) for, securities of the Company that, if consummated, would result in any Person (or the stockholders of such
Person) beneficially owning securities representing 15% or more of the equity or total voting power of the Company.
“
Company Benefit Plan
”
means each “employee benefit plan,” within the meaning of Section 3(3) of ERISA, including multiemployer plans (within
the meaning of Section 3(37) of ERISA), and each other stock grant, stock purchase, stock option, restricted stock, other equity
or equity-related, severance, employment, consulting, change-in-control, retention, fringe benefit, loan, collective bargaining,
bonus, incentive, sabbatical, medical, dental, vision, disability, cafeteria benefit, dependent care, welfare benefit, life insurance
or accident insurance, retirement, supplemental retirement, deferred compensation or other compensation or benefit plan, agreement,
program, policy or arrangement, sponsored, maintained, entered into or contributed to (or required to be contributed to) by the
Company or any of its ERISA Affiliates, or to which the Company or any of its ERISA Affiliates is a party, whether written or oral,
for the benefit of any Company Employee (including their dependents or beneficiaries) or with respect to which the Company or any
of its ERISA Affiliates has any liability (contingent or otherwise).
“
Company Board
” means
the Board of Directors of the Company.
“
Company Capital Stock
”
means, collectively, Company Common Stock and Company Preferred Stock.
“
Company Common Stock
”
means the Company’s common stock, par value $0.0001 per share.
“
Company Employee
” means
any current or former employee, consultant or director of the Company or any of the Company Subsidiaries.
“
Company Material Adverse Effect
”
means any event, change, condition, occurrence or effect that, individually or in the aggregate with all other events, changes,
conditions, occurrences or effects, (x) has had or would reasonably be expected to have a material adverse effect on the assets,
business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole, or (y) that
prevents or materially delays or materially impairs, or that would reasonably be expected to prevent, materially delay or materially
impair, the Company’s ability to perform its obligations under this Agreement or consummate the transactions contemplated
hereby on a timely basis by the Outside Date,
provided
, that in determining whether a Company Material Adverse Effect has
occurred pursuant to clause (x) above, there shall be excluded any effect resulting from: (i) changes in general economic or political
conditions or financial, credit or securities markets in general (including changes in interest or exchange rates); (ii) changes
in applicable Laws or changes in GAAP; (iii) acts, declarations or escalations of war, armed hostilities, sabotage, terrorism,
earthquakes, floods, hurricanes, tropical storms, fires or other natural disasters or any national, international or regional calamity;
(iv) the negotiation, execution, announcement, consummation or pendency of this Agreement or the transactions contemplated hereby
(including the impact thereon on the Company’s and the Company Subsidiaries’ relationships with customers, vendors,
lenders or employees); (v) any changes in the credit rating of the Company, the market price or trading volume of shares of Company
Common Stock or any failure by the Company to meet internal or published projections, forecasts or revenue or earnings predictions,
it being understood that any underlying event causing such changes or failures in whole or in part may be taken into account in
determining whether a Company Material Adverse Effect has occurred; (vi) any litigation by holders of Company Common Stock arising
from allegations of a breach of fiduciary duty relating to this Agreement or the transactions contemplated hereby; (vii) any suspension
of trading generally on the NYSE; or (viii) any action or inaction by the Company or Company Subsidiaries expressly required by
this Agreement (other than pursuant to
Section 5.1(a)
), or action taken or not taken by the Company or the Company Subsidiaries
upon the written request of Parent;
provided
that in each case of clauses (i), (ii), (iii) or (vii), such events, changes,
conditions, occurrences or effects shall be taken into account to the extent they have a materially and disproportionately adverse
impact on the Company and the Company Subsidiaries relative to other companies in the industry in which the Company and the Company
Subsidiaries operate. With respect to references to Company Material Adverse Effect in the representations and warranties set forth
in
Section 3.4
, the exceptions in clause (iv) above shall not apply.
“
Company Convertible Notes
”
means the 1.75% Convertible Senior Notes due 2020 issued by Pandora Media, Inc. pursuant to the 2015 Company Notes Indenture and
the 1.75% Convertible Senior Notes due 2023 issued by Pandora Media, Inc. pursuant to the 2018 Company Notes Indenture.
“
Company Notes Indenture
”
means, collectively, the 2015 Company Notes Indenture and the 2018 Company Notes Indenture.
“
Company Preferred Stock
”
means the preferred stock, par value $0.0001 per share, of the Company.
“
Company Stock Incentive Plans
”
means, collectively, (i) the Pandora Media, Inc. 2011 Equity Incentive Plan, as it may be amended from time to time, (ii) the Pandora
Media, Inc. 2004 Stock Plan, as it may be amended from time to time, (iii) the TheSavageBeast.com, Inc. 2000 Stock Incentive Plan;
(iv) the ESPP; and (v) any other compensatory equity-based plans or Contracts of the Company, including any option plans or Contracts
assumed by the Company pursuant to a merger, acquisition or similar transaction.
“
Company Stockholder Approval
”
means the adoption of this Agreement by the holders of a majority of the combined voting power of the outstanding shares of Company
Common Stock and the outstanding shares of Company Preferred Stock, voting together as a single class.
“
Company Stockholders Meeting
”
means a meeting of the holders of Company Capital Stock for the purpose of seeking the Company Stockholder Approval (including
any adjournments or postponements thereof).
“
Company Subsidiary
” means
a Subsidiary of the Company.
“
Company Superior Proposal
”
means any bona fide written Company Acquisition Proposal (except that references therein to “15%” shall be replaced
by “50%”) made by any Person (other than Parent or any Parent Subsidiary) after the date hereof, which in the good
faith judgment of the Company Board (after consultation with its outside legal counsel and financial advisors) is, if accepted,
likely to be consummated and would result, if consummated on the terms proposed on a timely basis, in a transaction that is more
favorable from a financial point of view to the stockholders of the Company than the transactions contemplated by this Agreement,
after taking into account (a) the likelihood and timing of consummation (as compared to the transactions contemplated hereby),
(b) such other matters that the Company Board considers relevant, including legal, financial (including the financing terms of
any such Company Acquisition Proposal), regulatory and other aspects and risks of such Company Acquisition Proposal (including
the conditions to closing, any requirement of a stockholder vote of the Person making the proposal, and any financing requirements
of such Person) and the identity of the Person making such Company Acquisition Proposal and (c) any changes to the terms of this
Agreement proposed by Parent.
“
Competition Laws
” means
all laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization
or lessening of competition through merger or acquisition or restraint of trade.
“
Confidentiality Agreement
”
means the confidentiality agreement, dated January 25, 2016 between Parent, Liberty Media Corporation and the Company, as the same
may be further amended, supplemented or otherwise modified by the Parties.
“
Constituent Documents
”
means, with respect to any Person, the charter, the certificate or articles of incorporation or formation, bylaws, limited liability
company or operating agreement or comparable organizational documents of such Person, as the same may be amended, supplemented
or otherwise modified from time to time.
“
Contract
” means any note,
bond, debenture, mortgage, indenture, deed of trust, license, lease, agreement or other contract, agreement, commitment, instrument
or obligation, in each case, including all amendments, supplements or other modifications thereto.
“
Control
” (including the
terms “
controlled by
” and “
under common control with
”), with respect to the relationship
between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction
of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract
or any other means.
“
Credit Agreement
” means
the Credit Agreement, dated as of December 29, 2017 (as may be amended from time to time, including, without limitation, pursuant
to Amendment Number One to Credit Agreement, dated as of February 6, 2018, as further amended by Amendment Number Two to Credit
Agreement, dated as of September 21, 2018), by and among the Company, Pandora Media California, LLC, the lenders party thereto,
Wells Fargo Bank, National Association, as administrative agent, and JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding,
Inc. and Wells Fargo Bank, National Association as joint lead arrangers and joint book runners.
“
ERISA
” means the Employee
Retirement Income Security Act of 1974, as amended.
“
ERISA Affiliate
” means,
with respect to any Person, each trade or business, whether or not incorporated, that, together with such Person, would be deemed
a “single employer” within the meaning of Section 4001(b) of ERISA or Section 414 of the Code.
“
Exchange Act
” means the
Securities Exchange Act of 1934, as amended, and the related rules and regulations promulgated thereunder.
“
Excluded Party
” means
any Person from whom the Company or any of its Representatives has received a written Company Acquisition Proposal after the execution
of this Agreement and prior to the No-Shop Period Start Date, which written Company Acquisition Proposal the Company Board has
determined in good faith prior to the start of the No-Shop Period Start Date (after consultation with its outside counsel and its
financial advisor) is or would reasonably be expected to lead to a Company Superior Proposal;
provided
,
however
,
that a Person shall immediately cease to be an Excluded Party (and the provisions of this Agreement applicable to Excluded Parties
shall cease to apply with respect to such Person) if (A) such Company Acquisition Proposal made by such Person prior to the start
of the No-Shop Period Start Date is withdrawn (it being understood that any amendment, modification or replacement of such Company
Acquisition Proposal shall not, in and of itself, be deemed a withdrawal of such Company Acquisition Proposal) or (B) such Company
Acquisition Proposal, in the good faith determination of the Company Board (after consultation with its outside counsel and its
financial advisor), no longer is or would reasonably be expected to lead to a Superior Proposal.
“
Form S-4
” means the registration
statement on Form S-4 to be filed with the SEC by Parent in connection with the registration under the Securities Act of the shares
of Parent Common Stock to be issued in the Merger (as amended or supplemented from time to time).
“
GAAP
” means generally
accepted accounting principles in the United States.
“
Governmental Entity
”
means, anywhere in the world, any supranational, national, federal, state, provincial, municipal, local or foreign government,
governmental or quasi-governmental authority, regulatory or administrative agency, governmental commission, department, board,
bureau, agency or instrumentality, court, arbitral body or other tribunal.
“
HSR Act
” means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder.
“
Indebtedness
” means (i)
any indebtedness or other obligation for borrowed money, whether current, short-term or long-term, or secured or unsecured, and
whether evidenced by a note, bond, debenture or other security or similar instrument or otherwise, (ii) any liabilities or obligations
with respect to interest rate swaps, collars, caps and similar hedging obligations or other financial agreements or arrangements
entered into for the purpose of limiting or managing interest rate risks, (iii) any capitalized lease obligations, (iv) any obligations
for the deferred purchase price of property or services, and (v) guaranties, endorsements and assumptions in respect of any of
the foregoing clauses (i) through (iv).
“
Intellectual Property
”
means all worldwide intellectual and industrial property rights, including all (i) patents and inventions, (ii) trademarks, service
marks, corporate names, trade names, domain names, social and mobile media identifiers, logos, trade dress, design rights, and
other designations of source or origin, together with the goodwill symbolized by any of the foregoing, (iii) copyrights, (iv) trade
secrets, know-how, technology, methods, processes, algorithms and confidential information, (v) artists’ and performers’
rights, including rights of performance, publicity, attribution and integrity and (vi) all applications, registrations, renewals,
continuations, continuations-in-part, divisionals, reissues, re-examinations, extensions and foreign counterparts of any of the
foregoing.
“
Investment Agreement
”
means the Investment Agreement, dated June 9, 2017, by and between the Company and Sirius XM Radio.
“
IT Assets
” means all
software, systems, code, applications, websites, applications, networks and other information technology equipment, assets and
infrastructure.
“
Knowledge
” means the
actual knowledge of (a) with respect to the Company, the persons set forth in
Section 8.16(a)
of the Company Disclosure
Letter after reasonable inquiry and (b) with respect to Parent, the persons set forth on
Section 8.16(b)
of the Parent Disclosure
Letter after reasonable inquiry.
“
Laws
” means any United
States, federal, state or local or any foreign law (in each case, statutory, common or otherwise), constitution, treaty, convention,
ordinance, code, rule, statute, regulation or other similar requirement enacted, issued, adopted, promulgated, entered into or
applied by a Governmental Entity.
“
Lien
” means any lien
(statutory or otherwise), pledge, hypothecation, mortgage, lease, restriction, covenant, title defect, assignment, charge, encumbrance,
adverse right, claim, option, right of first refusal, preemptive right or security interest of any kind or nature whatsoever.
“
Materials of Environmental Concern
”
means any pollutant, contaminant, hazardous or toxic substance or waste, or terms of similar meaning defined or regulated as such
under, and any other substance that could reasonably be expect to result in liability pursuant to, any Environmental Law, including
any petroleum or petroleum-containing products, asbestos, asbestos containing materials, urea-formaldehyde insulation, radioactivity,
polychlorinated biphenyls, and toxic molds.
“
Merger Consideration Closing Value
”
means the product of (x) the Exchange Ratio and (y) the Parent Measurement Price.
“
Nasdaq
” means The Nasdaq
Global Select Market.
“
Non-U.S. Company Benefit Plan
”
means a Company Benefit Plan that is not subject exclusively to United States Law.
“
NYSE
” means The New York
Stock Exchange.
“
Order
” means any order,
writ, injunction, decree, judgment, award, injunction, settlement or stipulation issued, promulgated, made, rendered or entered
into by or with any Governmental Entity (in each case, whether temporary, preliminary or permanent).
“
Owned Intellectual
Property
” means all
Intellectual Property that is
owned or purported
to be owned by the Company or the Company Subsidiaries
, including the Registered IP.
“
Parent Board
” means the
Board of Directors of Parent.
“
Parent Common Stock
”
means Parent’s shares of common stock, par value $0.001 per share.
“
Parent Material Adverse Effect
”
means any event, change, condition, occurrence or effect that, individually or in the aggregate with all other events, changes,
conditions, occurrences or effects, (x) has had or would reasonably be expected to have a material adverse effect on the assets,
business, financial condition or results of operations of Parent and the Parent Subsidiaries, taken as a whole or (y) that prevents
or materially delays or materially impairs, or that would reasonably be expected to prevent, materially delay or materially impair,
Parent’s and Merger Sub’s ability to perform their obligations under this Agreement or consummate the transactions
contemplated hereby on a timely basis by the Outside Date,
provided
that in determining whether a Parent Material Adverse
Effect has occurred pursuant to clause (x) above, there shall be excluded any effect resulting from: (i) changes in general economic
or political conditions or financial, credit or securities markets in general (including changes in interest or exchange rates);
(ii) changes in applicable Laws or changes in GAAP; (iii) acts of war, armed hostilities, sabotage, terrorism or natural disasters;
(iv) the negotiation or announcement of this Agreement (including the impact thereon on Parent’s relationships with customers,
vendors, lenders or employees); (v) any changes in the credit rating of Parent, the market price or trading volume of shares of
Parent Common Stock or any failure by Parent to meet internal or published projections, forecasts or revenue or earnings predictions
for any period, it being understood that any underlying event causing such changes or failures in whole or in part may be taken
into account in determining whether a Parent Material Adverse Effect has occurred; (vi) any litigation
by holders of Parent Common Stock arising
from allegations of a breach of fiduciary duty relating to this Agreement or the transactions contemplated hereby, (vii) any suspension
of trading generally on Nasdaq; or (viii) any action or inaction by Parent or Parent Subsidiaries expressly required by this Agreement
(other than pursuant to
Section 5.2(a)
), or action taken or not taken by Parent or Parent Subsidiaries upon the written
request of the Company;
provided
that in each case of clauses (i), (ii) or (iii) or (vii), such events, changes, conditions,
occurrences or effects shall be taken into account to the extent they have a materially and disproportionately adverse impact on
Parent and the Parent Subsidiaries relative to other companies in the industry in which Parent and the Parent Subsidiaries operate.
With respect to references to Parent Material Adverse Effect in the representations and warranties set forth in
Section 4.4
,
the exceptions in clause (iv) above shall not apply.
“
Parent Measurement Price
”
means an amount equal to the average of the volume weighted average price per share, rounded to four decimal places (with amounts
0.00005 and above rounded up), of Parent Common Stock on Nasdaq (as reported by Bloomberg L.P. or, if not reported therein, in
another authoritative source mutually selected by Parent and the Company) for the five consecutive trading day period that ends
on the second complete trading day ending immediately prior to the Closing Date (for the avoidance of doubt, such second complete
trading day shall be included in the five consecutive trading day period).
“
Parent Preferred Stock
”
means preferred stock, par value $0.001 per share, of Parent.
“
Parent SEC Financial Statements
”
means the consolidated financial statements of Parent included in the Parent SEC Documents (including, in each case, any notes
or schedules thereto).
“
Parent Stock Incentive Plans
”
means the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan, the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive
Plan, the Sirius Satellite Radio 2007 Stock Incentive Plan, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock
Incentive Plan and the XM Satellite Radio Holdings Inc. 1998 Shares Award Plan, in each case as it may be amended from time to
time.
“
Parent Stock Issuance
”
means the issuance of shares of Parent Common Stock as part of the Merger Consideration.
“
Parent Subsidiary
” means
a Subsidiary of Parent.
“
Permit
” means any governmental
license, permit, certificate, approval or authorization.
“
Permitted Lien
” means
(i) any Lien for Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP have been established, (ii) carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other similar Liens, including statutory liens, in each case incurred in the ordinary
course of business to secure claims which are not yet due and payable or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established, (iii) pledges or deposits in connection with workers’
compensation, unemployment insurance and other social security legislation, (iv) statutory landlords’ Liens and Liens granted
to landlords under any lease, (v) any purchase money security interests, equipment
leases or similar financing arrangements,
and (vi) Liens created under or in connection with the Credit Agreement.
“
Person
” means any individual,
corporation, partnership, limited liability company, association, trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof, and for the avoidance of doubt shall include any “group”
(as set forth in Section 13(d)(3) of the Exchange Act) of Persons.
“
Privacy Policy
” means
any Company policy or agreement relating to (i) privacy, (ii) Private Data or (ii) the security or integrity of any IT Assets.
“
Private Data
” means any
personal, personally identifiable, financial, sensitive or regulated information (including credit or debt card information, bank
account information or user names and passwords).
“
Proceeding
” means any
suit, action, proceeding, arbitration, mediation, audit, hearing, or inquiry commenced, brought, conducted or heard by or before
any Governmental Entity.
“
Proxy Statement
” means
the Company’s proxy statement to be sent to the stockholders of the Company relating to the Company Stockholders Meeting
(together with any amendments or supplements thereto).
“
Representatives
” means,
with respect to any Person, such Person’s officers, agents, employees, consultants, professional advisers (including attorneys,
accountants and financial advisors) and debt financing sources.
“
SEC
” means the United
States Securities and Exchange Commission.
“
Securities Act
” means
the Securities Act of 1933, as amended, and the related rules and regulations promulgated thereunder.
“
Specified Persons
” means
the Persons set forth on
Section 8.16(c)
of the Parent Disclosure Letter.
“
Subsidiary
” means, with
respect to any Person, any other corporation, partnership, joint venture, limited liability company or any other entity (i) of
which such first Person or a Subsidiary of such first Person is a general partner or managing member or (ii) at least a majority
of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors
or Persons performing similar functions with respect to such entity is directly or indirectly owned or controlled by such first
Person and/or one or more Subsidiaries thereof.
“
Takeover Law
” means any
state “business combination,” “affiliated transaction,” “control share acquisition,” “fair
price,” “moratorium” or other anti-takeover Law.
“
Taxes
” means any and
all federal, state, local, foreign or other taxes, charges, fees, levies, or other similar assessments (together with any and all
interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Entity,
including any income, franchises, windfall
or other profits, gross receipts, property, capital, sales, use, transfer, registration, property, inventory, license, capital
stock, payroll, employment, unemployment, social security, workers’ compensation, severance, stamp, customs, duties, occupation,
premium or net worth, excise, withholding, ad valorem, value added, estimated or other tax of any kind.
“
Tax Return
” means any
report, return, document, declaration or other information or filing that is filed or required to be filed with a Governmental
Entity with respect to Taxes (whether or not a payment is required to be made with respect to such filing), including, without
limitation, information returns, declarations of estimated Taxes, amended returns or claims for refunds (and any attachments thereto).
“
Treasury Regulations
”
means the United States Treasury Regulations promulgated under the Code.
“
WARN Act
” means the Worker
Adjustment and Retraining Notification Act of 1988 and any similar “mass layoff” or “plant closing” Laws,
or other Laws requiring advance notice of termination of employment and/or payments to affected employees.
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IN WITNESS WHEREOF, Parent, Merger Sub and
the Company have caused this Agreement to be duly executed, all as of the date first written above.
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SIRIUS XM HOLDINGS INC.
|
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|
|
By:
|
/s/ Patrick L. Donnelly
|
|
Name:
|
Patrick L. Donnelly
|
|
Title:
|
Executive Vice President, General Counsel and Secretary
|
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WHITE OAKS ACQUISITION CORP.
|
|
|
|
By:
|
/s/ Patrick L. Donnelly
|
|
Name:
|
Patrick L. Donnelly
|
|
Title:
|
Vice President and Secretary
|
|
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PANDORA MEDIA, INC.
|
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By:
|
/s/ Roger Lynch
|
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Name:
|
Roger Lynch
|
|
Title:
|
President & Chief Executive Officer
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ANNEX A
Form of Certificate of Incorporation
of the Surviving Corporation
SECOND AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION
OF
PANDORA MEDIA, INC.
FIRST: The name of the corporation (which
is hereinafter referred to as the “
Corporation
”) is Pandora Media, Inc.
SECOND: The address of the registered office
of the Corporation in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington,
County of New Castle, Delaware 19801. The name of the Corporation’s registered agent at such address 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:
(A)
Limited Liability
. A director
of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty
as a director to the fullest extent permitted by Delaware Law.
(B)
Right to Indemnification
.
1. Each person (and the heirs, executors
or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified and held
harmless by the Corporation to the fullest extent permitted by Delaware Law. The right to indemnification conferred in this Article
VI shall also include the right to be paid by the Corporation the expenses incurred in connection with any such proceeding in advance
of its final disposition to the fullest extent authorized by Delaware Law. The right to indemnification conferred in this Article
VI shall be a contract right.
2. The Corporation may, by action of its
Board of Directors, provide indemnification to such of the employees and agents of the Corporation to such extent and to such effect
as the Board of Directors shall determine to be appropriate and authorized by Delaware Law.
(C)
Insurance
. The Corporation shall
have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense, liability or loss incurred by such person in any such
capacity or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under Delaware Law.
(D)
Nonexclusivity of Rights
. The
rights and authority conferred in this Article VI shall not be exclusive of any other right that any person may otherwise have
or hereafter acquire.
(E)
Preservation of Rights
. Neither
the amendment nor repeal of this Article VI, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation
or the bylaws of the Corporation, nor, to the fullest extent permitted by Delaware Law, any modification of law, shall adversely
affect any right or protection of any person granted pursuant hereto existing at, or arising out of or related to any event, act
or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding
(or part thereof) relating to such event, act or omission arises or is first threatened, commenced or completed).
SEVENTH: The Court of Chancery of the State
of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation,
(ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation
to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision
of the Delaware Law, or (iv) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing
or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented
to the provisions of this Article VII.
ANNEX B
Form of Bylaws of Surviving Corporation
PANDORA MEDIA, INC.
BYLAWS
ADOPTED [●], 2018
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting
and Notice
. Meetings of the stockholders of the Corporation shall be held at such place either within or without the State
of Delaware as the Board of Directors may determine.
Section
2. Annual and Special Meetings
. Annual meetings of stockholders shall be held, at a date, time and place fixed by the Board
of Directors and stated in the notice of meeting, to elect a Board of Directors and to transact such other business as may properly
come before the meeting. Special meetings of the stockholders may be called by the President for any purpose and shall be called
by the President or Secretary if directed by the Board of Directors.
Section
3. Notice
. Except as otherwise provided by law, at least 10 and not more than 60 days before each meeting of stockholders,
written notice of the time, date and place of the meeting, and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be given to each stockholder.
Section
4. Quorum
. At any meeting of stockholders, the holders of record, present in person or by proxy, of a majority of the Corporation’s
issued and outstanding capital stock shall constitute a quorum for the transaction of business, except as otherwise provided by
law. In the absence of a quorum, any officer entitled to preside at or to act as secretary of the meeting shall have power to adjourn
the meeting from time to time until a quorum is present.
Section
5. Voting
. Except as otherwise provided by law, all matters submitted to a meeting of stockholders shall be decided by affirmative
vote of a majority of the Corporation’s issued and outstanding capital stock present in person or by proxy.
ARTICLE II
DIRECTORS
Section
1. Number, Election and Removal of Directors
. The number of Directors that shall constitute the Board of Directors shall not
be less than one or more than fifteen. The number of Directors shall be determined by the Board of Directors or the stockholders.
The Directors shall be elected by the stockholders at their annual meeting. Vacancies and newly created directorships resulting
from any increase in the number of Directors may be filled by a majority of the Directors then in office, although less than a
quorum, or by the sole
remaining Director or
by the stockholders. A Director may be removed with or without cause by the stockholders.
Section
2. Meetings
. Regular meetings of the Board of Directors shall be held at such times and places as may from time to time be
fixed by the Board of Directors or as may be specified in a notice of meeting.
Section
3. Quorum
. One-third of the total number of authorized Director seats shall constitute a quorum for the transaction of business.
If a quorum is not present at any meeting of the Board of Directors, the Directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation or these Bylaws, the act of a majority of the Directors present at any meeting
at which there is a quorum shall be the act of the Board of Directors.
Section
4. Committees
. The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such power and authority as the Board of Directors
shall specify. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another Director to act
as the absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the
Corporation shall consist of a President and a Secretary, and such other additional officers with such titles as the Board of Directors
shall determine, all of which shall be chosen by and shall serve at the pleasure of the Board of Directors. Such officers shall
have the usual powers and shall perform all the usual duties incident to their respective offices. All officers shall be subject
to the supervision and direction of the Board of Directors. The authority, duties or responsibilities of any officer of the Corporation
may be suspended by the President with or without cause. Any officer elected or appointed by the Board of Directors may be removed
by the Board of Directors with or without cause.
ARTICLE IV
GENERAL
PROVISIONS
Section
1. Notices
. Whenever any statute, the Certificate of Incorporation or these Bylaws require notice to be given to any Director
or stockholder, such notice may be given in writing by mail, addressed to such Director or stockholder at his address as it appears
in the records of the Corporation, with postage thereon prepaid. Such notice shall be deemed to have been given when it is deposited
in the United States mail. Notice to Directors may also be given by email.
Section 2.
Certificates
.
The shares of the Corporation shall be uncertificated, provided that the Board of Directors may provide by resolution or resolutions
that some or all of
any or all classes or series of stock shall
be certificated shares. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or
in the name of the Corporation by duly authorized officers of the Corporation certifying the number of shares owned by such holder
in the Corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued,
it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent, or registrar at the
date of issue. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged
to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate,
or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may
be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
Section
3. Fiscal Year
. The fiscal year of the Corporation shall be fixed by the Board of Directors.
***************************
Annex A1
Execution Version
JOINDER TO MERGER AGREEMENT
October 25, 2018
Reference is hereby
made to that certain Agreement and Plan of Merger and Reorganization dated as of September 23, 2018 (the “
Merger Agreement
”),
by and among Pandora Media, Inc., a Delaware corporation (the “
Company
”), Sirius XM Holdings Inc., a Delaware
corporation (“
Parent
”), and White Oaks Acquisition Corp., a Delaware corporation (“
Merger Sub
”).
Capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Merger Agreement.
In order to induce the
Company, Parent and Merger Sub to consummate the transactions contemplated by the Merger Agreement, and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, each of the undersigned (each, a “
Joining Party
”),
hereby:
(a)
represents and warrants as follows:
(i)
The undersigned is a corporation duly incorporated, validly existing and in good standing
under the Laws of the State of Delaware.
(ii)
The undersigned has all requisite power and authority to execute and deliver this Joinder
to Merger Agreement (this “
Joinder
”), to perform its obligations under this Joinder and the Merger Agreement
and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by the undersigned
of this Joinder and the consummation by the undersigned of the transactions contemplated by this Joinder and the Merger Agreement
have been duly authorized by all necessary corporate action on the part of the undersigned. The undersigned has duly executed and
delivered this Joinder and this Joinder constitutes the undersigned’s legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or similar Laws affecting creditors’
rights generally and by general principles of equity.
(iii)
No consent, approval, clearance, permit or authorization of, or registration or filing with,
or notice to, any Governmental Entity is required to be made or obtained by the undersigned in connection with the execution or
delivery of this Joinder or the consummation of the transactions contemplated by this Joinder or the Merger Agreement, except for:
(x) the filing of the Certificate of Holding Company Merger with the Secretary of State of the State of Delaware, (y) the filing
of the Certificate of Sirius XM Merger with the Secretary of State of the State of Delaware and (z) the filings, consents, approvals
and waiting periods referred to in Sections 3.4(a) and 4.4(a) of the Merger Agreement.
(iv)
The execution, delivery and performance of this Joinder by the undersigned does not, and the
consummation by the undersigned of the transactions contemplated hereby and by the Merger Agreement will not, (i) conflict with
or violate any provision of the Constituent Documents of the undersigned, or (ii) assuming the filings, consents, approvals and
waiting periods referred to in section (a)(iii) above are duly made, obtained or satisfied and the Company Stockholder Approval
is obtained (A) violate any Law or Order, in either case, applicable to the undersigned or any of its properties or assets or (B)
violate, conflict with, result in the loss of any benefit under, require a payment or incur a penalty under, constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a
right of termination or cancellation under, accelerate the performance required
by, or result in the creation of any Lien upon
any of the properties or assets of the undersigned under, any Contract to which the undersigned is a party, or by which the undersigned
or any of its properties or assets may be bound or affected, except, in the case of the foregoing clause (ii), for such matters
as, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect to the
undersigned.
(b)
acknowledges the receipt of a copy of the Merger Agreement and agrees, effective as of the
date first written above, (i) to join and become a party to the Merger Agreement, (ii) to be bound by, observe and comply with
the terms and conditions of the Merger Agreement, as the same may be amended from time to time, as a party thereto, and (x) with
respect to Billboard Holding Company, Inc., “New Holding Company” thereunder, (y) with respect to Billboard Acquisition
Sub, Inc., “Holdco Merger Sub” thereunder and (w) with respect to Sirius XM Radio Inc., “Sirius XM Radio”
thereunder and (iii) that for all purposes under the Merger Agreement, each reference to the “New Holding Company”
shall be deemed to mean Billboard Holding Company, Inc. and each reference to the “Holdco Merger Sub” shall be deemed
to mean Billboard Acquisition Sub, Inc.
This Joinder shall be
governed by, and construed in accordance with, the Law of the State of Delaware without regard to any conflicts of law principles
that would require the application of any other Law. By the execution and delivery of this Joinder, each Joining Party hereby submits
to the personal jurisdiction of any state or federal court within the State of Delaware in any suit, action or proceeding arising
out of or relating to this Joinder. The provisions of Article VIII of the Merger Agreement shall apply mutatis mutandis to this
Joinder.
IN
WITNESS WHEREOF,
the Joining Party has executed this Joinder as of the date first written above.
|
JOINING PARTY:
|
|
|
|
BILLBOARD HOLDING COMPANY, INC.
|
|
|
|
By:
|
/s/ Karen Walker
|
|
|
Name:
|
Karen Walker
|
|
Title:
|
President
|
|
|
|
BILLBOARD ACQUISITION SUB, INC.
|
|
|
|
By:
|
/s/ Karen Walker
|
|
|
Name:
|
Karen Walker
|
|
Title:
|
President
|
|
|
|
|
SIRIUS XM RADIO INC.
|
|
|
|
By:
|
/s/ Patrick L. Donnelly
|
|
|
Name:
|
Patrick L. Donnelly
|
|
Title:
|
Executive Vice President, General Counsel and Secretary
|
Accepted and agreed:
|
|
|
|
PANDORA MEDIA, INC.
|
|
|
|
By:
|
/s/ Karen Walker
|
|
|
Name:
|
Karen Walker
|
|
Title:
|
Chief Accounting Officer
|
|
|
|
|
|
|
SIRIUS XM HOLDINGS INC.
|
|
|
|
By:
|
/s/ Patrick L. Donnelly
|
|
|
Name:
|
Patrick L. Donnelly
|
|
Title:
|
Executive Vice President, General Counsel and Secretary
|
|
|
|
|
|
WHITE OAKS ACQUISITION CORP.
|
|
|
|
By:
|
/s/ Patrick L. Donnelly
|
|
|
Name:
|
Patrick L. Donnelly
|
|
Title:
|
Vice President and Secretary
|
|
|
Annex B
Centerview
Partners LLC
31
West 52nd Street
New
York, NY 10019
September
23, 2018
The
Board of Directors
Pandora
Media, Inc.
2100
Franklin St.
Suite
700
Oakland,
CA 94612
Ladies
and Gentlemen:
You
have requested our opinion as to the fairness, from a financial point of view, to the holders of the outstanding shares of common
stock, par value $0.0001 per share (the “Shares”) (other than Excluded Shares, as defined below), of Pandora Media,
Inc., a Delaware corporation (the “Company”), of the Exchange Ratio (as defined below) provided for pursuant to the
Agreement and Plan of Merger and Reorganization proposed to be entered into (the “Agreement”) by and among Sirius XM
Holdings Inc., a Delaware corporation (“Parent”), White Oaks Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent (“Merger Sub”), and the Company. The Agreement provides that (a) the Company will form a
Delaware corporation as a wholly owned subsidiary of the Company (“New Holding Company”), (b) New Holding Company will
form a Delaware corporation as a wholly owned subsidiary of New Holding Company (“Holdco Merger Sub”), (c) Holdco Merger
Sub will be merged with and into the Company (the “Holding Company Merger”), as a result of which the Company will
become a wholly owned subsidiary of New Holding Company, (d) immediately after the effective time of the Holding Company Merger,
the Company will convert into a Delaware limited liability company (the “Conversion”), (e) immediately after the effective
time of the Conversion, Merger Sub will merge with and into New Holding Company (the “Merger”), as a result of which
New Holding Company will become a wholly owned subsidiary of Parent, and (f) immediately after the effective time of the Merger,
New Holding Company will merge with and into Sirius XM Radio, Inc., a wholly owned subsidiary of Parent, as a result of which the
separate existence of New Holding Company will cease and Sirius XM Radio, Inc. will continue as the surviving corporation (collectively
with the Merger, the Holding Company Merger and the other transactions contemplated by the Agreement, the “Transaction”).
As a result of the Transaction, each issued and outstanding Share (other than any Shares owned by the Company (including Shares
held as treasury stock or otherwise) (such shares, together with any Shares held by Parent or any affiliate of the Company or Parent,
“Excluded Shares”)) will be converted into the right to receive 1.44 (the “Exchange Ratio”) shares of common
stock, par value $0.001 per share (the “Parent
31 WEST 52ND STREET,
22ND FLOOR, NEW YORK, NY 10019
PHONE: (212) 380-2650
FAX: (212) 380-2651 WWW.CENTERVIEWPARTNERS.COM
NEW YORK • LONDON • SAN FRANCISCO • PALO ALTO • LOS ANGELES
The Board of Directors
Pandora Media, Inc.
September 23, 2018
Shares”),
of Parent. The terms and conditions of the Transaction are more fully set forth in the Agreement.
We
have acted as financial advisor to the Board of Directors of the Company in connection with the Transaction. We will receive a
fee for our services in connection with the Transaction, a portion of which is payable upon the earlier of (i) the consummation
of the Transaction and (ii) the 13-month anniversary of the execution of the Agreement, and a substantial portion of which is payable
contingent upon the consummation of the Transaction. In addition, the Company has agreed to reimburse certain of our expenses arising,
and indemnify us against certain liabilities that may arise, out of our engagement.
We
are a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial
advisory and merchant banking activities. In the past two years, we have been engaged to provide financial advisory services to
the Company from time to time, including in connection with Parent’s preferred equity investment in the Company, the Company’s
sale of its Ticketfly business to Eventbrite and the Company’s ongoing review of strategic alternatives, and we have received
compensation from the Company for such services. In the past two years, we have not been engaged to provide financial advisory
or other services to Parent or Merger Sub, and we have not received compensation from Parent. We may provide investment banking
and other services to or with respect to the Company or Parent or their respective affiliates in the future, for which we may receive
compensation. Certain (i) of our and our affiliates’ directors, officers, members and employees, or family members of such
persons, (ii) of our affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing
may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and
other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, the Company,
Parent, or any of their respective affiliates, or any other party that may be involved in the Transaction.
In
connection with this opinion, we have reviewed, among other things: (i) a draft of the Agreement dated September 23, 2018
(the “Draft Agreement”); (ii) Annual Reports on Form 10-K, as amended, of the Company for the years ended
December 31, 2017, December 31, 2016 and December 31, 2015 and Annual Reports on Form 10-K of Parent for the years ended
December 31, 2017, December 31, 2016 and December 31, 2015; (iii) certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of the Company and Parent; (iv) certain publicly available research analyst reports for the Company and
Parent; (v) certain other communications from the Company and Parent to their respective stockholders; (vi) certain internal
information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of the Company,
including certain financial forecasts, analyses and projections relating to the Company prepared by management of the Company
and furnished to us by the Company for purposes of our analysis (the “Company Forecasts”) (collectively, the
“Company Internal Data”); (vii) certain internal information relating to the business, operations, earnings, cash
flow,
The
Board of Directors
Pandora
Media, Inc.
September
23, 2018
assets,
liabilities and prospects of Parent (collectively, the “Parent Internal Data”); (viii) certain publicly available research
analysts’ estimates relating to Parent furnished to us by Parent for purposes of our analysis (the “Parent Public Forecasts”);
and (ix) certain cost savings and operating synergies projected by the management of the Company to result from the Transaction
furnished to us by the Company for purposes of our analysis (the “Synergies”). We have participated in discussions
with members of the senior management and representatives of the Company and Parent regarding their assessment of the Company Internal
Data (including, without limitation, the Company Forecasts), the Parent Internal Data, the Parent Public Forecasts and the Synergies,
as appropriate, and the strategic rationale for the Transaction. In addition, we reviewed publicly available financial and stock
market data, including valuation multiples, for the Company and compared that data with similar data for certain other companies,
the securities of which are publicly traded, in lines of business that we deemed relevant. We also compared certain of the proposed
financial terms of the Transaction with the financial terms, to the extent publicly available, of certain other transactions that
we deemed relevant and conducted such other financial studies and analyses and took into account such other information as we deemed
appropriate.
We
have assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial,
legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by us for purposes of this opinion
and have, with your consent, relied upon such information as being complete and accurate. In that regard, we have assumed, at your
direction, that the Company Internal Data (including, without limitation, the Company Forecasts) and the Synergies have been reasonably
prepared on bases reflecting the best currently available estimates and judgments of the management of the Company as to the matters
covered thereby and that the Parent Public Forecasts are a reasonable basis upon which to evaluate the future financial performance
of Parent, and we have relied, at your direction, on the Company Internal Data (including, without limitation, the Company Forecasts),
the Parent Internal Data, the Parent Public Forecasts and the Synergies for purposes of our analysis and this opinion. We express
no view or opinion as to the Company Internal Data (including, without limitation, the Company Forecasts), the Parent Internal
Data, the Parent Public Forecasts or the Synergies or the assumptions on which they are based. In addition, at your direction,
we have not made any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet
or otherwise) of the Company or Parent, nor have we been furnished with any such evaluation or appraisal, and we have not been
asked to conduct, and did not conduct, a physical inspection of the properties or assets of the Company or Parent. We have assumed,
at your direction, that the final executed Agreement will not differ in any respect material to our analysis or this opinion from
the Draft Agreement reviewed by us. We have also assumed, at your direction, that the Transaction will be consummated on the terms
set forth in the Agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay
or the waiver, modification or amendment of any term, condition or agreement, the effect of which would
The Board of Directors
Pandora Media, Inc.
September 23, 2018
be
material to our analysis or this opinion and that, in the course of obtaining the necessary governmental, regulatory and other
approvals, consents, releases and waivers for the Transaction, no delay, limitation, restriction, condition or other change, including
any divestiture requirements or amendments or modifications, will be imposed, the effect of which would be material to our analysis
or this opinion. We have not evaluated and do not express any opinion as to the solvency or fair value of the Company or Parent,
or the ability of the Company or Parent to pay their respective obligations when they come due, or as to the impact of the Transaction
on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. We are not legal,
regulatory, tax or accounting advisors, and we express no opinion as to any legal, regulatory, tax or accounting matters.
We
express no view as to, and our opinion does not address, the Company’s underlying business decision to proceed with or effect
the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that
might be available to the Company or in which the Company might engage. This opinion is limited to and addresses only the fairness,
from a financial point of view, as of the date hereof, to the holders of the Shares (other than Excluded Shares) of the Exchange
Ratio provided for pursuant to the Agreement. We have not been asked to, nor do we express any view on, and our opinion does not
address, any other term or aspect of the Agreement or the Transaction, including, without limitation, the structure or form of
the Transaction, or any other agreements or arrangements contemplated by the Agreement or entered into in connection with or otherwise
contemplated by the Transaction, including, without limitation, the fairness of the Transaction or any other term or aspect of
the Transaction to, or any consideration to be received in connection therewith by, or the impact of the Transaction on, the holders
of any other class of securities, creditors or other constituencies of the Company or any other party. In addition, we express
no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to
be paid or payable to any of the officers, directors or employees of the Company or any party, or class of such persons in connection
with the Transaction, whether relative to the Exchange Ratio provided for pursuant to the Agreement or otherwise. Our opinion is
necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and
the information made available to us as of, the date hereof, and we do not have any obligation or responsibility to update, revise
or reaffirm this opinion based on circumstances, developments or events occurring after the date hereof. We express no view or
opinion as to what the value of Parent Shares actually will be when issued pursuant to the Transaction or the prices at which the
Shares or Parent Shares will trade or otherwise be transferable at any time, including following the announcement or consummation
of the Transaction. Our opinion does not constitute a recommendation to any stockholder of the Company or any other person as to
how such stockholder or other person should vote with respect to the Merger or otherwise act with respect to the Transaction or
any other matter.
The Board of Directors
Pandora Media, Inc.
September 23, 2018
Our
financial advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors
of the Company (in their capacity as directors of the Company and not in any other capacity) in connection with and for purposes
of its consideration of the Transaction. The issuance of this opinion was approved by the Centerview Partners LLC Fairness Opinion
Committee.
Based
upon and subject to the foregoing, including the various assumptions made, procedures followed, matters considered, and qualifications
and limitations set forth herein, we are of the opinion, as of the date hereof, that the Exchange Ratio provided for pursuant to
the Agreement is fair, from a financial point of view, to the holders of Shares other than Excluded Shares.
Very
truly yours,
CENTERVIEW
PARTNERS LLC
Annex C
|
LionTree Advisors LLC
660 Madison Avenue, 15
th
Floor
New York, NY 10065
|
CONFIDENTIAL
September
23, 2018
The
Board of Directors
Pandora
Media, Inc.
2101
Webster Street, Suite 1650
Oakland,
California 94612
Dear
Members of the Board:
We
understand that Pandora Media, Inc. (the
“Company”
) proposes to enter into an Agreement and Plan of Merger
and Reorganization, to be dated as of September 23, 2018 (the
“Agreement”
), by and among the Company, Sirius
XM Holdings Inc. (the
“Acquiror”
) and White Oaks Acquisition Corp., a wholly owned subsidiary of the Acquiror
(
“Merger Sub”
), pursuant to which (i) a newly formed corporation and wholly owned subsidiary of the Company
will merge with and into the Company, as a result of which the Company will become a wholly owned subsidiary of a newly formed
corporation (
“New Holdco”
), and each issued and outstanding share of common stock, par value $0.0001 per share,
of the Company (the
“Company Stock”
) will be converted, subject to certain exceptions, into one validly issued,
fully paid and non-assessable share of common stock of New Holdco (
“New Holdco Stock”
), and
(ii)
immediately
thereafter, Merger Sub will merge with and into New Holdco, as a result of which New Holdco will become a wholly owned subsidiary
of the Acquiror, and each issued and outstanding share of New Holdco Stock will be converted, subject to certain exceptions, into
the right to receive 1.44 (the
“Exchange Ratio”
) validly issued, fully paid and non-assessable shares of common
stock, par value $0.001 per share, of the Acquiror (the
“Acquiror Stock”
and, such number of shares of Company
Stock to be issued, the
“Consideration”
).
The
transactions contemplated by the Agreement (collectively, the
“Transaction”
) and the terms and conditions thereof
are more fully set forth in the Agreement.
You
have requested our opinion as to the fairness, from a financial point of view, of the Exchange Ratio pursuant to the Agreement
to the public holders of Company Stock (other than the Acquiror and its respective affiliates (collectively, the
“Excluded
Parties”
)) (without giving effect to any impact of the Transaction on any particular stockholder of the Company other
than in its capacity as a holder of Company Stock).
In
arriving at our opinion, we have, among other things:
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(i)
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reviewed a draft, dated September 23, 2018, of the Agreement;
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(ii)
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reviewed certain publicly available business and financial
information relating to the Company and the Acquiror;
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(iii)
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reviewed certain historical financial information and
other data relating to the Company that were provided to us by the management of the Company, approved for our use by the
Company, and not publicly available;
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The Board of Directors
Pandora Media, Inc.
September 23, 2018
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(iv)
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reviewed certain internal financial forecasts, estimates, and other data
relating to the business and financial prospects of the Company that were provided to us by the management of the Company,
approved for our use by the Company, and not publicly available, including financial forecasts and estimates for the fiscal
years ending December 31, 2018, through December 31, 2025, prepared by the management of the Company;
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(v)
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conducted discussions with members of the senior management of the Company
concerning the business, operations, historical financial results, and financial prospects of the Company and the Transaction;
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(vi)
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conducted limited discussions with members of the senior management of the
Acquiror concerning near term financial prospects of the Acquiror;
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(vii)
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reviewed current and historical market prices of the Company Stock and the
Acquiror Stock;
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(viii)
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reviewed certain publicly available financial and stock market data with respect
to certain other companies;
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(ix)
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reviewed and compared data regarding the premiums paid in certain other transactions;
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(x)
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reviewed certain financial performance data of the Company and compared that
data with similar data for certain other companies; and
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(xi)
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conducted such other financial studies, analyses and investigations, and considered
such other information, as we deemed necessary or appropriate.
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In
connection with our review, with your consent, we have assumed and relied upon, without independent verification, the accuracy
and completeness of the information provided to, discussed with, or reviewed by us for the purpose of this opinion. In addition,
with your consent, we have not made any independent evaluation or appraisal of any of the assets or liabilities (contingent or
otherwise) of the Company or the Acquiror, or any of their respective subsidiaries, nor have we been furnished with any such evaluation
or appraisal. With respect to the financial forecasts and estimates referred to above, we have assumed, with your consent (and
based on advice of management of the Company), that they have been reasonably prepared in good faith on a basis reflecting the
best currently available estimates and judgments of the management of the Company as to the future financial performance of the
Company and its subsidiaries and will be achieved at the times and in the amounts projected. We express no opinion with respect
to such forecasts or estimates. We also have assumed, with your consent, that the Transaction will have the tax consequences contemplated
by the Agreement. This opinion does not address any legal, regulatory, taxation, or accounting matters, as to which we understand
that you have obtained such advice as you deemed necessary from qualified professionals, and we have assumed the accuracy and veracity
of all assessments made by such advisors to the Company with respect to such matters. Our opinion is necessarily based on economic,
monetary, market,
The Board of Directors
Pandora Media, Inc.
September 23, 2018
and
other conditions as in effect on, and the information available to us as of, the date hereof and our opinion speaks only as of
the date hereof.
Our
opinion does not address the Company’s underlying business decision to engage in the Transaction or any related transaction,
the relative merits of the Transaction or any related transaction as compared to other business strategies or transactions that
might be available to the Company, or whether the consideration to be received by the stockholders of the Company pursuant to the
Agreement represents the best price obtainable. In connection with our engagement, we did not negotiate the Exchange Ratio or any
other matter with the Acquiror or its representatives on your behalf and we were not requested to, and did not, solicit interest
from other parties prior to the date hereof with respect to an acquisition of, or other business combination with, the Company
or any other alternative transaction. We also express no view as to, and our opinion does not address, the solvency of the Company
or any other entity under any state, federal, or other laws relating to bankruptcy, insolvency, or similar matters. This opinion
addresses only the fairness, from a financial point of view, of the Exchange Ratio pursuant to the Agreement, as of the date hereof,
to the holders of Company Stock (other than the Excluded Parties). We have not been asked to, nor do we, offer any opinion as to
the terms, other than the Exchange Ratio to the extent expressly specified herein, of the Agreement or any related documents or
the form of the Transaction or any related transaction (including any agreement or transaction between any Excluded Party and the
Company or between any Excluded Party and the Acquiror), including the fairness of the Transaction to, or any consideration received
in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of the Company, the
Acquiror, or any of their respective affiliates. We have not been asked to, nor do we, offer any opinion with respect to any allocation
of the Consideration (or any portion thereof), or the fair market value of the Company, the Acquiror, the Company Stock, or the
Acquiror Stock. In addition, we express no opinion as to the fairness of the amount or nature of any compensation to be received
by any officers, directors, or employees of any parties to the Transaction, any Excluded Parties, or any class of such persons,
whether relative to the Exchange Ratio or otherwise. This letter should not be construed as creating any fiduciary duty on the
part of LionTree Advisors LLC (or any of its affiliates) to any party. We express no opinion as to what the value of the Acquiror
Stock will be when issued pursuant to the Transaction or the prices at which the Acquiror Stock or Company Stock will trade at
any time. In rendering this opinion, we have assumed, with your consent, that except as would not be in any way meaningful to our
analysis: (i) the final executed form of the Agreement will not differ from the draft that we have reviewed, (ii) the representations
and warranties of the parties to the Agreement, and the related Transaction documents, are true and correct, (iii) the parties
to the Agreement, and the related Transaction documents, will comply with and perform all covenants and agreements required to
be complied with or performed by such parties under the Agreement and the related Transaction documents, and (iv) the Transaction
will be consummated in accordance with the terms of the Agreement and related Transaction documents, without any waiver or amendment
of any term or condition thereof. We have also assumed, with your consent, that all governmental, regulatory, or other third-party
consents and approvals necessary for the consummation of the Transaction or otherwise contemplated by the Agreement will be obtained
without any adverse effect on the Company, the Acquiror, or on the expected benefits of the Transaction in any way meaningful to
our analysis.
The Board of Directors
Pandora Media, Inc.
September 23, 2018
This
opinion is provided solely for the benefit of the Board of Directors of the Company (in its capacity as such) in connection with,
and for the sole purpose of, its evaluation of the Transaction, and does not constitute a recommendation to any stockholder as
to how such stockholder should vote or act with respect to the Transaction or any other matter.
We
have acted as financial advisor to the Board of Directors of the Company in connection with the Transaction. We will receive a
fee for our services, a portion of which is payable in connection with this opinion, and the Company has agreed to reimburse certain
of our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. In the past, we and
our affiliates have provided investment banking services and capital markets services to affiliates of the Acquiror and their
related entities or entities in which such affiliates have a significant direct or indirect interest, unrelated to the proposed
Transaction, for which we and our affiliates received, and may receive, compensation, including having acted as (i) financial
advisor to Charter Communications, Inc., Liberty Global plc, Lions Gate Entertainment Corp., Live Nation Entertainment, Inc. and
Starz in connection with a number of merger and acquisition transactions or similar matters and (ii) co-manager in connection
with certain debt offerings of such entities (including Charter Communications, Inc. and Live Nation Entertainment, Inc.). We
and our affiliates may also seek to provide such services to the Company, the Acquiror, their respective affiliates and their
related entities or entities in which they have a significant direct or indirect interest, and expect to receive fees for the
rendering of these services. In addition, from time to time, John C. Malone, who has a significant indirect ownership interest
in the Acquiror through affiliated entities, and Greg Maffei, who is Chairman of the Company and Chairman of the Acquiror, have
invested in, or alongside with, investment vehicles established by one or more of our affiliates. One or more of our affiliates
may establish investment vehicles in the future in which affiliates of the Acquiror may invest. In connection with the bankruptcy
proceedings of iHeart Media, Inc. (
“iHeart”
), in which affiliates of the Acquiror have an interest, we and our affiliates
have been engaged to act as a special financial advisor to iHeart for which we and our affiliates may receive compensation. In
the ordinary course of business, certain of our employees and affiliates may hold or trade, for their own accounts and the accounts
of their investors, securities of the Company and the Acquiror and, accordingly, may at any time hold a long or short position
in such securities. The issuance of this opinion was approved by an authorized committee of LionTree Advisors LLC.
This
opinion may not be disclosed, referred to, or communicated (in whole or in part) to any third party, nor shall any public reference
to us be made, for any purpose whatsoever except with our prior written consent in each instance.
Based
upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio pursuant to the Agreement
is fair, from a financial point of view, to the holders of Company Stock (other than the Excluded Parties).
[
Signature Page Follows
]
The Board of Directors
Pandora Media, Inc.
September 23, 2018
Very
truly yours,
LIONTREE
ADVISORS LLC