RingCentral, Inc 8-K, filed Nov 9, 2021
RingCentral, Inc. (RNG)
About this 8-K
RingCentral, Inc filed this 8-K on November 9, 2021, reporting on events of November 8, 2021.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 3.02: Unregistered sale of equity
- Item 3.03: Change to shareholders' rights
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 2021 (
(Exact name of registrant as specified in its charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On November 9, 2021, RingCentral, Inc. (“RingCentral” or the “Company”) announced that the Company has entered into a strategic partnership with Mitel US Holdings, Inc. (“MUSHI”) and certain of its affiliates (collectively, “Mitel”). In connection with the strategic partnership, RingCentral entered into various agreements, including (i) a Purchase and Sale Agreement with MUSHI and, solely for the limited purposes set forth therein, Mitel Networks (International) Limited (“MNIL”), (ii) a Framework Agreement with MUSHI, Mitel Networks, Inc. (“MNI”), and, for limited purposes set forth therein, MNIL, (iii) an Investment Agreement with Searchlight II MLN, L.P. (“Searchlight Investor”), and (iv) certain other related agreements.
Purchase and Sale Agreement
On November 8, 2021, RingCentral entered into a Purchase and Sale Agreement with MUSHI and, solely for the limited purposes set forth therein, MNIL, which sets forth, among other things, the principal terms and conditions of the Company’s acquisition and license of certain intellectual property rights related to CloudLink and MiCloud Connect (the “Purchased Assets”). The Company will pay up to $650,000,000 as consideration for the Purchased Assets, consisting of $300,000,000 in the form of cash paid at closing, approximately $300,000,000 in the form of 1,281,504 shares of Class A common stock, par value $0.0001 per share, of the Company (the “Class A Common Stock” and such shares, the “Purchase Share Consideration”) paid at closing (at a per share value of $234.10, which is equal to the closing price of the Class A Common Stock on the New York Stock Exchange on November 5, 2021), and up to $50,000,000, which was held back to cover potential claims and certain events postclosing and is payable after closing in the form of, at the Company’s sole election, cash or shares of Class A Common Stock. The transactions contemplated by the Purchase and Sale Agreement were consummated on November 9, 2021 and RingCentral and MUSHI entered into a License Agreement, dated as of November 9, 2021, pursuant to which RingCentral granted MUSHI a limited license to the Purchased Assets.
The Purchase and Sale Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated into this Item 1.01 by reference, and the foregoing summary of the Purchase and Sale Agreement is qualified in its entirety by reference to Exhibit 10.1.
Framework Agreement
On November 8, 2021, RingCentral entered into a Framework Agreement and other related agreements, effective as of November 9, 2021, with MUSHI, MNI, and, solely for the limited purposes set forth therein, MNIL, governing the terms of the commercial arrangement between the parties. Under the Framework Agreement, RingCentral will be Mitel’s exclusive provider of UCaaS offerings and exclusive provider for cloud communications applications. Pursuant to the agreement, Mitel will be marketing and selling RingCentral MVP and certain other RingCentral services, and RingCentral will pay compensation to Mitel in connection with sales of RingCentral products to Mitel customers, which compensation will be paid in the form of cash and/or shares of Class A Common Stock. The Framework Agreement has a multiyear term and can be earlier terminated by the parties under certain circumstances set forth therein.
Investment Agreement and Designation of Series A Preferred Stock
On November 8, 2021, RingCentral entered into the Investment Agreement, pursuant to which RingCentral sold to Searchlight Investor, in a private placement exempt from registration under the Securities Act of 1933, as amended, (the “Securities Act”), 200,000 shares of newly-issued Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), for an aggregate purchase price of $200 million. The Series A Preferred Stock issued to Searchlight Investor pursuant to the Investment Agreement is convertible into shares of RingCentral’s Class A common stock, par value $0.0001 per share, at a conversion price of $269.22 per share. The transactions contemplated by the Investment Agreement were consummated on November 9, 2021.
The Series A Preferred Stock ranks senior to the shares of the Company’s Class A common stock and Class B common stock with respect to rights on the distribution of assets on any voluntary or involuntary liquidation or winding up of the affairs of the Company. The Series A Preferred Stock is a zero coupon, perpetual preferred stock, with a liquidation preference of $1,000 per share and other customary terms, including with respect to mandatory conversion and change of control premium under certain circumstances.
Holders of Series A Preferred Stock will be entitled to vote with the holders of the Class A common stock and Class B common stock on an as-converted basis. Holders of the Series A Preferred Stock will be entitled to a separate class vote with respect to, among other things, amendments to the Company’s organizational documents that have an adverse impact on the rights, preferences, privileges or voting power of the Series A Preferred Stock, authorizations or issuances of Company capital stock, or other securities convertible into capital stock, that is senior to, or equal in priority with, the Series A Preferred Stock, and increases or decreases in the number of authorized shares of Series A Preferred Stock.
RingCentral filed a Certificate of Designations of the Series A Preferred Stock with the Secretary of the State of Delaware on November 9, 2021 setting forth the powers, preferences and rights, and the qualifications, limitations and restrictions, of the Series A Preferred Stock.
The Investment Agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated into this Item 1.01 by reference, and the foregoing summary of the Investment Agreement is qualified in its entirety by reference to Exhibit 10.2.
Registration Rights Agreements
On November 8, 2021, RingCentral entered into a Registration Rights Agreement with Searchlight Investor (the “Searchlight Registration Rights Agreement”) and a Registration Rights Agreement with MUSHI (the “Mitel Registration Rights Agreement”), each effective as of November 9, 2021, which provides the counterparty with, among other things, customary demand registration rights, subject to customary restrictions.
The Searchlight Registration Rights Agreement is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated into this Item 1.01 by reference, and the foregoing summary of the Searchlight Registration Rights Agreement is qualified in its entirety by reference to Exhibit 10.3. The Mitel Registration Rights Agreement is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated into this Item 1.01 by reference, and the foregoing summary of the MUSHI Registration Rights Agreement is qualified in its entirety by reference to Exhibit 10.4.
Investor Rights Agreement and Stockholder Rights Agreement
On November 8, 2021, RingCentral entered into an Investor Rights Agreement with Searchlight Investor (the “Searchlight Investor Rights Agreement”), and a Stockholder Rights Agreement with MUSHI ( the “Mitel Investor Rights Agreement”), each effective as of November 9, 2021. Such agreements contain customary terms
, including transfer restrictions, standstill restrictions, and voting commitments, pursuant to which the stockholder must vote in favor of each nominee or director nominated by the Board (or any committee thereof) and against the removal of any director nominated by the Board (or any committee thereof), certain exceptions.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The information contained in Item 1.01 is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information contained in Item 1.01 is incorporated herein by reference.
As described in Item 1.01, under the terms of the Purchase and Sale Agreement, the Company issued, and under the terms of the Framework Agreement, the Company has agreed to issue, shares of RingCentral’s Class A Common Stock to MUSHI. These issuances and sales were and will be exempt from registration under the Securities Act, pursuant to Section 4(a)(2) of the Securities Act.
As described in Item 1.01, under the terms of the Investment Agreement, RingCentral issued shares of Series A Preferred Stock to Searchlight Investor at the Closing. This issuance and sale was exempt from registration under the Securities Act, pursuant to Section 4(a)(2) of the Securities Act.
Item 3.03. Material Modification to Rights of Security Holders.
The information contained in Items 1.01 and 5.03 is incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On November 9, 2021, RingCentral filed a Certificate of Designations of the Series A Preferred Stock with the Secretary of the State of Delaware, setting forth the powers, preferences and rights, and the qualifications, limitations and restrictions, of the Series A Preferred Stock. A summary of the terms of the Series A Preferred Stock is contained above under “Item 1.01 Entry into a Material Definitive Agreement,” which is incorporated by reference herein.
The Certificate of Designations is filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated into this Item 5.03 by reference, and the foregoing summary of the Certificate of Designations is qualified in its entirety by reference to Exhibit 3.1.
Item 8.01. Other Events.
On November 9, 2021, the Company issued a press release announcing the strategic partnership and related transactions with Mitel. The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Forward Looking Statements
This Current Report on Form 8-K contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking” statements for purposes of the U.S. federal and state securities laws. These statements may be identified by the use of forward looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “our vision,” “plan,” “potential,” “preliminary,” “predict,” “should,” “will,” or “would” or the negative thereof or other variations thereof or comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. Risks and uncertainties that may cause these forward-looking statements to be inaccurate include, among others: the announcement of the strategic partnership; and other risks discussed in the Company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”). These risks and uncertainties may cause the Company’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a further list and description of such risks and uncertainties, please refer to the Company’s filings with the SEC that are available at www.sec.gov. The Company cautions you that the list of important factors included in the Company’s SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: November 9, 2021
| RINGCENTRAL, INC. | ||||||
| By: | /s/ Mitesh Dhruv | |||||
| Name: | Mitesh Dhruv | |||||
| Title: | Chief Financial Officer (Principal Financial Officer) | |||||
| By: | /s/ Vaibhav Agarwal | |||||
| Name: | Vaibhav Agarwal | |||||
| Title: | Chief Accounting Officer (Principal Accounting Officer) | |||||
Exhibit 3.1
CERTIFICATE OF DESIGNATIONS OF
SERIES A CONVERTIBLE PREFERRED STOCK,
PAR VALUE $0.0001,
OF
RINGCENTRAL, INC.
Pursuant to Section 151 of the Delaware General Corporation Law (as amended, supplemented or restated from time to time, the “DGCL”), RINGCENTRAL, INC., a corporation organized and existing under the laws of the State of Delaware (the “Company”), in accordance with the provisions of Section 103 of the DGCL, DOES HEREBY CERTIFY:
That, the Second Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware (as amended, the “Certificate of Incorporation”), currently authorizes the issuance of 1,350,000,000 shares of capital stock, consisting of 1,000,000,000 shares of Class A Common Stock, par value $0.0001 per share (the “Common Stock”), 250,000,000 shares of Class B Common Stock, par value $0.0001 per share, and 100,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”);
That, subject to the Certificate of Incorporation, the board of directors of the Company (the “Board”) is authorized to fix by resolution or resolutions the designations and the powers, including voting powers, if any, preferences and relative, participating, optional or other rights, if any, and qualifications, limitations or restrictions thereof, of any series of Preferred Stock, and to fix the number of shares constituting any such series.
That, pursuant to the authority conferred upon the Board by the Certificate of Incorporation, the Board adopted the following resolution designating a new series of Preferred Stock as “Series A Convertible Preferred Stock”:
RESOLVED, that, pursuant to the authority vested in the Board in accordance with the provisions of Article IV of the Certificate of Incorporation and the provisions of Section 151 of the DGCL, a series of Preferred Stock of the Company is hereby authorized, and the number of shares to be included in such series, and voting powers, designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions of the shares of Preferred Stock included in such series, shall be as follows:
SECTION 1. Designation and Number of Shares. The shares of such series of Preferred Stock shall be designated as “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”). The number of authorized shares constituting the Series A Preferred Stock shall be 200,000. That number from time to time may be increased (but not above the total number of authorized shares of the class and subject to Section 13(b)(iii)) or decreased (but not below the number of shares of Series A Preferred Stock then outstanding and subject to Section 13(b)(iii)) by further resolution duly adopted by the Board, or any duly authorized committee thereof, and by the filing of a certificate pursuant to the provisions of the DGCL stating that such increase or decrease, as applicable, has been so authorized. The Company shall not have the authority to issue fractional shares of Series A Preferred Stock.
SECTION 2. Ranking. The Series A Preferred Stock will rank, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company:
(a) on a parity basis with each other class or series of Capital Stock of the Company now existing or hereafter authorized, the terms of which expressly provide that such class or series ranks on a parity basis with the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Parity Stock”);
(b) junior to each other class or series of Capital Stock of the Company now existing or hereafter authorized, the terms of which expressly provide that such class or series ranks senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Senior Stock”); and
(c) senior to the Common Stock and each other class or series of Capital Stock of the Company now existing or hereafter authorized, the terms of which do not expressly provide that such class or series ranks on a parity basis with or senior to the Series A Preferred Stock as to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (such Capital Stock, “Junior Stock”).
SECTION 3. Definitions. As used herein for all purposes of this Certificate of Designations:
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person; provided, however, (i) that the Company and its Subsidiaries shall not be deemed to be Affiliates of the Investor or any of its Affiliates and (ii) that with respect to the Investor and its Affiliates, “Affiliate” shall not include any portfolio company or investment fund, vehicle or similar entity affiliated with Searchlight Capital Partners, L.P. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.
Any Person shall be deemed to “beneficially own”, to have “beneficial ownership” of, or to be “beneficially owning” any securities (which securities shall also be deemed “beneficially owned” by such Person) that such Person is deemed to “beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act; provided that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable within sixty (60) days or thereafter (including assuming conversion of all Series A Preferred Stock, if any, owned by such Person to Common Stock).
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“Affiliated Holders” means, with respect to any person, any company, partnership, trust, foundation or other entity or investment vehicle for which such person possesses Voting Control (as defined in the Certificate of Incorporation) with respect to the Company’s Class B Common Stock held by such company, partnership, trust, foundation or other entity or investment vehicle.
“Board” has the meaning set forth in the recitals above.
“Business Day” means any weekday that is not a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to be closed.
“Bylaws” means the Amended and Restated Bylaws of the Company, as may be amended from time to time.
“Capital Stock” means, with respect to any Person, any and all shares of, interests in, rights to purchase, warrants to purchase, options for, participations in or other equivalents of or interests in (however designated) equity issued by such Person.
“Certificate of Designations” means this Certificate of Designations relating to the Series A Preferred Stock, as it may be amended from time to time.
“Certificate of Incorporation” has the meaning set forth in the recitals above.
“Change of Control” means the occurrence of one of the following, whether in a single transaction or a series of transactions:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), who files a Schedule TO or any schedule, form or report under the Exchange Act disclosing or with respect to whom it otherwise becomes known (through public disclosure or otherwise) to the Company that such person or group has become the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority of the total voting power of the outstanding Voting Stock of the Company, other than as a result of a transaction in which (1) the holders of securities that represented 100% of the outstanding Voting Stock of the Company immediately prior to such transaction are substantially the same as the holders of securities that represent a majority of the outstanding Voting Stock of the surviving Person or its Parent Entity immediately following such transaction and (2) the holders of securities that represented 100% of the outstanding Voting Stock of the Company immediately prior to such transaction own directly or indirectly Voting Stock of the surviving Person or its Parent Entity in substantially the same proportion to each other as immediately prior to such transaction; provided that, for purposes of calculating the voting power of the Voting Stock directly or indirectly “beneficially owned,” as defined in Rule 13d-3 and 13d-5 under the Exchange Act, by Founder Holders or a “group” that includes the Founder Holders, such calculation shall exclude in both the numerator and denominator (A) any shares of Voting Stock publicly disclosed as of the date hereof in SEC filings of the Founder Holders or the
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Company to be directly or indirectly beneficially owned by the Founder Holders on the date hereof and (B) any shares of Voting Stock directly or indirectly beneficially owned by the Founder Holders as a result of the acquisition by the Founder Holders of equity grants (or the exercise or conversion thereof) outstanding on the date hereof or subsequently granted, in each case, made under the Company’s equity incentive plans.
(b) the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company, or the sale, transfer or lease of all or substantially all of the assets of the Company (determined on a consolidated basis), whether in a single transaction or a series of related transactions, to another Person, or any recapitalization, reclassification or other transaction (other than the filing of any amendment to the Certificate of Incorporation solely to change the title of the Class A Common Stock from “Class A Common Stock” to “Common Stock” or a change in par value) in which all or substantially all of the Common Stock is or is entitled to be exchanged for or converted into cash, securities or other property, other than (1) a transaction following which in the case of a merger or consolidation transaction, holders of securities that represented 100% of the outstanding Voting Stock of the Company immediately prior to such transaction own directly or indirectly (in substantially the same proportion to each other as immediately prior to such transaction, other than changes in proportionality as a result of any cash/stock election provided under the terms of the definitive agreement regarding such transaction) at least a majority of the voting power of the outstanding Voting Stock of the surviving Person or Parent Entity in such merger or consolidation transaction immediately after such transaction, and (2) in the case of a sale, transfer or lease of all or substantially all of the assets of the Company, such sale, transfer or lease is to a Subsidiary or a Person that becomes a Subsidiary of the Company; or
(c) shares of Common Stock or shares of any other Capital Stock of the Company into which the Series A Preferred Stock is convertible are not listed for trading on any United States national securities exchange or cease to be traded in contemplation of a de-listing (other than as a result of a transaction described in clause (b) above).
“Change of Control Effective Date” has the meaning set forth in Section 9(b).
“Change of Control Purchase Date” means, with respect to each share of Series A Preferred Stock, the date on which the Company makes the payment in full of the Change of Control Redemption Price for such share to the Holder thereof or to the Transfer Agent, irrevocably, for the benefit of such Holder.
“Change of Control Redemption” has the meaning set forth in Section 9(a).
“Change of Control Redemption Price” has the meaning set forth in Section 9(a).
“Common Stock” has the meaning set forth in the recitals above.
“close of business” means 5:00 p.m. (New York City time).
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“Closing Price” of the Common Stock on any date of determination means the closing sale price or, if no closing sale price is reported, the last reported sale price, of the shares of the Common Stock on the NYSE on such date. If the Common Stock is not traded on the NYSE on any date of determination, the Closing Price of the Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal United States securities exchange or automated quotation system on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal United States securities exchange or automated quotation system on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a United States securities exchange or automated quotation system, the last quoted bid price for the Common Stock in the over-the-counter market as reported by OTC Markets Group Inc. or any similar organization, or, if that bid price is not available, the market price of the Common Stock on that date as determined by an Independent Financial Advisor retained by the Company for such purpose.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Common Stock” has the meaning set forth in the recitals above.
“Company” has the meaning set forth in the recitals above.
“Constituent Person” has the meaning set forth in Section 12(a).
“Conversion Agent” means the Transfer Agent acting in its capacity as conversion agent for the Series A Preferred Stock, and its successors and assigns.
“Conversion Date” has the meaning set forth in Section 8(a).
“Conversion Notice” has the meaning set forth in Section 8(a)(i).
“Conversion Price” means, for each share of Series A Preferred Stock, a dollar amount equal to $1,000 divided by the Conversion Rate.
“Conversion Rate” means, for each share of Series A Preferred Stock, 3.7145 shares of Common Stock, subject to adjustment as set forth herein.
“Current Market Price” per share of Common Stock, as of any date of determination, means the arithmetic average of the VWAP per share of Common Stock for each of the ten (10) consecutive full Trading Days ending on the Trading Day immediately preceding such day, appropriately adjusted to take into account the occurrence during such period of any event described in Section 11.
“DGCL” has the meaning set forth in the recitals above.
“Distributed Property” has the meaning set forth in Section 11(a)(iv).
“Distribution Transaction” means any distribution of equity securities of a Subsidiary of the Company to holders of Common Stock, whether by means of a spin-off, split-off, redemption, reclassification, exchange, stock dividend, share distribution, rights offering or similar transaction.
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“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Property” has the meaning set forth in Section 12(a).
“Expiration Date” has the meaning set forth in Section 11(a)(iii).
“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as reasonably determined in good faith by the Board, or an authorized committee thereof, (i) after consultation with an Independent Financial Advisor, as to any security or other property with a Fair Market Value of less than $50,000,000, or (ii) otherwise using an Independent Financial Advisor to provide a valuation opinion.
“Founder Holder” means Vladimir Shmunis, Vlad Vendrow, ELCA Fund I, L.P., ELCA Fund II, L.P., ELCA Fund III, L.P or ELCA, LLC and each of their respective Affiliated Holders.
“Holder” means a Person in whose name the shares of the Series A Preferred Stock are registered, which Person shall be treated by the Company, Transfer Agent, Registrar, paying agent and Conversion Agent as the absolute owner of the shares of Series A Preferred Stock for the purpose of making payment and settling conversions and for all other purposes; provided that, to the fullest extent permitted by law, no Person that has received shares of Series A Preferred Stock in violation of the Securities Purchase Agreement shall be a Holder, and the Transfer Agent, Registrar, paying agent and Conversion Agent, as applicable, shall not, unless directed otherwise by the Company, recognize any such Person as a Holder and the Person in whose name the shares of the Series A Preferred Stock were registered immediately prior to such transfer shall remain the Holder of such shares.
“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing; provided, however, that such firm or consultant is not an Affiliate of the Company and does not have a material relationship with the Company.
“Initial Change of Control Notice” has the meaning set forth in Section 9(b).
“Investor” has the meaning set forth in the Securities Purchase Agreement.
“Registration Rights Agreement” means that certain Registration Rights Agreement between the Company and Searchlight II MLN, L.P. made and entered into as of November 8, 2021 and effective as of November 9, 2021, as it may be amended, supplemented or otherwise modified from time to time.
“Issuance Date” means, with respect to any share of Series A Preferred Stock, the date of issuance of such share.
“Junior Stock” has the meaning set forth in Section 2(c).
“Liquidation Preference” means, with respect to any share of Series A Preferred Stock, as of any date, $1,000 per share.
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“Mandatory Conversion” has the meaning set forth in Section 7(a).
“Mandatory Conversion Date” has the meaning set forth in Section 7(a).
“Mandatory Conversion Price” means 175% of the Conversion Price, as adjusted pursuant to the provisions of Section 11(a). The Mandatory Conversion Price shall initially be $471.13.
“Market Disruption Event” means any of the following events:
(a) any suspension of, or limitation imposed on, trading of the Common Stock by any exchange or quotation system on which the Closing Price is determined pursuant to the definition of the term “Closing Price” (the “Relevant Exchange”) during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Common Stock, any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) and whether by reason of movements in price exceeding limits permitted by the Relevant Exchange as to securities generally, or otherwise relating to the Common Stock or options contracts relating to the Common Stock on the Relevant Exchange; or
(b) any event that disrupts or impairs (as determined by the Company in its reasonable discretion) the ability of market participants during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Common Stock, any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) in general to effect transactions in, or obtain market values for, the Common Stock on the Relevant Exchange or to effect transactions in, or obtain market values for, options contracts relating to the Common Stock on the Relevant Exchange.
“Notice of Mandatory Conversion” has the meaning set forth in Section 7(b).
“NYSE” means the New York Stock Exchange.
“Officer’s Certificate” means a certificate signed by the Chief Executive Officer, the Chief Financial Officer, the Secretary, or any President or Vice President of the Company (whether or not designated by a number or numbers or word or words added before or after the title “President” or “Vice President”).
“Original Issuance Date” means the Closing Date, as defined in the Securities Purchase Agreement.
“Parent Entity” means, with respect to any Person, any other Person of which such first Person is a direct or indirect wholly owned Subsidiary.
“Parity Stock” has the meaning set forth in Section 2(a).
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“Person” means any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or any other entity.
“Preferred Stock” has the meaning set forth in the recitals above.
“Record Date” means, with respect to any dividend, distribution or other transaction or event in which holders of Common Stock have the right to receive any cash, securities or other property or in which Common Stock is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of Common Stock entitled to receive such cash, securities or other property (whether such date is fixed by the Board or by statute, contract or otherwise).
“Registrar” means the Transfer Agent acting in its capacity as registrar for the Series A Preferred Stock, and its successors and assigns.
“Relevant Exchange” has the meaning set forth in the definition of the term “Market Disruption Event”.
“Reorganization Event” has the meaning set forth in Section 12(a).
“Required Number of Shares” has the meaning set forth in Section 9(g).
“Securities Purchase Agreement” means that certain Investment Agreement between the Company and Searchlight II MLN, L.P., dated as of November 8, 2021, as it may be amended, supplemented or otherwise modified from time to time.
“Senior Stock” has the meaning set forth in Section 2(b).
“Series A Preferred Stock” has the meaning set forth in Section 1.
“Subsidiary”, when used with respect to any Person, means any corporation, limited liability company, partnership, association, trust or other entity of which (i) securities or other ownership interests representing more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) or (ii) sufficient voting rights to elect at least a majority of the board of directors or other governing body are, as of such date, owned by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Trading Day” means a Business Day on which the Relevant Exchange is scheduled to be open for business and on which there has not occurred a Market Disruption Event.
“Trading Period” has the meaning set forth in Section 7(a).
“Transfer Agent” means the Person acting as Transfer Agent, Registrar and paying agent and Conversion Agent for the Series A Preferred Stock, and its successors and assigns. The Transfer Agent initially shall be Computershare Trust Company, N.A.
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“Trigger Event” has the meaning set forth in Section 11(a)(vii).
“Voting Stock” means (i) with respect to the Company, the Common Stock (or any other Capital Stock into which the Common Stock has been reclassified) and (ii) with respect to any other Person, all Capital Stock of such Person having the right to vote generally in any election of directors of the board of directors of such Person or other similar governing body.
“VWAP” per share of Common Stock on any Trading Day means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg (or, if Bloomberg ceases to publish such price, any successor service reasonably chosen by the Company) page “RINGCENTRAL <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of Common Stock on such Trading Day determined, using a volume-weighted average method, by an Independent Financial Advisor retained for such purpose by the Company).
SECTION 4. Dividends.
(a) Participating Dividends. Dividends or distributions may be authorized by the Board, or any duly authorized committee thereof, and declared and paid by the Company, or any duly authorized committee thereof, on any Junior Stock and Parity Stock from time to time (a “Common Dividend”); provided that, notwithstanding anything to the contrary in this Certificate of Designations, at the time of such authorization, the Board or such committee authorizes an equivalent dividend or distribution on the Series A Preferred Stock (a “Participating Dividend”) such that (1) the Record Date and the payment date for such Participating Dividend occur on the same respective date as the Record Date and payment date for such Common Dividend and (2) the kind and amount of consideration payable per share of Series A Preferred Stock in such Participating Dividend is the same kind and amount of consideration that would be payable to holders of Common Stock in the Common Dividend in respect of a number of shares of Common Stock that would be issuable upon conversion of a share of Series A Preferred Stock (pursuant to Section 6) immediately prior to the Record Date for such Common Dividend.
(b) Conversion Following a Record Date. If the Conversion Date for any shares of Series A Preferred Stock is after the close of business on a Record Date but prior to the corresponding payment date for such dividend or distribution, the Holder of such shares as of such Record Date shall be entitled to receive such dividend or distribution, notwithstanding the conversion of such shares prior to the applicable payment date.
SECTION 5. Liquidation Rights. (a) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Holders shall be entitled, out of assets legally available therefor, before any distribution or payment out of the assets of the Company may be made to or set aside for the holders of any Junior Stock, and subject to the rights of the holders of any Senior Stock and the rights of the Company’s existing and future creditors, to receive in full a liquidating distribution in cash and in the amount per share of Series A Preferred Stock equal to the greater of (i) the Liquidation Preference with respect to such share of Series A Preferred Stock as of the date of such voluntary or involuntary
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liquidation, dissolution or winding up of the affairs of the Company and (ii) the amount such Holders would have received had such Holders, immediately prior to such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, converted such shares of Series A Preferred Stock into Common Stock (pursuant to Section 6). Holders shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company other than what is expressly provided for in this Section 5 and will have no right or claim to any of the Company’s remaining assets.
(b) Partial Payment. If in connection with any distribution described in Section 5(a) above, the assets of the Company or proceeds therefrom are not sufficient to pay in full the aggregate liquidating distributions required to be paid pursuant to Section 5(a) to all Holders and the liquidating distributions payable to all holders of any Parity Stock, the amounts distributed to the Holders and to the holders of all such Parity Stock shall be paid pro rata in accordance with the respective aggregate liquidating distributions to which they would otherwise be entitled if all amounts payable thereon were paid in full.
(c) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of the Company shall not be deemed a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, nor shall the merger, consolidation, exchange or any other business combination transaction of the Company into or with any other Person or the merger, consolidation, exchange or any other business combination transaction of any other Person into or with the Company be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
SECTION 6. Right of the Holders to Convert.
(a) Each Holder shall have the right, at such Holder’s option, subject to the conversion procedures set forth in Section 8, to convert each share of such Holder’s Series A Preferred Stock at any time into (i) the number of shares of Common Stock equal to the quotient of (A) the Liquidation Preference with respect to such share of Series A Preferred Stock divided by (B) the Conversion Price as of the applicable Conversion Date plus (ii) cash in lieu of fractional shares as set out in Section 11(h). The right of conversion may be exercised as to all or any portion of such Holder’s Series A Preferred Stock from time to time; provided that, in each case, no right of conversion may be exercised by a Holder in respect of fewer than 1,000 shares of Series A Preferred Stock (unless such conversion relates to all shares of Series A Preferred Stock held by such Holder).
(b) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of the Series A Preferred Stock, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of Series A Preferred Stock then outstanding. Any shares of Common Stock issued upon conversion of Series A Preferred Stock shall be duly authorized, validly issued, fully paid and nonassessable.
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SECTION 7. Mandatory Conversion by the Company. (a) So long as a Shelf Registration Statement (as defined in the Investor Rights Agreement) is in effect (to the extent it is required to be in effect under the Investor Rights Agreement), at any time after the three (3) year anniversary of the Original Issuance Date, if the VWAP per share of Common Stock was greater than the Mandatory Conversion Price for (x) each of at least twenty (20) Trading Days in any period of thirty (30) consecutive Trading Days (such thirty (30) consecutive Trading Day period, the “Trading Period”) and (y) the last Trading Day of such Trading Period, the Company may, subject to the conversion procedures set forth in this Section 7, elect to convert (a “Mandatory Conversion”) all of the outstanding shares of Series A Preferred Stock into shares of Common Stock (the date selected by the Company for any Mandatory Conversion pursuant to this Section 7(a), the “Mandatory Conversion Date”). In the case of a Mandatory Conversion, each share of Series A Preferred Stock then outstanding shall be converted into (i) the number of shares of Common Stock equal to the quotient of (A) the Liquidation Preference with respect to such share of Series A Preferred Stock divided by (B) the Conversion Price of such share in effect as of the Mandatory Conversion Date plus (ii) cash in lieu of fractional shares as set out in Section 11(h).
(b) Notice of Mandatory Conversion. If the Company elects to effect a Mandatory Conversion, the Company shall, within ten (10) Business Days following the completion of the applicable thirty (30) day Trading Period referred to in Section 7(a) above, provide notice of the Mandatory Conversion to each Holder (such notice, a “Notice of Mandatory Conversion”). For the avoidance of doubt, a Notice of Mandatory Conversion does not limit a Holder’s right to convert on a Conversion Date prior to the Mandatory Conversion Date. The Mandatory Conversion Date selected by the Company shall be no less than ten (10) Business Days and no more than twenty (20) Business Days after the date on which the Company provides the Notice of Mandatory Conversion to the Holders. The Notice of Mandatory Conversion shall state, as appropriate:
(i) the Mandatory Conversion Date selected by the Company; and
(ii) the Conversion Rate as expected to be in effect on the Mandatory Conversion Date, the number of shares Series A Preferred Stock to be converted from such Holder, the number of shares of Common Stock to be issued to such Holder upon conversion of each such share of Series A Preferred Stock and the Liquidation Preference expected as of the Mandatory Conversion Date.
(c) The Company may not deliver a Notice of Mandatory Conversion during the period beginning on the date that it publicly announces its execution of a definitive agreement contemplating a Change of Control and ending on the date that is thirty (30) Trading Days after the Company’s public announcement of the termination of such definitive agreement, if any.
SECTION 8. Conversion Procedures and Effect of Conversion. (a) Conversion Procedure. A Holder must do each of the following in order to convert shares of Series A Preferred Stock pursuant to Section 6(a):
(i) complete and manually sign the conversion notice provided by the Conversion Agent (the “Conversion Notice”), and deliver such notice to the Conversion Agent; provided that a Conversion Notice may be conditional (which condition may be a condition subsequent) on the completion of a Change of Control or other corporate transaction or other event or period of time;
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(ii) deliver to the Conversion Agent the certificate or certificates (if any) representing the shares of Series A Preferred Stock to be converted;
(iii) if required, furnish appropriate endorsements and transfer documents; and
(iv) if required, pay any stock transfer, documentary, stamp or similar taxes not payable by the Company pursuant to Section 21.
The “Conversion Date” means (A) with respect to conversion of any shares of Series A Preferred Stock at the option of any Holder pursuant to Section 6(a), the date on which such Holder complies with the procedures in this Section 8(a) (including the satisfaction of any conditions to conversion set forth in the Conversion Notice) and (B) with respect to Mandatory Conversion pursuant to Section 7(a), the Mandatory Conversion Date.
(b) Effect of Conversion. Effective immediately prior to the close of business on the Conversion Date applicable to any shares of Series A Preferred Stock, dividends shall no longer be declared on any such shares of Series A Preferred Stock, and such shares of Series A Preferred Stock shall cease to be outstanding.
(c) Record Holder of Underlying Securities as of Conversion Date. The Person or Persons entitled to receive the Common Stock and, to the extent applicable, cash, securities or other property issuable upon conversion of Series A Preferred Stock on a Conversion Date shall be treated for all purposes as the record holder(s) of such shares of Common Stock and/or cash, securities or other property as of the close of business on such Conversion Date. As promptly as practicable on or after the Conversion Date (and in any event no later than two (2) Trading Days thereafter; provided however that, if a written notice from the Holder in accordance with Section 8(a)(i) specifies a date of delivery for any shares of Common Stock, such shares shall be delivered on the date so specified, which shall be no earlier than the second (2nd) Trading Day immediately following the date of such notice), the Company shall issue the number of whole shares of Common Stock issuable upon conversion (and deliver payment of cash in lieu of fractional shares as set out in Section 11(h)) and, to the extent applicable, any cash, securities or other property issuable in connection therewith. Such delivery of shares of Common Stock, securities or other property shall be made by book-entry or, at the request of the Holder, by delivering a notice to the Conversion Agent, through the facilities of The Depository Trust Company or in certificated form. Any such certificate or certificates shall be delivered by the Company to the appropriate Holder on a book-entry basis, through the facilities of The Depository Trust Company, or by mailing certificates evidencing the shares to the Holders, in each case at their respective addresses as set forth in the Conversion Notice (in the case of a conversion pursuant to Section 6(a)) or in the records of the Company or as set forth in a notice from the Holder to the Conversion Agent, as applicable (in the case of a Mandatory Conversion). In the event that a Holder shall not by written notice designate the name in which shares of Common Stock (and payments of cash in lieu of fractional shares) and, to the extent applicable, cash, securities or other property to be delivered upon conversion of shares of Series A Preferred
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Stock should be registered or paid, or the manner in which such shares, cash, securities or other property should be delivered, the Company shall be entitled to register and deliver such shares, securities or other property, and make such payment, in the name of the Holder and in the manner shown on the records of the Company.
(d) Status of Converted or Reacquired Shares. Shares of Series A Preferred Stock converted in accordance with this Certificate of Designations, or otherwise acquired by the Company in any manner whatsoever, shall be retired promptly after the conversion or acquisition thereof and shall not be reissued as shares of such series. All such shares shall, upon their retirement and any filing required by the DGCL, become authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the Board pursuant to the provisions of the Certificate of Incorporation.
(e) Partial Conversion. In case any certificate for shares of Series A Preferred Stock shall be surrendered for partial conversion, the Company shall, at its expense, execute and deliver to or upon the written order of the Holder of the certificate so surrendered a new certificate for the shares of Series A Preferred Stock not converted.
SECTION 9. Change of Control. (a) Holder Rights Upon Change of Control. Upon the occurrence of a Change of Control, the Company shall redeem (the “Change of Control Redemption”) all shares of Series A Preferred Stock that have not been converted pursuant to Section 6(a) prior to the occurrence of such Change of Control at a purchase price per share of Series A Preferred Stock (the “Change of Control Redemption Price”), payable in cash, equal to (i) the Liquidation Preference of such share of Series A Preferred Stock or (ii) if the Change of Control occurs before the second (2nd) anniversary of the Original Issuance Date, 1.5 multiplied by the Liquidation Preference of such share of Series A Preferred Stock; provided that the Company shall only be required to pay the Change of Control Redemption Price to the extent such purchase can be made out of funds legally available therefor in accordance with Section 9(g).
(b) Initial Change of Control Notice. On or before the twentieth (20th) Business Day prior to the effective date of a Change of Control (the “Change of Control Effective Date”) (or, if later, promptly after the Company discovers that a Change of Control may occur), a written notice (the “Initial Change of Control Notice”) shall be sent by or on behalf of the Company to the Holders as they appear in the records of the Company, which notice shall contain (i) the date on which the Change of Control is anticipated to be effected (or, if applicable, the date on which a Schedule TO or other schedule, form or report disclosing a Change of Control was filed), (ii) a description of the material terms and conditions of the Change of Control and (iii) the then applicable Conversion Rate. No later than ten (10) Business Days prior to the Change of Control Effective Date as set forth in the Initial Change of Control Notice (or, if the Change of Control has already occurred as provided in the Initial Change of Control Notice, promptly, but no later than the tenth (10th) Business Day following receipt thereof), any Holder that desires to exercise its right to convert all or a portion of its shares of Series A Preferred Stock pursuant to Section 6(a) (and not have such Series A Preferred Stock redeemed pursuant to Section 9(a)) shall notify the Company in writing thereof and shall specify (x) whether such Holder is electing to exercise its right to convert all or a portion of its shares of Series A Preferred Stock pursuant to Section 6(a), and (y) the number of shares of Series A Preferred Stock subject to such conversion.
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(c) Final Change of Control Redemption Notice. Within ten (10) Business Days prior to the Change of Control Effective Date (or if the Company discovers later than such date that a Change of Control has occurred, promptly following the date of such discovery), a final written notice shall be sent by or on behalf of the Company to the Holders as they appear in the records of the Company on the Business Day immediately prior to the date such notice is sent, which notice shall contain:
(i) a statement setting forth in reasonable detail the calculation of the Change of Control Redemption Price with respect to such Holder;
(ii) the Change of Control Purchase Date, which shall be no later than the Change of Control Effective Date and shall provide a reasonable amount of time between delivery of such notice and the Change of Control Purchase Date to allow such Holder to comply with the instructions delivered pursuant to Section 9(c)(iii) below; and
(iii) the instructions a Holder must follow to receive the Change of Control Redemption Price in connection with such Change of Control.
(d) Change of Control Redemption Procedure. To receive the Change of Control Redemption Price, a Holder must surrender to the Transfer Agent in accordance with the instructions delivered pursuant to Section 9(c)(iii), the certificates representing the shares of Series A Preferred Stock to be repurchased by the Company or lost stock affidavits therefor, to the extent applicable or book entry statements evidencing such shares, if uncertificated.
(e) Delivery upon Change of Control Redemption. Upon a Change of Control Redemption, subject to Section 9(g) below, the Company (or its successor) shall deliver or cause to be delivered to the Holder by wire transfer of immediately available funds, the Change of Control Redemption Price for such Holder’s shares of Series A Preferred Stock.
(f) Treatment of Shares. Until a share of Series A Preferred Stock is redeemed by the payment or deposit in full of the applicable Change of Control Redemption Price as provided in Section 9(i), such share of Series A Preferred Stock will remain outstanding and will be entitled to all of the powers, designations, preferences and other rights provided herein; provided that no such shares of Series A Preferred Stock may be converted into shares of Common Stock following the Change of Control Effective Date.
(g) Sufficient Funds. If the Company shall not have sufficient funds legally available under the DGCL to redeem all shares of Series A Preferred Stock required under Section 9(a) (the “Required Number of Shares”), the Company shall (i) redeem, pro rata among the Holders (for the avoidance of doubt, other than any shares that have been converted into Common Stock), a number of shares of Series A Preferred Stock with an aggregate Change of Control Redemption Price equal to the amount legally available for the purchase of shares of Series A Preferred Stock under the DGCL and (ii) purchase any shares of Series A Preferred Stock not purchased because of the foregoing limitations at the applicable Change of Control Redemption Price as soon as practicable after the Company is able to make such purchase out of
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assets legally available for the purchase of such share of Series A Preferred Stock. The inability of the Company (or its successor) to make a purchase payment for any reason shall not relieve the Company (or its successor) from its obligation to effect any required purchase when, as and if permitted by applicable law. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to comply with its obligations under this Section 9.
(h) Change of Control Agreements. The Company shall not enter into any agreement for a transaction constituting a Change of Control unless (i) such agreement provides for or does not interfere with or prevent (as applicable) the exercise by the Holders of their Change of Control Redemption in a manner that is consistent with and gives effect to this Section 9, and (ii) the acquiring or surviving Person in such Change of Control represents or covenants, in form and substance reasonably satisfactory to the Board acting in good faith, that at the closing of such Change of Control such Person shall have sufficient funds (which may include, without limitation, cash and cash equivalents on the Company’s balance sheet, the proceeds of any debt or equity financing, available lines of credit or uncalled capital commitments) to consummate such Change of Control and the payment of the Change of Control Redemption Price in respect of shares of Series A Preferred Stock that have not been converted into Common Stock prior to the Change of Control Effective Date.
(i) With respect to any share of Series A Preferred Stock to be redeemed by the Company pursuant to the Change of Control Redemption and which has been redeemed in accordance with the provisions of this Section 9, or for which the Company has irrevocably deposited an amount equal to the Change of Control Redemption Price in respect of such share with the Transfer Agent (which amount the Transfer Agent shall hold in trust irrevocably for the holder of such share of Series A Preferred Stock), (i) such share shall no longer be deemed outstanding and (ii) all rights with respect to such share shall cease and terminate other than (x) the rights of the Holder thereof to receive the Change of Control Redemption Price therefor and (y) the rights of the Holder to receive dividends or distributions with a Record Date prior to such redemption or deposit.
SECTION 10. RESERVED.
SECTION 11. Anti-Dilution Adjustments. (a) Adjustments. The Conversion Rate will be subject to adjustment, without duplication, upon the occurrence of the following events, except that the Company shall not make any adjustment to the Conversion Rate if Holders of the Series A Preferred Stock participate, at the same time and upon the same terms as holders of Common Stock and solely as a result of holding shares of Series A Preferred Stock, in any transaction described in this Section 11(a), without having to convert their Series A Preferred Stock, as if they held a number of shares of Common Stock equal to the number of shares of Common Stock into which the shares of Series A Preferred Stock held by such Holder are convertible pursuant to Section 6:
(i) The issuance of Common Stock as a dividend or distribution to all or substantially all holders of Common Stock, or a subdivision or combination of Common Stock or a reclassification of Common Stock into a greater or lesser number of shares of Common Stock, in which event the Conversion Rate shall be adjusted based on the following formula:
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CR1 = CR0 x (OS1 / OS0)
CR0 = the Conversion Rate in effect immediately prior to the close of business on (i) the Record Date for such dividend or distribution, or (ii) the effective date of such subdivision, combination or reclassification
CR1 = the new Conversion Rate in effect immediately after the close of business on (i) the Record Date for such dividend or distribution, or (ii) the effective date of such subdivision, combination or reclassification
OS0 = the number of shares of Common Stock outstanding immediately prior to the close of business on (i) the Record Date for such dividend or distribution or (ii) the effective date of such subdivision, combination or reclassification
OS1 = the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, the completion of such event
Any adjustment made pursuant to this clause (i) shall be effective immediately after the close of business on the Record Date for such dividend or distribution, or the effective date of such subdivision, combination or reclassification. If any such event is announced or declared but does not occur, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such event shall not occur, to the Conversion Rate that would then be in effect if such event had not been announced or declared.
(ii) The dividend, distribution or other issuance to all or substantially all holders of Common Stock of rights (other than rights, options or warrants distributed in connection with a stockholder rights plan (in which event the provisions of Section 11(a)(vii) shall apply)), options or warrants entitling them to subscribe for or purchase shares of Common Stock, at a price per share that is less than the Current Market Price as of the Record Date for such issuance, in which event the Conversion Rate will be increased based on the following formula:
CR1 = CR0 x [(OS0+X) / (OS0+Y)]
CR0 = the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend, distribution or issuance
CR1 = the new Conversion Rate in effect immediately following the close of business on the Record Date for such dividend, distribution or issuance
OS0 = the number of shares of Common Stock outstanding immediately prior to the close of business on the Record Date for such dividend, distribution or issuance
X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants
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Y = the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants divided by the Current Market Price as of the Record Date for such dividend, distribution or issuance.
For purposes of this clause (ii), in determining whether any rights, options or warrants entitle the holders to purchase the Common Stock at a price per share that is less than the Current Market Price as of the Record Date for such dividend, distribution or issuance, there shall be taken into account any consideration the Company receives for such rights, options or warrants, and any amount payable on exercise thereof, with the value of such consideration, if other than cash, to be the Fair Market Value thereof.
Any adjustment made pursuant to this clause (ii) shall become effective immediately following the close of business on the Record Date for such dividend, distribution or issuance. In the event that such rights, options or warrants are not so issued, the Conversion Rate shall be readjusted, effective as of the date the Board publicly announces its decision not to issue such rights, options or warrants, to the Conversion Rate that would then be in effect if such dividend, distribution or issuance had not been declared. To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock are otherwise not delivered pursuant to such rights, options or warrants upon the exercise of such rights, options or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the dividend, distribution or issuance of such rights, options or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered.
(iii) The Company or one or more of its Subsidiaries purchases Common Stock pursuant to a tender offer or exchange offer (other than an exchange offer that constitutes a Distribution Transaction subject to Section 11(a)(v)) by the Company or a Subsidiary of the Company for all or any portion of the Common Stock, or otherwise acquires Common Stock (except (1) in an open market purchase in compliance with Rule 10b-18 promulgated under the Exchange Act, (2) through an “accelerated share repurchase” on customary terms, or (3) in connection with tax withholding upon vesting or settlement of options, restricted stock units, performance share units or other similar equity awards or upon forfeiture or cashless exercise of options or other equity awards) (a “Covered Repurchase”), if the cash and value of any other consideration included in the payment per share of Common Stock validly tendered, exchanged or otherwise acquired through a Covered Repurchase exceeds the arithmetic average of the VWAP per share of Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the Trading Day next succeeding the last day on which tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended) or shares of Common Stock are otherwise acquired through a Covered Repurchase (the “Expiration Date”), in which event the Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x [(FMV + (SP1 x OS1)) / (SP1 x OS0)]
CR0 = the Conversion Rate in effect immediately prior to the close of business on the Expiration Date
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CR1 = the new Conversion Rate in effect immediately after the close of business on the Expiration Date
FMV = the Fair Market Value, on the Expiration Date, of all cash and any other consideration paid or payable for all shares validly tendered or exchanged and not withdrawn, or otherwise acquired through a Covered Repurchase, as of the Expiration Date
OS0 = the number of shares of Common Stock outstanding immediately prior to the last time tenders or exchanges may be made pursuant to such tender or exchange offer (including the shares to be purchased in such tender or exchange offer) or shares are otherwise acquired through a Covered Repurchase
OS1 = the number of shares of Common Stock outstanding immediately after the last time tenders or exchanges may be made pursuant to such tender or exchange offer (after giving effect to the purchase of shares in such tender or exchange offer) or shares are otherwise acquired through a Covered Repurchase
SP1 = the arithmetic average of the VWAP per share of Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the Trading Day next succeeding the Expiration Date
Such adjustment shall become effective immediately after the close of business on the Expiration Date. If an adjustment to the Conversion Rate is required under this Section 11(a)(iii), delivery of any additional shares of Common Stock that may be deliverable upon conversion as a result of an adjustment required under this Section 11(a)(iii) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 11(a)(iii).
In the event that the Company or any of its Subsidiaries is obligated to purchase Common Stock pursuant to any such tender offer, exchange offer or other commitment to acquire shares of Common Stock through a Covered Repurchase but is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Conversion Rate shall be readjusted to be the Conversion Rate that would have been then in effect if such tender offer, exchange offer or Covered Repurchase had not been made.
(iv) The Company shall, by dividend or otherwise, distribute to all or substantially all holders of its Common Stock (other than for cash in lieu of fractional shares), shares of any class of its Capital Stock, evidences of its indebtedness, assets, other property or securities, but excluding (A) dividends or distributions referred to in Section 11(a)(i) or Section 11(a)(ii) hereof, (B) Distribution Transactions as to which Section 11(a)(v) shall apply, (C) dividends or distributions paid exclusively in cash as to which Section 11(a)(vi) shall apply and (D) rights, options or warrants distributed in connection with a stockholder rights plan as to which Section 11(a)(vii) shall apply (any of such shares of its Capital Stock, indebtedness, assets or property that are not so excluded are hereinafter called the “Distributed Property”), then, in each such case the Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x [SP0 / (SP0 - FMV)]
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CR0 = the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution
CR1 = the new Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution
SP0 = the Current Market Price as of the Record Date for such dividend or distribution
FMV = the Fair Market Value of the portion of Distributed Property distributed with respect to each outstanding share of Common Stock on the Record Date for such dividend or distribution; provided that, if FMV is equal or greater than SP0, then in lieu of the foregoing adjustment, the Company shall distribute to each holder of Series A Preferred Stock on the date the applicable Distributed Property is distributed to holders of Common Stock, but without requiring such holder to convert its shares of Series A Preferred Stock, in respect of each share of Series A Preferred Stock held by such holder, the amount of Distributed Property such holder would have received had such holder owned a number of shares of Common Stock equal to the Conversion Rate on the Record Date for such dividend or distribution
Any adjustment made pursuant to this clause (iv) shall be effective immediately after the close of business on the Record Date for such dividend or distribution. If any such dividend or distribution is declared but does not occur, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such dividend or distribution shall not occur, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
(v) The Company effects a Distribution Transaction, in which case the Conversion Rate in effect immediately prior to the effective date of the Distribution Transaction shall be increased based on the following formula:
CR1 = CR0 x [(FMV + MP0) / MP0]
CR0 = the Conversion Rate in effect immediately prior to the close of business on the effective date of the Distribution Transaction
CR1 = the new Conversion Rate in effect immediately after the close of business on the effective date of the Distribution Transaction
FMV = the arithmetic average of the volume-weighted average prices for a share of the capital stock or other interest distributed to holders of Common Stock on the principal United States securities exchange or automated quotation system on which such capital stock or other interest trades, as reported by Bloomberg (or, if Bloomberg ceases to publish such price, any successor service chosen by the Company) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of such capital stock or other interest on such Trading Day determined, using a volume-weighted average method, by an Independent Financial Advisor retained for such purpose by the Company), for each of the ten consecutive full Trading Days commencing with, and including, the first trading day following the effective date of the Distribution Transaction
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MP0 = the arithmetic average of the VWAP per share of Common Stock for each of the ten (10) consecutive full Trading Days commencing on, and including, the first trading day following the effective date of the Distribution Transaction
Such adjustment shall become effective immediately following the close of business on the effective date of the Distribution Transaction. If an adjustment to the Conversion Rate is required under this Section 11(a)(v), delivery of any additional shares of Common Stock that may be deliverable upon conversion as a result of an adjustment required under this Section 11(a)(v) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 11(a)(v).
(vi) The Company makes a cash dividend or distribution to all or substantially all holders of the Common Stock, the Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x [SP0 / (SP0 – C)]
CR0 = the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution
CR1 = the new Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution
SP0 = the Current Market Price as of the Record Date for such dividend or distribution
C = the amount in cash per share of Common Stock the Company distributes to all or substantially all holders of its Common Stock; provided that, if C is equal or greater than SP0, then in lieu of the foregoing adjustment, the Company shall pay to each holder of Series A Preferred Stock on the date the applicable cash dividend or distribution is made to holders of Common Stock, but without requiring such holder to convert its shares of Series A Preferred Stock, in respect of each share of Series A Preferred Stock held by such holder, the amount of cash such holder would have received had such holder owned a number of shares of Common Stock equal to the Conversion Rate on the Record Date for such dividend or distribution
Any adjustment made pursuant to this clause (vi) shall be effective immediately after the close of business on the Record Date for such dividend or distribution. If any dividend or distribution is declared but not paid, the Conversion Rate shall be readjusted, effective as of the date the Board announces that such dividend or distribution will not be paid, to the Conversion Rate that would then be in effect if such had dividend or distribution not been declared.
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(vii) If the Company has a stockholder rights plan in effect with respect to the Common Stock on any Conversion Date, upon conversion of any shares of the Series A Preferred Stock, Holders of such shares will receive, in addition to the applicable number of shares of Common Stock, the rights under such rights plan relating to such Common Stock, unless, prior to such Conversion Date, the rights have (i) become exercisable or (ii) separated from the shares of Common Stock (the first of such events to occur, a “Trigger Event”), in which case, the Conversion Rate will be adjusted, effective automatically at the time of such Trigger Event, as if the Company had made a distribution of such rights to all holders of Common Stock as described in Section 11(a)(ii) (without giving effect to the forty-five (45) day limit on the exercisability of rights, options or warrants ordinarily subject to such Section 11(a)(ii)), subject to appropriate readjustment in the event of the expiration, termination or redemption of such rights prior to the exercise, deemed exercise or exchange thereof. Notwithstanding the foregoing, to the extent any such stockholder rights are exchanged by the Company for shares of Common Stock or other property or securities, the Conversion Rate shall be appropriately readjusted as if such stockholder rights had not been issued, but the Company had instead issued such shares of Common Stock or other property or securities as a dividend or distribution of shares of Common Stock pursuant to Section 11(a)(i) or Section 11(a)(iv), as applicable.
To the extent that such rights are not exercised prior to their expiration, termination or redemption, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the occurrence of the Trigger Event been made on the basis of the issuance of, and the receipt of the exercise price with respect to, only the number of shares of Common Stock actually issued pursuant to such rights.
Notwithstanding anything to the contrary in this Section 11(a)(vii), no adjustment shall be required to be made to the Conversion Rate with respect to any Holder which is, or is an “affiliate” or “associate” of, an “acquiring person” under such stockholder rights plan or with respect to any direct or indirect transferee of such Holder who receives Series A Preferred Stock in such transfer after the time such Holder becomes, or its affiliate or associate becomes, such an “acquiring person”.
(b) Calculation of Adjustments. All adjustments to the Conversion Rate shall be calculated by the Company to the nearest 1/10,000th of one share of Common Stock (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment to the Conversion Rate will be required unless such adjustment would require an increase or decrease of at least one percent of the Conversion Rate; provided, however, that any such adjustment that is not required to be made will be carried forward and taken into account in any subsequent adjustment; provided, further that any such adjustment of less than one percent that has not been made will be made upon any Conversion Date or redemption or repurchase date.
(c) When No Adjustment Required. (i) Except as otherwise provided in this Section 11, the Conversion Rate will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing, or for the repurchase of Common Stock.
(ii) Except as otherwise provided in this Section 11, the Conversion Rate will not be adjusted as a result of the issuance of, the distribution of separate certificates representing, the exercise or redemption of, or the termination or invalidation of, rights pursuant to any stockholder rights plans.
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(iii) No adjustment to the Conversion Rate will be made:
(A) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in Common Stock under any plan in which purchases are made at market prices on the date or dates of purchase, without discount, and whether or not the Company bears the ordinary costs of administration and operation of the plan, including brokerage commissions;
(B) upon the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries or of any employee agreements or arrangements or programs, including, without limitation, the Company’s 2013 Equity Incentive Plan and forms of agreements thereunder;
(C) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security, including the Series A Preferred Stock; or
(D) for a change in the par value of the Company’s Capital Stock.
(d) Successive Adjustments. After an adjustment to the Conversion Rate under this Section 11, any subsequent event requiring an adjustment under this Section 11 shall cause an adjustment to each such Conversion Rate as so adjusted.
(e) Multiple Adjustments. For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Rate pursuant to this Section 11 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder; provided, however, that if more than one subsection of this Section 11 is applicable to a single event, the subsection shall be applied that produces the largest adjustment.
(f) Notice of Adjustments. Whenever the Conversion Rate is adjusted as provided under this Section 11, the Company shall as soon as reasonably practicable following the occurrence of an event that requires such adjustment (or if the Company is not aware of such occurrence, as soon as reasonably practicable after becoming so aware):
(i) compute the adjusted applicable Conversion Rate in accordance with this Section 11 and prepare and transmit to the Conversion Agent an Officer’s Certificate setting forth the applicable Conversion Rate, the method of calculation thereof, and the facts requiring such adjustment and upon which such adjustment is based; and
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(ii) provide a written notice to the Holders of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the applicable Conversion Rate was determined and setting forth the adjusted applicable Conversion Rate.
(g) Conversion Agent. The Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the Conversion Rate or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Conversion Agent shall be fully authorized and protected in relying on any Officer’s Certificate delivered pursuant to this Section 11(g) and any adjustment contained therein and the Conversion Agent shall not be deemed to have knowledge of any adjustment unless and until it has received such certificate. The Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, that may at the time be issued or delivered with respect to any Series A Preferred Stock and the Conversion Agent makes no representation with respect thereto. The Conversion Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock pursuant to the conversion of Series A Preferred Stock or to comply with any of the duties, responsibilities or covenants of the Company contained in this Section 11.
(h) Fractional Shares. No fractional shares of Common Stock will be delivered to the Holders upon conversion. In lieu of fractional shares otherwise issuable, the Holders will be entitled to receive, at the Company’s sole discretion, either (i) an amount in cash equal to the fraction of a share of Common Stock multiplied by the Closing Price of the Common Stock on the Trading Day immediately preceding the applicable Conversion Date or (ii) one additional whole share of Common Stock. In order to determine whether the number of shares of Common Stock to be delivered to a Holder upon the conversion of such Holder’s shares of Series A Preferred Stock will include a fractional share, such determination shall be based on the aggregate number of shares of Series A Preferred Stock of such Holder that are being converted and/or issued on any single Conversion Date or Change of Control Purchase Date.
SECTION 12. Adjustment for Reorganization Events.
(a) Reorganization Events. In the event of:
(i) any reclassification, exchange, merger, consolidation or other similar business combination of the Company with or into another Person, in each case, pursuant to which at least a majority of the total voting power of the outstanding Voting Stock of the Company is changed or converted into, or exchanged for, cash, securities or other property of the Company or another Person;
(ii) any sale, transfer, lease or conveyance to another Person of all or a majority of the property and assets of the Company, in each case pursuant to which the Common Stock is converted into cash, securities or other property; or
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(iii) any exchange of securities of the Company with another Person (other than in connection with a merger or acquisition) or reclassification, recapitalization or reorganization of the Common Stock into other securities;
other than, in each case, any such transaction that constitutes a Change of Control, with respect to which, for the avoidance of doubt, the provisions of Section 9 shall apply (each of which is referred to as a “Reorganization Event”), each share of Series A Preferred Stock outstanding immediately prior to such Reorganization Event will, without the consent of the Holders and subject to Section 12(d) and Section 13(b), remain outstanding but shall become convertible into, out of funds legally available therefor, the number, kind and amount of securities, cash and other property (the “Exchange Property”) (without any interest on such Exchange Property and without any right to dividends or distribution on such Exchange Property which have a Record Date that is prior to the applicable Conversion Date) that the Holder of such share of Series A Preferred Stock would have received in such Reorganization Event had such Holder converted its shares of Series A Preferred Stock into the applicable number of shares of Common Stock immediately prior to the effective date of the Reorganization Event using the Conversion Rate applicable immediately prior to the effective date of the Reorganization Event and the Liquidation Preference; provided that the foregoing shall not apply if such Holder is a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (any such Person, a “Constituent Person”), or an Affiliate of a Constituent Person, to the extent such Reorganization Event provides for different treatment of Common Stock held by such Constituent Persons or such Affiliate thereof. If the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each share of Common Stock held immediately prior to such Reorganization Event by a Person (other than a Constituent Person or an Affiliate thereof), then for the purpose of this Section 12(a), the kind and amount of securities, cash and other property receivable upon conversion following such Reorganization Event will be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock.
(b) Successive Reorganization Events. The above provisions of this Section 12 shall similarly apply to successive Reorganization Events and the provisions of Section 11 shall apply to any shares of Capital Stock received by the holders of the Common Stock in any such Reorganization Event.
(c) Reorganization Event Notice. The Company (or any successor) shall, no less than thirty (30) days prior to the anticipated effective date of any Reorganization Event, provide written notice to the Holders of such occurrence of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property (a “Reorganization Event Notice”) . Failure to deliver such Reorganization Event Notice shall not affect the operation of this Section 12.
(d) Reorganization Event Agreements. The Company shall not enter into any agreement for a transaction constituting a Reorganization Event unless (i) such agreement provides for or does not interfere with or prevent (as applicable) conversion of the Series A Preferred Stock into the Exchange Property in a manner that is consistent with and gives effect to this Section 12, and (ii) to the extent that the Company is not the surviving corporation in such
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Reorganization Event or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the conversion of the Series A Preferred Stock into Capital Stock of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event.
SECTION 13. Voting Rights.
(a) General. Except as provided in Section 13(b), Holders of shares of Series A Preferred Stock shall be entitled to vote as a single class with the holders of the Common Stock and the holders of any other class or series of Capital Stock of the Company then entitled to vote with the Common Stock on all matters submitted to a vote of the holders of Common Stock (and, if applicable, holders of any other class or series of Capital Stock of the Company). Each Holder shall be entitled to the number of votes equal to the product of (i) the largest number of whole shares of Common Stock into which all shares of Series A Preferred Stock could be converted pursuant to Section 6 multiplied by (ii) a fraction the numerator of which is the number of shares of Series A Preferred Stock held by such Holder and the denominator of which is the aggregate number of issued and outstanding shares of Series A Preferred Stock, in each case, at and calculated as of the Record Date for the determination of stockholders entitled to vote or consent on such matters or, if no such Record Date is established, at and as of the date such vote or consent is taken or any written consent of stockholders is first executed. The Holders shall be entitled to notice of any meeting of holders of Common Stock in accordance with the Certificate of Incorporation and Bylaws of the Company.
(b) Adverse Changes. The affirmative vote or consent of the Holders of at least a majority of the outstanding shares of Series A Preferred Stock, voting together as a separate class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be necessary for effecting or validating any of the following actions, whether or not such approval is required pursuant to the DGCL:
(i) any amendment, alteration or repeal (whether by merger, consolidation, or otherwise) of (A) any provision of the Certificate of Incorporation (other than this Certificate of Designations) or Bylaws that would have an adverse effect, in any material respect, on the rights, preferences, privileges or voting power of the Series A Preferred Stock or the Holders thereof or (B) any provision of this Certificate of Designations;
(ii) any amendment or alteration (whether by merger, consolidation, or otherwise) of, or any supplement (whether by a certificate of designations or otherwise) to, the Certificate of Incorporation or any provision thereof, or any other action to authorize or create, or increase the number of authorized or issued shares of, or any securities convertible into shares of, or reclassify any security into, or issue, any Parity Stock or Senior Stock or any other class or series of Capital Stock of the Company ranking senior to, or on a parity basis with, the Series A Preferred Stock as to dividend rights or rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company;
(iii) any increase or decrease in the authorized number of shares of Series A Preferred Stock or issuance of shares of Series A Preferred Stock after the Issuance Date (other than a decrease contemplated by Section 8(d) of this Certificate of Designations); and
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(iv) any dividend on the Common Stock that is a one-time special dividend of $100,000,000 or more (in cash or measured by the Fair Market Value of the property being distributed in the dividend).
provided, however, (A) that, with respect to any merger, consolidation or similar transaction in which the holders of the Series A Preferred Stock receive equity securities in exchange for the Series A Preferred Stock, so long as (1) the holders of the Series A Preferred Stock receive equity securities with rights, preferences, privileges and voting power substantially the same as those of the Series A Preferred Stock and (2) the provisions of the certification of incorporation or bylaws (or equivalent governing documents) of the surviving entity or successor entity in such transaction do not differ from the Certificate of Incorporation or Bylaws in any manner that would have an adverse effect, in any material respect, on the rights, preferences, privileges or voting power of the Series A Preferred Stock or the holders thereof, such holders shall not have any voting rights with respect to such amendment, alteration or repeal pursuant to clause (i) above and (B) that the authorization or creation of, or the increase in the number of authorized or issued shares of, or the reclassification of any security (other than the Series A Preferred Stock) into, or the issuance of, Junior Stock will not require the vote the holders of the Series A Preferred Stock pursuant to this Section 13(b).
For purposes of this Section 13, the filing in accordance with applicable law of a certificate of designations or any similar document setting forth or changing the designations, powers, preferences, rights, qualifications, limitations and restrictions of any class or series of stock of the Company shall be deemed an amendment to the Certificate of Incorporation.
(c) Notwithstanding anything to the contrary in this Certificate of Designations, any amendment, alteration or repeal (whether by merger, consolidation or otherwise) of any provision of the Certificate of Incorporation (including this Certificate of Designations) or Bylaws that adversely affects the Conversion Price, Conversion Rate, Liquidation Preference, Change of Control Redemption, the Mandatory Conversion Price or Change of Control Redemption Price shall not be effective as to the shares of Series A Preferred Stock held by any Holder without the consent of such Holder.
(d) Each Holder of Series A Preferred Stock will have one vote per share of Series A Preferred Stock held by such holder as of the applicable Record Date on any matter on which Holders of Series A Preferred Stock are entitled to vote separately as a class, whether at a meeting or by written consent.
(e) The affirmative vote or consent of the Holders of a majority of the outstanding shares of Series A Preferred Stock, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be sufficient to waive or amend the provisions of Section 9(h) of this Certificate of Designations, and any amendment or waiver of any of the provisions of Section 9(h) approved by such percentage of the Holders shall be binding on all of the Holders.
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(f) For the avoidance of doubt and notwithstanding anything to the contrary in the Certificate of Incorporation or Bylaws of the Company, the Holders of Series A Preferred Stock shall have the exclusive consent and voting rights set forth in Section 13(b) and may take action or consent to any action with respect to such rights without a meeting by delivering a consent in writing or by electronic transmission of the Holders of the Series A Preferred Stock entitled to cast not less than the minimum number of votes that would be necessary to authorize, take or consent to such action at a meeting of stockholders.
SECTION 14. RESERVED.
SECTION 15. Preemptive Rights. The Holders shall not have any preemptive rights.
SECTION 16. Term. Except as expressly provided in this Certificate of Designations, the shares of Series A Preferred Stock shall not be redeemable or otherwise mature and the term of the Series A Preferred Stock shall be perpetual.
SECTION 17. Creation of Capital Stock. Subject to Section 13(b), the Board, or any duly authorized committee thereof, without the vote of the Holders, may authorize and issue additional shares of Capital Stock of the Company.
SECTION 18. No Sinking Fund. Shares of Series A Preferred Stock shall not be subject to or entitled to the operation of a retirement or sinking fund.
SECTION 19. Transfer Agent, Conversion Agent, Registrar and Paying Agent. The duly appointed Transfer Agent, Conversion Agent, Registrar and paying agent for the Series A Preferred Stock shall be Computershare Trust Company, N.A. The Company may, in its sole discretion, appoint any other Person to serve as Transfer Agent, Conversion Agent, Registrar or paying agent for the Series A Preferred Stock and thereafter may remove or replace Computershare Trust Company, N.A. or such other Person at any time. Upon any such appointment or removal, the Company shall send or cause to be sent notice thereof to the Holders.
SECTION 20. Replacement Certificates. (a) Mutilated, Destroyed, Stolen or Lost Certificates. If physical certificates evidencing the Series A Preferred Stock are issued, the Company shall replace any mutilated certificate at the Holder’s expense upon surrender of that certificate to the Transfer Agent for cancellation. The Company shall replace certificates that become destroyed, stolen or lost at the Holder’s expense upon delivery to the Company and the Transfer Agent of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by the Transfer Agent and the Company.
(b) Certificates Following Conversion. If physical certificates representing the Series A Preferred Stock are issued, the Company shall not be required to issue replacement certificates representing shares of Series A Preferred Stock on or after the Conversion Date applicable to such shares (except if any certificate for shares of Series A Preferred Stock shall be surrendered for partial conversion, the Company shall, at its expense, execute and deliver to or upon the written order of the Holder of the certificate so surrendered a new certificate for the
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shares of Series A Preferred Stock not converted). In place of the delivery of a replacement certificate following the applicable Conversion Date, the Transfer Agent, upon receipt of the reasonably satisfactory evidence and indemnity described in clause (a) above, shall deliver certificates representing the shares of Common Stock issuable upon conversion of such shares of Series A Preferred Stock formerly evidenced by the physical certificate.
SECTION 21. Taxes. (a) Transfer Taxes. The Company shall pay any and all stock transfer, documentary, stamp and similar taxes that may be payable in respect of any issuance or delivery of shares of Series A Preferred Stock or shares of Common Stock or other securities issued on account of Series A Preferred Stock pursuant hereto or certificates representing such shares or securities. However, in the case of conversion of Series A Preferred Stock, the Company shall not be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Series A Preferred Stock, shares of Common Stock or other securities to a beneficial owner other than the beneficial owner of the Series A Preferred Stock immediately prior to such conversion, and shall not be required to make any such issuance, delivery or payment unless and until the Person otherwise entitled to such issuance, delivery or payment has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid or is not payable.
(b) Withholding; Tax Treatment. All payments and distributions (or deemed distributions) on the shares of Series A Preferred Stock (and on the shares of Common Stock received upon their conversion) shall be subject to withholding and backup withholding of taxes to the extent required by law, subject to applicable exemptions, and amounts withheld, if any, shall be treated as received by the Holders. Absent a change in law or a contrary determination (as defined in Section 1313(a) of the Code), the Holders and the Company agree not to treat (i) the Series A Preferred Stock as “preferred stock” within the meaning of Section 305 of the Code and Treasury Regulation Section 1.305-5 for United States federal income tax and withholding tax purposes, and shall not take a position inconsistent with such treatment and (ii) any accrued amounts thereon as a dividend for U.S. federal income tax purposes and applicable state and local tax purposes unless and until such dividends are declared and paid as Cash Dividends.
SECTION 22. Notices. All notices referred to herein shall be in writing and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail (return receipt requested) with postage prepaid, or by nationally recognized private courier service addressed: (i) if to the Company, to its office at RingCentral, Inc., 20 Davis Drive, Belmont, California 94002 (Attention: Chief Financial Officer), (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Company (which may include the records of the Transfer Agent) or (iii) to such other address as the Company or any such Holder, as the case may be, shall have designated by notice similarly given in writing.
SECTION 23. Facts Ascertainable. When the terms of this Certificate of Designations refers to a specific agreement or other document to determine the meaning or operation of a provision hereof, the Secretary of the Company shall maintain a copy of such agreement or document at the principal executive offices of the Company and a copy thereof shall be provided free of charge to any Holder who makes a request therefor. The Secretary of the Company shall also maintain a written record of the Issuance Date, the number of shares of Series A Preferred Stock issued to a Holder and the date of each such issuance, and shall furnish such written record free of charge to any Holder who makes a request therefor.
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SECTION 24. Waiver. Notwithstanding any provision in this Certificate of Designations to the contrary, any provision contained herein and any right of the Holders of Series A Preferred Stock granted hereunder may be waived as to all shares of Series A Preferred Stock (and the Holders thereof) upon the vote or written consent of the Holders of a majority of the outstanding shares of Series A Preferred Stock; provided that any waiver that adversely affects the Conversion Price, Conversion Rate, Liquidation Preference, Change of Control Redemption, the Mandatory Conversion Price or Change of Control Redemption Price shall not be effective as to the shares of Series A Preferred Stock held by any Holder without the consent of such Holder.
SECTION 25. Severability. If any term of the Series A Preferred Stock set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms set forth herein which can be given effect without the invalid, unlawful or unenforceable term will, nevertheless, remain in full force and effect, and no term herein set forth will be deemed dependent upon any other such term unless so expressed herein.
SECTION 26. Business Opportunities. To the fullest extent permitted by Section 122(17) of the DGCL (or any successor provision) and except as may be otherwise expressly agreed in writing by the Company and the Investor, the Company, on behalf of itself and its Subsidiaries, renounces any interest or expectancy of the Company and its Subsidiaries in, or in being offered an opportunity to participate in, business opportunities, that are from time to time presented to the Investor or any of its officers, representatives, directors, agents, stockholders, members, partners, Affiliates, Subsidiaries (other than the Company and its Subsidiaries), or any of its designees on the Company’s Board and/or any of its representatives who, from time to time, may act as officers of the Company, even if the opportunity is one that the Company or its Subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. Any Person purchasing or otherwise acquiring any interest in any shares of Capital Stock of the Company shall be deemed to have notice of and consented to the provisions of this Section 26. Neither the alteration, amendment or repeal of this Section 26, nor the adoption of any provision of the Certificate of Incorporation or this Certificate of Designations inconsistent with this Section 26, nor, to the fullest extent permitted by Delaware law, any modification of law, shall eliminate or reduce the effect of this Section 26 in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Section 26, would accrue or arise, prior to such alteration, amendment, repeal, adoption or modification. If any provision or provisions of this Section 26 shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Section 26 (including, without limitation, each portion of any paragraph of this Section 26 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Section 26 (including, without limitation, each such portion of any paragraph of this Section 26 containing any such provision held to be invalid, illegal or unenforceable) shall
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be construed so as to permit the Company to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Company to the fullest extent permitted by law. This Section 26 shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director, officer, employee or agent of the Company under the Certificate of Incorporation, the Bylaws, any other agreement between the Company and such director, officer, employee or agent or applicable law.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be executed this 9th day of November, 2021.
| RINGCENTRAL, INC. |
| By: /s/ |
| Name: John Marlow |
| Title: Chief Administrative Officer |
[Signature Page to Certificate of Designations]
Exhibit 10.1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
MITEL US HOLDINGS, INC.,
RINGCENTRAL, INC.
AND, SOLELY FOR THE PURPOSES SET FORTH HEREIN,
MITEL NETWORKS (INTERNATIONAL) LIMITED
Dated as of November 8, 2021
TABLE OF CONTENTS
| Page | ||||||
| ARTICLE I DEFINITIONS |
1 | |||||
| Section 1.1 |
Definitions | 1 | ||||
| Section 1.2 |
Other Defined Terms | 13 | ||||
| ARTICLE II PURCHASE AND SALE |
14 | |||||
| Section 2.1 |
Purchase and Sale | 14 | ||||
| Section 2.2 |
Closing | 14 | ||||
| Section 2.3 |
Purchase Price | 15 | ||||
| Section 2.4 |
Excluded Assets | 15 | ||||
| Section 2.5 |
Seller Liabilities | 15 | ||||
| Section 2.6 |
Purchaser Liabilities | 16 | ||||
| Section 2.7 |
Purchase Price Allocation | 16 | ||||
| Section 2.8 |
Withholding Rights | 17 | ||||
| ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER |
17 | |||||
| Section 3.1 |
Organization and Standing | 17 | ||||
| Section 3.2 |
Authority; Non-Contravention | 17 | ||||
| Section 3.3 |
Governmental Approvals | 18 | ||||
| Section 3.4 |
Title to Purchased Assets | 18 | ||||
| Section 3.5 |
Restrictions on Business Activities | 18 | ||||
| Section 3.6 |
Material Adverse Effect | 18 | ||||
| Section 3.7 |
Seller Financial Statements | 19 | ||||
| Section 3.8 |
Indebtedness | 19 | ||||
| Section 3.9 |
Compliance with Laws | 20 | ||||
| Section 3.10 |
Taxes | 21 | ||||
| Section 3.11 |
Intellectual Property | 22 | ||||
| Section 3.12 |
Listed Contracts; Material Contracts | 26 | ||||
| Section 3.13 |
Top End Users, Distributors and Suppliers | 26 | ||||
| Section 3.14 |
Legal Proceedings | 27 | ||||
| Section 3.15 |
Purchase for Investment | 27 | ||||
| Section 3.16 |
Private Placement Consideration | 27 | ||||
| Section 3.17 |
Solvency | 27 | ||||
| Section 3.18 |
Fairness Opinion | 28 | ||||
| Section 3.19 |
Brokers’ and Finders’ Fee | 28 | ||||
| Section 3.20 |
No Other Purchaser Representations or Warranties | 28 | ||||
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER |
28 | |||||
| Section 4.1 |
Organization and Standing | 28 | ||||
| Section 4.2 |
Capitalization | 29 | ||||
| Section 4.3 |
Authority; Non-Contravention | 30 | ||||
| Section 4.4 |
Governmental Approvals | 31 | ||||
| Section 4.5 |
Purchaser SEC Documents; Undisclosed Liabilities | 31 | ||||
| Section 4.6 |
Listing and Maintenance Requirements | 32 | ||||
| Section 4.7 |
Compliance with Laws | 33 | ||||
| Section 4.8 |
Taxes | 34 | ||||
| Section 4.9 |
Employees | 34 | ||||
| Section 4.10 |
Intellectual Property | 34 | ||||
| Section 4.11 |
Legal Proceedings | 34 | ||||
| Section 4.12 |
Related Party Transactions | 35 | ||||
| Section 4.13 |
No Other Seller Representations or Warranties | 35 | ||||
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| ARTICLE V COVENANTS |
35 | |||||
| Section 5.1 |
Publicity | 35 | ||||
| Section 5.2 |
NYSE Listing of Shares | 35 | ||||
| Section 5.3 |
Litigation Support | 35 | ||||
| Section 5.4 |
Misallocated Assets | 35 | ||||
| Section 5.5 |
Restrictive Legends | 36 | ||||
| Section 5.6 |
Further Assurances | 36 | ||||
| Section 5.7 |
Seller Licenses to Purchaser | 36 | ||||
| Section 5.8 |
Restrictions on Mitel Connectors and Core Softphone Library | 54 | ||||
| Section 5.9 |
Cooperation and Exchange of Information | 54 | ||||
| ARTICLE VI CERTAIN TAX MATTERS |
37 | |||||
| Section 6.1 |
Cooperation and Exchange of Information | 37 | ||||
| Section 6.2 |
Transfer Taxes | 37 | ||||
| Section 6.3 |
Straddle Periods | 37 | ||||
| ARTICLE VII SURVIVAL; INDEMNIFICATION; REMEDIES |
37 | |||||
| Section 7.1 |
Survival | 37 | ||||
| Section 7.2 |
Indemnification | 38 | ||||
| Section 7.3 |
Limitations on Indemnification | 40 | ||||
| Section 7.4 |
Claim Procedures | 41 | ||||
| Section 7.5 |
Third Party Claims | 41 | ||||
| ARTICLE VIII GENERAL PROVISIONS |
43 | |||||
| Section 8.1 |
Entire Agreement | 43 | ||||
| Section 8.2 |
Assignment | 43 | ||||
| Section 8.3 |
Amendments and Waivers | 43 | ||||
| Section 8.4 |
No Third-Party Beneficiaries | 43 | ||||
| Section 8.5 |
Notices | 43 | ||||
| Section 8.6 |
Specific Performance | 44 | ||||
| Section 8.7 |
Governing Law; Arbitration; Waiver of Jury Trial | 44 | ||||
| Section 8.8 |
Severability | 45 | ||||
| Section 8.9 |
Counterparts | 45 | ||||
| Section 8.10 |
Expenses | 46 | ||||
| Section 8.11 |
Interpretation; Absence of Presumption | 46 | ||||
| Section 8.12 |
Acknowledgment of Securities Laws | 46 | ||||
| Section 8.13 |
Disclosure Schedule References | 46 | ||||
| Section 8.14 |
Delays or Omissions | 46 | ||||
| Section 8.15 |
Guaranty | 47 | ||||
| EXHIBITS | ||
| Exhibit A | Form of Assignment Agreement and Bill of Sale | |
| Exhibit B | Form of Patent Assignment Agreement | |
| Exhibit C | CL Technology | |
| Exhibit D | MiC Technology | |
| Exhibit E | CloudLink GW—CTI Interface | |
| Exhibit F | License |
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT, dated as of November 8, 2021 (this “Agreement”), is by and among Mitel US Holdings, Inc., a Delaware corporation (“Seller”) and RingCentral, Inc., a Delaware corporation (“Purchaser” and, together with Seller and the Seller Entities signing the Assignment Agreement, the “Parties”) and, solely for the purposes of Article VIII, Mitel Networks (International) Limited, a U.K. limited company (“Guarantor”).
WHEREAS, Seller and certain of its Subsidiaries are engaged in, among other things, the MiC Business and the CloudLink Activities;
WHEREAS, Seller desires to sell certain assets related to the MiC Business and CloudLink to Purchaser while continuing to operate the MiC Business and conduct the CloudLink Activities (it being understood, for the avoidance of doubt, that Purchaser is not acquiring the MiC Business as a whole, and is not assuming any employees of Seller or any of its Affiliates);
WHEREAS, on the terms and subject to the conditions set forth herein, at the Closing (as defined below), the Seller Entities shall sell, assign, transfer and convey to Purchaser, and Purchaser shall purchase and acquire from the Seller Entities, all of their right, title and interest in and to the Purchased Assets (the “Transaction”) and the Seller Entities shall grant to Purchaser a license to the Seller Licensed IP Rights;
WHEREAS, concurrently with the execution and delivery of this Agreement, in connection with the transactions contemplated hereby, any of Guarantor or any of its Subsidiaries that have any right, title, or interest in or to any Purchased Assets (each a “Seller Entity” and, collectively, the “Seller Entities”), and Purchaser are entering into that certain Assignment Agreement and Bill of Sale (the “Assignment Agreement”), which shall become effective pursuant to its terms at the Closing.
NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, on the terms and subject to the conditions of this Agreement, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, capitalized terms not otherwise defined have the meaning ascribed to such terms in Schedule 2.3(c) and Exhibit F, and the following terms have the meanings set forth below:
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, directly or indirectly controlled by, or under direct or indirect common control with, such Person or a member of such Person’s immediate family; provided that, with respect to Seller and its Affiliates, “Affiliate” shall not include Searchlight Capital Partners, L.P. or any portfolio company (other than Guarantor and its Subsidiaries) or investment fund, vehicle or similar entity affiliated with Searchlight Capital Partners, L.P., other than for purposes of (i) Section 5.1 (Confidentiality) and Section 8.2 (Assignment), (ii) uses of the term “Non-Recourse Parties” with respect to Seller and its Affiliates and (iii) uses of the term “Representatives” with respect to Seller in Sections 3.20 and 5.1; provided, further, that Seller and its Affiliates shall be deemed not to be an Affiliate of Purchaser or any of its Subsidiaries and Purchaser and its Subsidiaries shall not be deemed to be Affiliates of Seller or any of its Affiliates. For purposes of this definition, the term “control” (including the correlative terms “controlling,” “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Anti-Corruption Laws” means, with respect to any Person, the Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78dd-1, et seq.) (the “FCPA”), any rules or regulations thereunder, the U.S. Travel Act, the United Kingdom Bribery Act 2010, Laws passed pursuant to the Organization of Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or any other Laws of any other jurisdiction (national, state or local) concerning anti-corruption, anti-bribery, or money laundering applicable to such Person.
“Acquired IPR Agreements” has the meaning set forth in Section 3.11(l).
“Business Day” means any day except a Saturday, a Sunday or other day on which the SEC or banking institutions in New York, New York or San Francisco, California are authorized or required by law, regulation or executive order to be closed.
“Bylaws” means the Amended and Restated Bylaws of Purchaser, as may be amended and restated from time to time.
“CC Technology” means any Technology to the extent used in the operation of, or that perform, Contact Center Solutions.
“Certificate of Incorporation” means the Second Amended and Restated Certificate of Incorporation of Purchaser, as may be amended and restated from time to time.
“CL” or “CloudLink” means all versions of the Software platform of Guarantor and its Subsidiaries, that are or were known as, or Sold or Marketed under the name of, “CloudLink”, which Software platform consists of a number of independent Software components operated as individual microservices. CloudLink is shown as #1 in the diagram attached hereto as Exhibit E.
“CL Gateway” means the Company-Owned Software that functions as a gateway (“Gateway”) between the instance of CloudLink operating on AWS (as of the date hereof) and an On-Premises Solution that interfaces to the Gateway through one or more Connectors. The CL Gateway is shown as #2 in the diagram attached hereto as Exhibit E.
“Core Softphone Library” means the collection of Company-Owned Software modules that provide softphone functionality on a computer or other device that connects to CloudLink. The Core Softphone Library is shown as # 9 in the diagram attached hereto as Exhibit E.
“CL MiC Relevant Technology” shall mean, collectively, (a) the independent Software components operated as individual microservices comprising CloudLink that are called by or used in the operation of MiCloud Connect, including as listed in Section 1.1(c) of the Seller Disclosure Schedules, (b) the Generic Connectors and (c) the CL Gateway.
“CL Technology ” means (a) the Company-Owned Software constituting CloudLink and associated existing documentation (including, for the avoidance of doubt, the Current CL Software and all prior versions of CloudLink, whether or not currently in use by the Seller Entities), (b) the Technology constituting the CL Gateway and the Generic Connectors and (c) all Company-Owned Technology (including any build scripts, make files, test scripts and build files included in such Company-Owned Technology) that is exclusively used in or exclusively necessary for (i) the CloudLink Activities, or (ii) the development, maintenance, compilation, testing, deployment or provision of CloudLink as of the date of this Agreement, excluding in each case all CC Technology, the Technology for the Mitel Connectors, the Core Softphone Library and Internal Support Technology. CL Technology includes the Technology set forth on Exhibit C. CL Technology shall not include business books and records, computers, hardware or other tangible personal property.
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“CL Transferred Derivatives” shall mean any new version or release, bug fix, patch or other modification with respect to the Software included in the CL MiC Relevant Technology, regardless of whether such Software is a derivative work (as “derivative work” is defined in the United States Copyright Act, 17 U.S.C. Section 101), in each case made by or on behalf of Guarantor or any of its Subsidiaries and released to production or made generally available to customers by Guarantor or any of its Subsidiaries.
“Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of Purchaser.
“Closing Cash Consideration” means an aggregate amount in cash equal to $300,000,000.
“CloudLink Activities” means the use of CloudLink by Guarantor or any of its Subsidiaries for their unified communications-as-a-service and on-premises communications offerings to customers (as of the date of this Agreement, except where an alternative date or timeframe is expressly indicated); provided that CloudLink Activities do not include the use of the Mitel Connectors to connect a Mitel On-Premises Solution to CL or the Exploitation of the Core Softphone Library.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Company-Owned” means, when used with respect to terms “Software” or “Technology,” that Software or Technology to the extent that Guarantor or any of its Subsidiaries owns any Intellectual Property Rights embodied by such Software or Technology. For the avoidance of doubt, Company-Owned Technology and Company-Owned Software do not include Licensed IP.
“Contact Center Solution” means any software application that can be integrated with or interoperate with an Offering to enable the interaction with, and support of, a large volume of customers through multiple means of communication, including voice, email, chat and collaboration tools.
“Contaminant” means any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” or “worm” (as such terms are commonly understood in the Software industry) or any other code, Software routines, or hardware components designed or intended to have, or capable of performing, any of the following functions: (i) disrupting, disabling, harming or otherwise impeding in any manner the operation of, or permitting or causing unauthorized access to, a system, network, or other device; or (ii) damaging or destroying any data or file without the user’s consent.
“Contract” means any loan or credit agreement, debenture, note, bond, mortgage, indenture, deed of trust, lease, sublease, license, contract or other agreement, arrangement or understanding, in each case, whether written or oral.
“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions or variants thereof or related or associated epidemics, pandemics or disease outbreaks.
“Current CL Software” means the Company-Owned Software constituting (a) the version(s) of CloudLink in production use by the Seller Entities as of the date of this Agreement and (b) the major release of CloudLink in production use by the Seller Entities immediately prior to the major release described in the foregoing part (a); provided that such prior release will be delivered to Purchaser only upon request.
“Current MiC Software” means the Company-Owned Software constituting (a) the versions of MiCloud Connect in production use by the Seller Entities as of the date of this Agreement and (b) the major release of MiCloud Connect in production use by the Seller Entities immediately prior to the major release described in the foregoing part (a); provided that such prior release will be delivered to Purchaser only upon request.
“DGCL” means the General Corporation Law of the State of Delaware.
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“Employee Compensation Expenses” means all Liabilities of Guarantor and its Subsidiaries for Seller Employees, including for compensation expenses, vacation and/or paid time off that has been accrued but unused by any Seller Employee, all salary, wages, commissions, bonuses, incentive payments and other accrued but unpaid benefits of any Seller Employee.
“ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade or business, or that is, or was at the relevant time, a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
“Exchange Act” means the Securities Exchange Act of 1934.
“Exploit” shall mean to disclose, reproduce, copy, modify, transmit, distribute, create derivative works of, compile, execute, perform, render, show, display and otherwise exploit.
“Filings” means any registrations, applications, declarations, reports, submissions or other filings with, or any notices to, any Person (including any third party or Governmental Entity).
“Fraud” means actual common law fraud in the making of a representation or warranty committed by a Person making such representation or warranty with the intent to deceive another Person, and to induce any Person to enter into this Agreement and requires (a) a false representation, warranty, or statement of material fact; (b) actual knowledge or belief that such representation or warranty is false; (c) an intention to induce a such other Person to whom such representation or warranty was made to act or refrain from acting in reliance upon it; (d) causing that Person, in justifiable reliance upon such false representation or warranty to take or refrain from taking action; and (e) causing such Person or any Party hereto to suffer damage by reason of such reliance. For clarity, a claim for Fraud may only be made against such Person committing such Fraud.
“Future Patents” means any Patent owned by Guarantor or any of its Subsidiaries on the Effective Date or thereafter that, absent a license thereto, would be infringed by the Use of (a) any CL Other Retained Derivatives, Mitel Connector Retained Derivatives, Transferred Derivatives or Transition Technology or (b) any features or functionality of the Transferred Derivatives, CL Other Retained Derivatives, Mitel Connector Retained Derivatives, Transition Technology in any form of Technology.
“GAAP” means generally accepted accounting principles in the United States, consistently applied and as in effect from time to time.
“Generic Connectors” means the Company-Owned Software that allows an On-Premises Solution to connect to the CL Gateway, but excluding the Mitel Connectors. The Generic Connectors are shown as #3 in the diagram attached hereto as Exhibit E.
“Governmental Authorization” means any authorizations, approvals, licenses, franchises, clearances, permits, certificates, waivers, consents, exemptions, variances, expirations and terminations of any waiting period requirements issued by or obtained from, and any notices, filings, registrations, qualifications, declarations and designations with, a Governmental Entity.
“Governmental Entity” means any (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, (b) federal, state, provincial, local, municipal, foreign or other government or supra national entity, regulatory or administrative authority, (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or entity and any court or other judicial, tribunal or arbitral body), (d) organization, entity or body or individual exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature (including stock exchanges), (e) political party, (f) royal family, (g) public international organization (e.g., the World Bank or Red Cross) or, (h) government-owned or controlled entity, (including state-owned or state-controlled businesses.
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“Governmental Official” is any (a) officer, agent, or employee of a Governmental Entity, (b) person acting in an official capacity for or on behalf of a Governmental Entity, (c) candidate for government or political office, or (d) member of a royal family.
“Indebtedness” means, with respect to any specified Person (a) borrowed money indebtedness, including principal, interest and any prepayment penalties, expenses, or fees thereon, created, issued, or incurred by such Person (whether or not evidenced by loan, note, bond, debenture, security or the issuance and sale of debt securities or the sale of property to another Person subject to a Contract); (b) reimbursement obligations with respect to letters of credit, bank guarantees, surety bonds, and performance bonds, whether or not matured; (c) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases (other than real estate leases and any other leases that would be required to be capitalized upon adoption of Accounting Standard Codification 842); (d) indebtedness secured by a Lien (other than a Permitted Lien) on the property of such Person; and (e) borrowed money indebtedness of others guaranteed by such Person; provided, however, that Indebtedness will expressly exclude trade payables, purchase money security interests and other similar indebtedness incurred in the ordinary course of business.
“Intellectual Property” or “Intellectual Property Rights” means any and all common law or statutory rights anywhere in the world arising under or associated with: (a) patents, patent applications (and Patents issuing from such applications), statutory invention registrations, registered designs, and similar or equivalent rights in inventions and designs, and all rights therein provided by international treaties and conventions (“Patents”); (b) trademarks, service marks, trade dress, trade names, logos and other designations of origin (“Marks”); (c) domain names, uniform resource locators, Internet Protocol addresses, social media handles and other names, identifiers and locators associated with Internet addresses, sites and services (“Internet Properties”); (d) copyrights and any other equivalent rights in works of authorship (including rights in Software as a work of authorship) and any other related rights of authors, mask work rights, and database rights (“Copyrights”); (e) trade secrets and industrial secret rights, and rights in know-how, data and confidential or proprietary business or technical information that derives independent economic value, whether actual or potential, from not being known to other persons (“Trade Secrets”); and (f) other similar or equivalent intellectual property rights anywhere in the world.
“Internal Support Technology” means technology utilized to support general administration and business functions of Guarantor and its Subsidiaries, including accounting, marketing, sales, end user licensing administration and support (e.g., SAP) and not for the development, maintenance, compilation, testing, deployment or provision of unified communications-as-a-service or on-premises communications offerings to customers.
“Judgment” means any judgment, injunction, writ, order, ruling, edict, award, stipulation or decree, whether non-final, final, temporary, preliminary or permanent, enacted, issued, promulgated, enforced, made, rendered or entered into by or with any Governmental Entity.
“Knowledge” means, with respect to any matter in question, with respect to Seller or any of the Seller Entities, the actual knowledge after due inquiry, as of the date of this Agreement of Mary McDowell, Tarun Loomba, James Yersh and Graham Bevington, and, with respect to Purchaser, the actual knowledge after due inquiry as of the date of this Agreement of Vlad Shmunis, Anand Eswaran, Mitesh Dhruv and John Marlow.
“Law” means any U.S. or non-U.S. federal, state, provincial, local or other constitution, law, statute, ordinance, rule, regulation, published policy or requirement, or controlling principle of common law, or any order, in any case issued, enacted, adopted, promulgated, implemented or otherwise put into legal effect by or under the authority of any Governmental Entity.
“Legal Proceeding” means any litigation, investigation, suit, claim, charge, action, demand, complaint, citation, summons, subpoena, audit, hearing, inquiry, arbitration or other proceeding of any nature, whether at law or equity, judicial or administrative, by or before any Governmental Entity.
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“Liability” means any liability, indebtedness, commitment, guaranty or other obligation of any type, whether known or unknown, asserted or unasserted, matured or unmatured, absolute, incurred or contingent, accrued or unaccrued, liquidated or unliquidated, determined or determinable, due or to become due, on- or off-balance sheet, including those arising under any Contract, applicable Law or Legal Proceeding, accounts payable, royalties payable, Employee Compensation Expenses and liabilities for Taxes.
“Licensed Embedded IP” means, collectively, all Technology, the Intellectual Property Rights in which are licensed to any Seller Entity by a third party, that is incorporated into or embodied by a Transferred Product, excluding Open Source Software.
“Licensed IP Contract” means any Contract pursuant to which any Seller Entity is granted a license, or covenant not to sue, permission or consent with respect to Licensed Embedded IP or Licensed Operating IP.
“Licensed IP” means, collectively, the (i) Licensed Operating IP and (ii) Licensed Embedded IP.
“Licensed Operating IP” means, collectively, any Technology, the Intellectual Property Rights in which are licensed to any Seller Entity by a third party, that is used by the Seller Entities to operate, maintain or deliver a Transferred Product or to conduct or operate the MiC Business or conduct the CloudLink Activities, excluding (a) Open Source Software and (b) any off-the-shelf Software that is generally commercially available in executable or object code form pursuant to a nonexclusive license or services that are commercially available pursuant to a non-exclusive license ((a) and (b), collectively, “Standard IP Contracts”).
“Liens” means, with respect to any property or asset, any pledge, lien, charge, mortgage, deed of trust, lease, sublease, license, restriction, hypothecation, right of first refusal or offer, conditional sales or other title retention agreement, adverse claim of ownership or use, easement, encroachment, right of way or other title defect, encumbrance, option to purchase or lease or otherwise acquire any interest, and security interest of any kind or nature whatsoever.
“Market” (including, with correlative meanings, the terms “Marketed” and “Marketing”) means, with respect to an Offering, the marketing, promotion, advertising, or offering for Sale of such Offering.
“Material Adverse Effect” means, (a) with respect to any Person, any change, event, development or occurrence (“Change”) that has a material adverse effect on the business, financial condition or results of operations of such Person and its Subsidiaries, taken as a whole, and (b) with respect to the Purchased Assets, the MiC Business or the CloudLink Activities, any Change that has a material adverse effect on the Purchased Assets, taken as a whole, or the conduct of the MiC Business or the CloudLink Activities, as applicable; provided that none of the following, and no Changes or effects arising out of or resulting from the following (in each case, by itself or when aggregated) will be deemed to be or constitute a Material Adverse Effect or will be taken into account when determining whether a Material Adverse Effect has occurred or may, would or could occur (subject to the limitations set forth below):
(i) Changes in general economic conditions, or Changes in conditions in the global or international economy generally;
(ii) (A) Changes in conditions in the financial markets, credit markets or capital markets, including changes in interest rates or credit ratings; (B) changes in exchange rates for the currencies of any country; or (C) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over the counter market;
(iii) Changes in conditions in the industries in which such Person and its Subsidiaries conduct business or, in the case of the Purchased Assets or the conduct of the MiC Business or the CloudLink Activities, the industries in which Guarantor and its Subsidiaries conduct business;
(iv) Changes in regulatory, legislative or political conditions;
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(v) any acts of God, natural disasters, epidemics, pandemics or disease outbreaks (including COVID-19) or any geopolitical conditions, outbreak of hostilities, acts of war (whether or not declared), sabotage, cyberterrorism (including by means of cyber-attack by or sponsored by a Governmental Entity), terrorism or military actions (including any escalation or general worsening of any of the foregoing);
(vi) the negotiation, execution or announcement of this Agreement or the pendency or consummation of the Transaction, including the impact thereof on the relationship, contractual or otherwise, with customers, suppliers, lenders, lessors, business partners, employees, regulators, Governmental Entities or vendors (it being understood and agreed that the foregoing shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address the consequences resulting from this Agreement or the consummation of the Transaction, including the representations and warranties contained in Section 3.2(b) and Section 4.3(b));
(vii) any action required to be taken pursuant to the express terms of this Agreement;
(viii) changes or proposed changes in GAAP or other accounting standards or in any applicable Laws (or the enforcement or interpretation of any of the foregoing); and
(ix) changes in the price or trading volume of common stock of such Person (provided that the underlying facts and circumstances giving rise to such changes may be taken into account in determining whether a Material Adverse Effect has occurred unless otherwise excluded hereby); and
(x) any failure to meet (A) any public estimates or expectations of revenue, earnings or other financial performance or results of operations for any period; or (B) any budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (provided that the underlying cause of any such failure may be taken into consideration when determining whether a Material Adverse Effect has occurred unless otherwise excluded hereby);
except, in the case of each of clauses (i), (ii), (iii), (iv), (v), and (viii), to the extent such Change has had a disproportionate adverse effect on such Person and its Subsidiaries, taken as a whole, relative to other companies operating in the industries in which such Person and its Subsidiaries operate (or, in the case of the Purchased Assets or the conduct of the MiC Business or the CloudLink Activities, the industries in which Guarantor and its Subsidiaries operate).
“Material Contracts” means: (i) all Contracts that are Listed Contracts; (ii) all Contracts between Seller or any of its Affiliates and (A) a Top End User, (B) a Top Distributor or (C) a Top Supplier, in each case in this clause (ii), that are material to the relationship between Seller and its Affiliates and such Top End User, Top Distributor or Top Supplier, as applicable; or (iii) that are Licensed IP Contracts.
“MiC Business” means the business and operations of Guarantor or any of its Subsidiaries with respect to MiCloud (as conducted as of the date of this Agreement, except where an alternative date or timeframe is expressly indicated), including the licensing, sale, development, marketing, and support of MiCloud.
“MiC Derivatives” shall mean any new version or release, bug fix, patch, or other modification with respect to the Company-Owned Software included in the MiC Technology, regardless of whether such Software is a derivative work (as “derivative work” is defined in the United States Copyright Act, 17 U.S.C. Section 101), in each case made by or on behalf of Guarantor or any of its Subsidiaries and released to production or made generally available to customers by Guarantor or any of its Subsidiaries.
“MiC Technology” means (a) the Company-Owned Software constituting MiCloud Connect (including, for the avoidance of doubt, the Current MiC Software and all prior versions of MiCloud Connect, whether or not currently in use by the Seller Entities) and associated existing documentation and (b) all Company-Owned Technology (including any build scripts, make files, test scripts and build files included in such Company-Owned Technology) that is exclusively used in or is exclusively necessary for (i) the operation or performance of the MiC
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Business, or (ii) the development, maintenance, compilation, testing, deployment or provision of MiCloud Connect as of the date of this Agreement excluding in each case (1) all CC Technology and (2) Internal Support Technology. MiC Technology includes the Technology identified in Box 1 (other than CC Technology), Box 2 and Box 3 on Exhibit D. MiC Technology shall not include business books and records, computers, hardware or other tangible personal property.
“MiCloud” or “MiCloud Connect” means all versions of the software as a service platform of Guarantor and its Subsidiaries Sold or Marketed under the name of, “MiCloud Connect.”
“Mitel Connectors” means the Company-Owned Software that allows Mitel On-Premises Solutions to connect to the CL Gateway and the Core Softphone Library. The Mitel Connectors are shown as #4, #5, #6, #7 and #8 in the diagram attached hereto as Exhibit E.
“Mitel On-Premises Solution” means the Mitel Services that provide any, all, or some combination of the following communications functionalities: voice, video, personal and team messaging, voicemail, contact center, and content sharing, in each case, that is provided and maintained in a single-tenant manner (i.e., with a single or multiple instance(s) of software, whether on-premise or in a virtualized environment, that is dedicated to a single customer), and sold as a perpetual or subscription-based license.
“Mitel Services” means all Offerings of the Mitel Entities that are directly or indirectly Marketed or Sold by any Mitel Entity, including through the Mitel Channel. For the avoidance of doubt, an Offering of another Person that is not a Mitel Entity shall be a Mitel Service if such Offering is Marketed and Sold by any Mitel Entity in a wholesale, re-sale, or “white label” manner.
“NPE” means an entity and each one of its Affiliates if (i) such entity and all its Affiliates collectively derived more than half of their total consolidated gross revenue, measured over the full twelve (12) months preceding a particular date, from Patent Assertion (other than as a result, during such twelve (12) month period, of a damages award or settlement obtained in such period from Patent infringement proceedings brought by such entity or its Affiliates against one or more other entities based on such entities’ sale or distribution of one or more infringing products or services that compete against one or more bona fide commercial products of such entity or its Affiliates, provided that such entity and all its Affiliates collectively did not derive from Patent Assertion an amount equaling more than half of their total consolidated gross revenue measured over the full thirty-six (36) months preceding the particular date), or (ii) the principal goal or plan of such entity and its Affiliates, as of a particular date, is to derive revenue from Patent Assertion, either directly, or indirectly through one or more of its Affiliates.
“NYSE” means the New York Stock Exchange and its successors.
“Offering” means any communications service, product, component, feature, function, application, module, system, portal, software, hardware, platform, technology, or other offering.
“Omitted Licensed Patent” has the meaning set forth in Section 5.4(c).
“On-Premises Solution” means a service, other than a Mitel On-Premises Solution, that provide any, all, or some combination of the following communications: functionalities voice, video, personal and team messaging, voicemail, contact center, and content sharing, in each case, that is provided and maintained in a single-tenant manner (i.e., with a single or multiple instance(s) of software, whether on-premise or in a virtualized environment, that is dedicated to a single customer), and sold as a perpetual or subscription-based license.
“Open Source License” means any license that (i) is considered an open source software license by the Open Source Initiative or a free Software license by the Free Software Foundation, or any license substantially similar to any of the foregoing, including any version of any software licensed pursuant to any version of the GNU General Public License, GNU Lesser/Library General Public License, Apache Software License, Mozilla Public License, BSD License, MIT License, Common Public License, or any derivative of any of the foregoing
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licenses; or (ii) requires, as a condition of use, modification or distribution of Software subject to such license, that (A) such Software or other Software combined or distributed with such software be disclosed or distributed in source code form, or (B) such Software or other software combined or distributed with such Software or any associated Technology be made available by any member seller without cost (including for the purpose of making additional copies or derivative works).
“Open Source Software” means any Software, freeware, shareware, or other materials that are distributed as “free software” or “open source software” or are otherwise generally distributed publicly or made publicly available under terms of an Open Source License.
“Other IP Rights” means Intellectual Property Rights other than Patents, Trademarks, or Internet Properties.
“Patent Assertion” means any of the following assertions of rights under a Patent against another Person (a) a written demand, allegation or assertion of a claim of infringement or an invitation to license, that would lead a recipient to understand that such demand, allegation, or assertion or refusal of such invitation will likely result in a claim, action, or proceeding in a judicial, administrative, or other governmental body, including but not limited to a court (in any country) or the U.S. International Trade Commission for infringement of such Patent for the primary purpose of deriving royalties or other monetary compensation (a “Filed Claim”), or (b) the commencement or subsequent pursuit of a Filed Claim.
“Patent Assignment Agreement” means a Patent Assignment Agreement in substantially the form attached hereto as Exhibit B.
“Permitted Liens” means, with respect to any Person, any of the following: (i) liens for Taxes, assessments and governmental charges or levies either (A) not yet delinquent or (B) that are being contested in good faith and by appropriate proceedings and for which adequate reserves have been established in the financial statements in accordance with GAAP; (ii) mechanics, carriers’, workmen’s, warehouseman’s, repairmen’s, materialmen’s or other liens or security interests, in each case, imposed by Law and arising in the ordinary course of business, that are not yet due or that are being contested in good faith and by appropriate proceedings; (iii) recorded leases, subleases and licenses (other than capital leases and leases underlying sale and leaseback transactions); (iv) pledges or deposits to secure obligations pursuant to workers’ compensation Law or similar legislation or to secure public or statutory obligations; (v) pledges and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business consistent with past practice; (vi) solely with respect to real property, defects, imperfections or irregularities in title, charges, easements, covenants and rights of way (unrecorded and of record) and other similar liens (or other encumbrances of any type), and zoning, building and other similar codes or restrictions, in each case that, individually or in the aggregate, do not, and would not reasonably be expected to, impair in any material respect the current use of the applicable real property; (vii) any non-exclusive license to or covenant not to sue with respect to any Intellectual Property Rights; (viii) liens pursuant to any Person’s indebtedness; and (ix) statutory, common law or contractual liens, or other encumbrances of record securing payments not yet due (other than indebtedness), including liens of landlords pursuant to the terms of any lease or liens against the interests of the landlord or owner of any leased real property unless caused by such Person or any of its Subsidiaries.
“Person” means an individual or entity, including a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a Governmental Entity (or any department, agency, or political subdivision thereof), or any syndicate or group that would be deemed to be a Person under Section 13(d)(3) of the Exchange Act.
“Post-Closing Tax Period” means any taxable period (or portion thereof) beginning after the date hereof.
“Pre-Closing Tax Period” means any taxable period (or portion thereof) ending on or before the date hereof.
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“Purchased Assets” means all of the right, title and interest of Guarantor and its Subsidiaries in and to the following assets, properties and rights, whether tangible or intangible, personal or mixed, wherever located and whether or not reflected on the books and records of any of the Seller Entities:
(a) the CL Technology and MiC Technology (the “Transferred Technology”);
(b) the Transferred IP Rights, including any Seller Entity’s right to register, prosecute, maintain or record any such Intellectual Property Rights and all rights to seek and recover damages for the past, present or future infringement of any of the foregoing; and
(c) the Transferred Patent Records.
For the avoidance of doubt, the Purchased Assets shall not include (i) any Contracts of any party of any kind, (ii) any accounts receivable or other receivables, (iii) any computers, hardware or other tangible personal property, (iv) any Intellectual Property Rights other than Transferred IP Rights, (v) any Licensed IP, (iv) any Internal Support Technology, (vi) any Technology that is not Transferred Technology, and (vi) any Excluded Assets.
“Purchaser Charter Documents” means the Certificate of Incorporation and the Bylaws.
“Purchaser Common Stock” means the Class A common stock, par value $0.0001 per share, of Purchaser.
“Purchaser Disclosure Schedules” means those certain Purchaser Disclosure Schedules dated as of the date of this Agreement provided by Purchaser to Seller.
“Purchaser Equity Awards” means each compensatory equity award granted by Purchaser, whether granted under a Purchaser Stock Plan or otherwise, that relates to Purchaser Common Stock.
“Purchaser Intellectual Property” means any Intellectual Property that is owned in whole or in part or purported to be owned in whole or in part, by Purchaser or any of its Subsidiaries, excluding, for the avoidance of doubt, any Purchased Assets.
“Purchaser Preferred Stock” means the preferred stock, par value $0.0001 per share, of Purchaser.
“Purchaser Stock Plan” means Purchaser’s 2003 Equity Incentive Plan, Purchaser’s 2010 Equity Incentive Plan, Purchaser’s 2013 Incentive Equity Plan, Purchaser’s Amended and Restated Employee Stock Purchase Plan, and each other employee benefit or compensation plan of Purchaser that provides for the award of rights of any kind to receive shares of Purchaser Common Stock or benefits measured in whole or in part by reference to shares of Purchaser Common Stock, and in each case, all award agreements thereunder.
“Registered Intellectual Property” means (a) issued Patents and Patent applications, (b) registered Marks and applications to register Marks, (c) registered Copyrights and applications for Copyright registration, (d) domain name registrations and (e) any other Intellectual Property that is the subject of an application or registration issued, filed with, or recorded by any Governmental Entity or domain name registrar.
“Registration Office” means, collectively, the United States Patent and Trademark Office, United States Copyright Office and all equivalent foreign patent, trademark, copyright offices or other Governmental Entity.
“Representative” means, with respect to a Person, such Person’s Affiliates and the directors, managers, members, officers, employees, agents, contractors, subcontractors, or other representatives of such Person and its Affiliates.
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“Restricted Person” means any person listed on or covered by any list of sanctioned or restricted persons for export, import, sanctions, government contracting or related reasons administered by any government in which any Seller Entity conducts business, including the United States, Russia, and India. The lists include but are not limited to the Bank of England Financial Sanctions List, List of Denied Persons and Entity List administered by the U.S. Department of Commerce, the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Department of Treasury, European Union Sanctions List, United Kingdom Proscribed Terrorist Groups, and the United Nations Security Council Sanctions.
“Retained Invention” means an invention or discovery made by any employee or consultant of Grantor or is Subsidiaries in connection with the conduct of the MiC Business or CloudLink Activities during the two-year period immediately preceding the date of this Agreement that has been disclosed in an invention disclosure maintained by Guarantor’s or its Subsidiaries’ Patent and invention disclosure process, or other procedures used by Guarantor and its Subsidiaries in connection with their Patent prosecution processes to identify employee-created inventions discoveries which invention or discovery if claimed in an issued Patent would absent license thereto as granted to Purchaser under this Agreement, be infringed by (1) the Seller Entities’ conduct of the MiC Business or the CloudLink Activities; (2) the Use or Exploitation of MiCloud Connect, CloudLink, Mitel Connectors or the Core Softphone Library by Purchaser or its Affiliates; or (3) the Use or Exploitation of any features or functionality of MiCloud Connect, CloudLink, Mitel Connectors or the Core Softphone Library in any form of Technology.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the Securities and Exchange Commission.
“SEC Reports” means all schedules, forms, reports statements, certifications, prospectuses, registration statements and documents with the SEC that have been required to be filed or furnished, as the case may be, by it pursuant to applicable Laws, together with all exhibits and schedules thereto and all information incorporated therein by reference.
“Securities Act” means the Securities Act of 1933.
“Sell” (including, with correlative meanings, the terms “Sale”, “Sold”, and “Selling”) means, with respect to an Offering, the sale, resale, license, delivery, or other provision of such Offering, whether by way of migration, a new purchase, or otherwise, including the execution of a new Contract and the renewal, amendment or modification of an existing Contract..
“Seller Disclosure Schedules” means those certain Seller Disclosure Schedules dated as of the date of this Agreement provided by Seller to Purchaser.
“Seller Employees” mean any and all current and former employees and contractors of the Seller Entities.
“Seller Hybrid Patents” means those Listed Licensed Patents identified in the Seller Disclosure Schedule as a “Hybrid Patent.”
“Seller Licensed IP Rights” mean the Seller Licensed Other IP Rights and the Seller Licensed Patents.
“Seller Licensed Other IP Rights” means all Other IP Rights (other than Transferred Other IP Rights) owned by Guarantor or any of its Subsidiaries as of the date of this Agreement or at any relevant time thereafter.
“Seller Licensed Patents” means (i) the Patents set forth on Section 1.1(e) of the Seller Disclosure Schedules (the “Listed Licensed Patents”), (ii) any Omitted Licensed Patent that may be added to such Schedule in accordance with Section 5.4(c), (iii) the Future Patents, and (iv) any foreign counterparts to any of the foregoing.
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“Software” means any and all computer programs, including any and all application software (including mobile digital applications), system software, firmware, middleware, assemblers, applets, compilers and binary libraries, and software implementations of algorithms, models and methodologies, whether in source code or object code form, as well as related documentation, guides, wikis, developer notes and similar materials.
“Solvent” means, with respect to any Person, that, as of any date of determination, (a) the amount of the “fair saleable value” of the assets of such Person on a going concern basis will, as of such date, exceed (i) the value of all “liabilities of such Person, including contingent and other liabilities” as of such date, as such quoted terms are generally determined in accordance with applicable U.S. federal laws governing determinations of the insolvency of debtors and (ii) the amount that will be required to pay the probable liabilities of such Person on its existing debts (including contingent liabilities) as such debts become absolute and matured, (b) such Person will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date and (c) such Person will be able to pay its liabilities, including contingent and other liabilities, as they mature. For purposes of this definition, each of the phrases “not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged” and “able to pay its liabilities, including contingent and other liabilities, as they mature” means that such Person will be able to generate enough cash from operations, asset dispositions or financings or other sources, or a combination thereof, to meet its obligations as they become due.
“Straddle Period” means any taxable period beginning on or before and ending after the date hereof.
“Subsidiary” means, with respect to any Person, any other Person (other than a natural Person) of which securities or other ownership interests (i) having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions or (ii) representing more than 50% of such securities or ownership interests, in each case, are at the time directly or indirectly owned by such first Person.
“Tax” means any U.S. federal, state, local and foreign income, gross, franchise, windfall or other profits, receipts, capital, sales, use, ad valorem, value added, goods and services, profits, license, withholding, payroll, employment, unemployment, excise, premium, property, net worth, capital gains, transfer, stamp, documentary, social security, environmental, alternative or add-on minimum, and occupation tax, and any other levy, fee, impost, duty or similar governmental charge, together with all interest and penalties thereon and addition thereto imposed by any Governmental Entity.
“Tax Proceeding” means any audit, examination, contest, litigation or other Proceeding with or against any Taxing Authority.
“Tax Return” means any return, declaration, report, claim for refund or information return or statement filed or required to be filed with any Taxing Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Taxing Authority” means any Governmental Entity responsible for the administration, determination, regulation, collection, levy, assessment, enforcement or the imposition of any Tax.
“Technology” means embodiments of Intellectual Property Rights, including documentation, materials, data, databases, Software or other works of authorship, and know-how or knowledge of employees, relating to, embodying, or describing processes, algorithms, inventions, methods, designs, formulae, recipes, and other technical information.
“Transferred Derivative Other IPR” means all Other IPR embodied in the Transferred Derivatives.
“Transferred Derivatives” means, collectively, all (a) MiC Derivatives and (b) CL Transferred Derivatives.
“Transferred IP Rights” means (i) the Transferred Patents and the Registered Intellectual Property set forth in Section 1.1(b) of the Seller Disclosure Schedules and (ii) any and all Company-Owned Intellectual Property Rights (other than Patents, Marks and other Registered Intellectual Property) that are embodied by (1) the MiC Technology (the “MiC IP Rights”), or (2) the CL Technology (the “CL IP Rights”); provided that the Transferred IP Rights do not include any Intellectual Property Rights in or embodied by the Mitel Connectors or the Core Softphone Library.
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“Transferred IP/Technology” means, collectively, Transferred IP Rights and Transferred Technology.
“Transferred Patent Records” means, collectively, the following items to the extent maintained by the Seller Entities in the ordinary course and related to the Transferred Patents: (i) (a) books, records, manuals, lists and reports, correspondence, engineering drawings, notebooks and logbooks to the extent exclusively related to the Transferred Patents, (b) invention notebooks to the extent exclusively related to the Transferred Patents, and (c) all files, documents and tangible materials to the extent exclusively relating to the investigation, evaluation, preparation, prosecution, maintenance, defense, filing, issuance, registration, assertion or enforcement of the Transferred Patents, and (ii) all correspondence to and from any Registration Office with respect to any Transferred Patents, but, for the avoidance of doubt, excluding in each case any of the foregoing, those portions of the foregoing (1) to the extent relating to any of the Seller Entities’ businesses other than the MiC Business or to uses of CloudLink other than for the CloudLink Activities or (2) that are subject to privilege.
“Transferred Patents” means the Patents set forth in Section 1.1(b) of the Seller Disclosure Schedules.
“Transferred Products” means, collectively, CL and MiCloud.
“Transition Services Agreement” means the Transition Services Agreement between Purchaser and Mitel Networks, Inc., a Delaware corporation, dated on or around the date of this Agreement.
“TSA Deliverables” means all Company-Owned Technology provided to Purchaser or its Affiliates by or on behalf of Guarantor or any of its Subsidiaries in connection with the performance of their obligations under the Transition Services Agreement (excluding CL TSA Updates).
“Use” and variations thereof, shall mean, to make, have made, use, sell, offer for sale, and import and, additionally as to a Patent, to practice any method or process claimed in such Patent.
Section 1.2 Other Defined Terms. In addition, the following terms shall have the meanings ascribed to them in the corresponding section of this Agreement:
| Term |
Section | |
| Agreement |
Preamble | |
| Assignment Agreement |
Recitals | |
| Board |
4.3(a) | |
| Capitalization Date |
4.2(a) | |
| Change |
Definition of Material Adverse Effect | |
| Closing |
2.2(a) | |
| Common Stock |
4.2(a) | |
| Copyrights |
Definition of Intellectual Property | |
| Enforceability Exceptions |
4.3(a) | |
| Excluded Assets |
2.4 | |
| Guarantor |
Preamble | |
| Internet Properties |
Definition of Intellectual Property | |
| Listed Licensed Patents |
Definition of Seller Licensed Patents | |
| Marks |
Definition of Intellectual Property | |
| MiC IP Rights |
Definition of Transferred IP Rights | |
| Parties |
Preamble | |
| Patents |
Definition of Intellectual Property | |
| Periodic Taxes |
6.3 | |
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| Purchaser |
Preamble | |
| Purchaser SEC Reports |
4.5(a) | |
| Purchaser Securities |
4.2(d) | |
| Registered Transferred IP |
Section 3.11(a) | |
| Relevant Matters |
8.7(a) | |
| Seller |
Preamble | |
| Seller Financial Statements |
27 | |
| Seller Liabilities |
2.4 | |
| Trade Secrets |
Definition of Intellectual Property | |
| Transaction |
Recitals | |
| Transfer Taxes |
6.2 |
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale. Subject to the terms and conditions set forth herein, Seller shall, and shall cause the other Seller Entities to, sell, assign, transfer and convey to Purchaser, and Purchaser shall purchase and acquire from Seller and the other Seller Entities, in each case at the Closing, all of Seller’s and the other Seller Entities’ right, title and interest in and to the Purchased Assets as of the Closing, free and clear of all Liens (other than Permitted Liens of the nature described in clauses (i) through (vii) and (ix) of the definition of Permitted Liens)).
Section 2.2 Closing.
(a) The closing of the Transaction (the “Closing”) shall take place at 4:00 p.m. (Prevailing Eastern Time) on November 9, 2021 by remote electronic exchange of documents or at such other time as shall be mutually agreed between the Seller and Purchaser. The date on which the Closing actually occurs shall be referred to herein as the “Closing Date”.
(b) At the Closing, Seller and each other applicable Seller Entity shall deliver, or cause to be delivered, to Purchaser:
(i) the Purchased Assets, excluding (a) any versions of MiCloud Connect other than the Current MiC Software and (b) any version of CloudLink other than the Current CL Software;
(ii) a copy of the Core Softphone Library and Mitel Connectors;
(iii) the Domain Name Assignment Agreement;
(iv) the Patent Assignment Agreement;
(v) a duly executed IRS Form W-9 from each Seller Entity (or, if such Seller Entity is a “disregarded entity” within the meaning of Treasury Regulations Section 1.1445-2(b)(2)(iii), the entity that is treated as the transferor of property for U.S. federal income Tax purposes) that is a United States Person, within the meaning of Section 7701(a)(30) of the Code;
(vi) the Fairness Opinion; and
(vii) the Assignment Agreement.
(c) Delivery by Electronic Transmission. Any Purchased Assets, Core Softphone Library and Mitel Connectors that can be transferred by so-called “load and leave” procedures or by electronic transmission, in each case, as described in California Board of Equalization Sales and Use Tax Regulations Section
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1502(f)(1)(D), shall be so transferred by either (i) the Seller Entities installing the Purchased Assets on Purchaser’s computer(s) without providing any storage media to Purchaser in connection with the transfer, or (ii) remote telecommunications, where Purchaser does not obtain possession of any tangible personal property, such as storage media, in connection with the transfer, and the Seller Entities and Purchaser shall prepare and retain in their business records contemporaneous documentation of such transfers. This Agreement is intended to constitute a “technology transfer agreement” within the meaning of California Revenue and Taxation Code Section 6011(10) and California Board of Equalization Sales and Use Tax Regulations Section 1507.
(d) Source Code Delivery. Without limiting the Seller Entities’ obligations to deliver the Purchased Assets, the Seller Parties’ shall use commercially reasonable efforts to deliver the Software source code and object code included in the Purchased Assets, and the Core Softphone Library to Purchaser electronically in a secure source code repository designated by Purchaser no later than December 17, 2021, pursuant to Section 2.2(c) and in accordance with Purchaser’s reasonable direction.
Section 2.3 Purchase Price.
(a) In consideration for the Purchased Assets, the Seller Licensed IP Rights and the other obligations of Seller pursuant to this Agreement, at the Closing, Seller shall be entitled to receive an aggregate amount of consideration equal to the sum of (i) the Closing Cash Consideration, (ii) the Total Holdback Payment (if any) in accordance with Section 2.3(c), and (iii) the Stock Consideration (collectively, the “Purchase Price”).
(b) At the Closing, Purchaser shall deliver to Seller (i) the Closing Cash Consideration and (ii) evidence in book entry form, issued in the name of Seller (or its nominee in accordance with its delivery instructions), representing one million two-hundred eighty-one thousand five-hundred four (1,281,504) shares of Purchaser Common Stock (the “Stock Consideration”).
(c) Seller may be entitled to receive, and Purchaser may be required to pay to Seller, after the Closing, the additional payments set forth on Schedule 2.3(c), subject to the terms and conditions set forth therein.
Section 2.4 Excluded Assets. Notwithstanding anything in this Agreement to the contrary, Guarantor and its Subsidiaries shall retain, and Purchaser shall not acquire, any direct or indirect right, title and interest in and to, (i) any assets of Guarantor or its Subsidiaries other than the Purchased Assets, including, for the avoidance of doubt, any refunds, credits, overpayments or other recoveries of, against or in respect of any Taxes imposed on or with respect to the Purchased Assets, the MiC Business or the CloudLink Activities for a Pre-Closing Tax Period or any Taxes of or imposed on Seller or any of its Affiliates and (ii) any CC Technology ((i) and (ii), collectively, the “Excluded Assets”).
Section 2.5 Seller Liabilities.
(a) Subject to the terms of this Agreement, Seller and its Affiliates shall retain, and Purchaser and its Affiliates shall not assume or be liable for any of, the following Liabilities (collectively, the “Seller Liabilities”):
(i) any and all Liabilities in connection with Third Party Claims (including claims alleging infringement of Intellectual Property Rights), to the extent relating to or arising out of (A) any use of the Purchased Assets (including the MiC Technology and the CL Technology) prior to the Closing or (B) any use by Guarantor and its Subsidiaries of the Purchased Assets licensed from Purchaser after the Closing (other than with respect to Technology which is not a Purchased Asset and delivered by Purchaser or its Affiliates for Guarantor or its Subsidiaries to use with a Purchased Asset and such use is pursuant to Purchaser’s or its Affiliates’ direction),
(ii) any and all Liabilities for which any Seller Entity or any of their Affiliates expressly has responsibility pursuant to this Agreement or any Transaction Document,
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(iii) any fees or expenses incurred by or on behalf of any Seller Entity or any of their Affiliates in connection with this Agreement, any of the Transaction Documents or the Transaction, other than pursuant to that certain letter agreement, dated as of November 6, by and among Purchaser and MLN TopCo Ltd. (the “Financial Advisory Cost Sharing Letter”),
(iv) any indebtedness of any Seller or any of their Affiliates,
(v) accounts payable or other payables of any Seller Entity or any of their Affiliates, including all Employee Compensation Expenses,
(vi) any Taxes for any Pre-Closing Tax Period imposed with respect to the use or ownership of the Purchased Assets by Seller and Seller Entities (including any Taxes that are the subject of the Tax audits set forth in Section 3.10 of the Seller Disclosure Schedules), allocated, in the case of any Straddle Period, in accordance with Section 6.3,
(vii) Taxes of Seller and Seller Entities for any taxable period, including Taxes of any Person for which Seller or Seller Entities are liable under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor or by contract, and
(viii) Transfer Taxes borne by Seller pursuant to Section 6.2 and any other Taxes of Seller or Seller Entities incident to or arising out of the negotiation, preparation, approval, or authorization of this Agreement, other than, in the case of each of clauses (vi) and (vii) above and this clause (viii), any Taxes described in Section 2.6(a)(iii) or Section 2.6(a)(iv).
For the avoidance of doubt, the Purchaser’s obligations regarding indemnification under Section 7.2(b)(i)-(ii) shall not constitute Seller Liabilities.
Section 2.6 Purchaser Liabilities.
(a) Subject to the terms of this Agreement and excluding the Seller Liabilities, at the Closing, Purchaser shall assume and agrees to pay, discharge or perform when due only the following Liabilities (collectively, the “Purchaser Liabilities”), and no others:
| (i) | any and all Liabilities in connection with Third Party Claims (including claims alleging infringement of Intellectual Property Rights), to the extent relating to or arising out of any use of the Purchased Assets (including the MiC Technology and the CL Technology) after the Closing by Purchaser or its Affiliates, excluding the Liabilities described in Section 2.5(a)(i), |
| (ii) | any and all Liabilities for which Purchaser or any of its Affiliates expressly has responsibility pursuant to this Agreement or any Transaction Agreement, |
| (iii) | all Taxes relating to the Purchased Assets attributable to a Post-Closing Tax Period, other than any Transfer Taxes borne by Seller pursuant to Section 6.2, and |
| (iv) | Transfer Taxes borne by Purchaser pursuant to Section 6.2. |
For the avoidance of doubt, Seller’s obligations regarding indemnification under Section 7.2(a)(i)-(ii) shall not constitute Purchaser Liabilities.
Section 2.7 Purchase Price Allocation. Seller and Purchaser agree to allocate and, as applicable, to cause their relevant Affiliates to allocate, the Purchase Price and any other items that are treated as additional consideration for applicable Tax purposes to Class VI (intangibles) and Class VII (goodwill and going concern) in
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accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the “Allocation”). The Allocation shall be adjusted, as necessary, to reflect any subsequent adjustments to the Purchase Price and any other amounts treated as consideration for applicable Tax purposes. None of Seller, Purchaser or any of their respective Affiliates shall take any position inconsistent with the Allocation on any Tax Return or in any Tax Proceeding, in each case, except to the extent otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any analogous provision of state, local or foreign law). In the event that the Allocation is disputed by any Taxing Authority, the Party receiving notice of such dispute shall promptly notify the other Party in writing of such notice and resolution of the dispute.
Section 2.8 Withholding Rights. Purchaser shall be entitled to deduct and withhold from the consideration otherwise deliverable pursuant to Article II of this Agreement such amounts as Purchaser is required to deduct and withhold with respect to any such deliveries and payments under any provision of state, local, provincial or foreign Law. Purchaser shall use commercially reasonable efforts to give notice to Seller reasonably in advance of making any payments pursuant to this Agreement that are anticipated to result in withholding and shall reasonably cooperate with Seller to mitigate or eliminate any such withholding. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to such recipients in respect of which such deduction and withholding was made; provided that, if and to the extent any such amounts are required to be deducted or withheld with respect to a payment otherwise payable hereunder solely as a result of Purchaser (or its assignee or designee) assigning its obligation to make such payment to a Person that is tax resident in a jurisdiction other than the United States or that makes such payment from a jurisdiction other than the United States (such Person, the “Non-U.S. Assignee Payor”), such Non-U.S. Assignee Payor shall gross up such payment such that the Person receiving such payment receives the full amount otherwise payable pursuant to this Agreement after giving effect to such deduction or withholding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth, subject to Section 8.13, in a corresponding identified section of the Seller Disclosure Schedules, Seller represents and warrants to Purchaser that:
Section 3.1 Organization and Standing. Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Each other Seller Entity is a corporation, partnership or other legal entity duly organized, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its organization, except where the failure to be so organized, existing and in good standing would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits. Each of Seller and each other Seller Entity has the requisite corporate power and authority to conduct the MiC Business and the CloudLink Activities as they are presently being conducted and to own, lease or operate the Purchased Assets, except, in each case, where the failure to have such corporate power and authority would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits.
Section 3.2 Authority; Non-Contravention.
(a) Each Seller Entity has the requisite corporate power and authority to (i) execute and deliver this Agreement and the other Transaction Documents to which it is a party; (ii) perform its respective covenants and obligations hereunder and thereunder; and (iii) consummate the Transaction and the other transactions contemplated by the Transaction Documents, as applicable. The execution and delivery of this Agreement and the other Transaction Documents by Seller and each other Seller Entity that is a party thereto, the performance by Seller and each other Seller Entity of their respective covenants and obligations hereunder and thereunder, and the consummation of the Transaction and the other transactions contemplated by the Transaction Documents, have been duly authorized and approved by the board of directors, or other equivalent governing body, of Seller and each other Seller Entity, as applicable, and no other corporate action on the part of Seller or each other Seller Entity is necessary to authorize the execution and delivery by Seller and each other Seller Entity
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of this Agreement and the other Transaction Documents, as applicable, the performance by Seller and each other Seller Entity of their respective covenants and obligations and the consummation of the Transaction and the other transactions contemplated by the Transaction Documents. This Agreement and the other Transaction Documents have been duly executed and delivered by Seller and each other Seller Entity that is a party thereto and, assuming the due authorization, execution and delivery by Purchaser, as applicable, constitutes a legal, valid and binding obligation of Seller and each other Seller Entity that is a party thereto, enforceable against Seller or such other Seller Entity in accordance with its terms, subject to the Enforceability Exceptions (as defined below).
(b) The execution and delivery of this Agreement and the other Transaction Documents by Seller and each other Seller Entity that is a party thereto, the performance by Seller and each other Seller Entity of their respective covenants and obligations hereunder and thereunder, and the consummation of the Transaction and the other transactions contemplated by the Transaction Documents do not and would not reasonably be expected to (i) violate or conflict with any provision of the certificate of incorporation or bylaws of Seller or the comparable organizational documents of any of the other Seller Entities; (ii) violate, conflict with, result in the breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) pursuant to, result in the termination of, accelerate the performance required by or result in a right of termination or acceleration pursuant to any material Contract to which Seller or any Seller Entity is a party; (iii) assuming the Governmental Authorizations referred to in Sections 3.3 and 4.4 are made and obtained, violate or conflict with any Law applicable to any Seller Entity, the MiC Business or the conduct of the CloudLink Activities or by which any properties or assets of any Seller Entity are bound; or (iv) result in the creation or imposition of any Lien on any Purchased Assets (other than Permitted Liens), except in the case of each of clauses (ii), (iii) and (iv) for such violations, conflicts, breaches, defaults, terminations, accelerations or Liens that would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits.
Section 3.3 Governmental Approvals. No consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Entity is necessary for the execution and delivery of this Agreement and the other Transaction Documents by Seller and each other Seller Entity, as applicable, the performance by Seller and each other Seller Entity of their respective obligations hereunder and thereunder and the consummation by them of the Transaction or the other transactions contemplated by the Transaction Documents, except, in each case, as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits.
Section 3.4 Title to Purchased Assets. The Seller Entities own all right, title and interest in and to all of the Purchased Assets free and clear of all Liens, other than Permitted Liens, and have good and transferable title to all of the Purchased Assets. None of the Purchased Assets is owned, exclusively or jointly, by any Person other than Seller Entities. At the Closing, Purchaser will own all right, title and interest in and to the Purchased Assets, free and clear of all Liens, other than Permitted Liens, subject, for the avoidance of doubt, in the case of Transferred Patents, to the Purchaser recording the Intellectual Property assignments with the appropriate Governmental Entities. Nothing in this Section 3.4 is intended to or shall be treated as a representation of non-infringement with respect to Intellectual Property, which is addressed exclusively in Section 3.11.
Section 3.5 Restrictions on Business Activities. There is no Contract to which any Seller Entity is a party (non-competition or otherwise) that has or would reasonably be expected to have the effect of prohibiting or materially impairing the Use or Exploitation of the Purchased Assets by any Seller Entity in the manner Used and Exploited by, or currently planned as of the date of this Agreement in a written roadmap, to be Used and Exploited by, the Seller Entities as of the date of this Agreement and which would so impair the Use and Exploitation of the Purchased Assets by Purchaser in the same manner after the Closing.
Section 3.6 Material Adverse Effect.
(a) Since January 1, 2021 and through the date of this Agreement, there has not occurred any Change that has had or would be reasonably expected to have, either individually or in the aggregate with all such other Changes, a Material Adverse Effect on the Purchased Assets, the MiC Business or the CloudLink Activities.
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(b) Since January 1, 2021 and through the date of this Agreement, there has been no (i) sale, lease, license, transfer or other disposition of any material Purchased Assets, other than in the ordinary course of business, or (ii) purchase, lease or other acquisition of any material Purchased Assets, other than in the ordinary course of business.
Section 3.7 Seller Financial Statements. Section 3.7 of the Seller Disclosure Schedules sets forth the Seller Entities’ (i) audited consolidated balance sheet as of December 31, 2020 and the related consolidated statements of operations, cash flows, and stockholders’ equity for the twelve (12) month period then ended (the “Audited Year-End Financials”) and (ii) the unaudited consolidated balance sheet as of September 30, 2021, and the related unaudited consolidated statements of operations, cash flows, and stockholders’ equity for the nine (9) month period then ended (together with the Audited Year-End Financials, the “Seller Financial Statements”). The Seller Financial Statements have been prepared in accordance with GAAP consistently applied throughout the periods indicated and consistent with each other (except that any unaudited Seller Financial Statements need not contain footnotes and other presentation items that may be required by GAAP). The Seller Financial Statements present fairly in all material respects the Seller Entities’ consolidated financial condition, operating results and cash flows as of the dates and during the periods indicated therein. The books and records of each Seller Entity from which the Seller Financial Statements were derived have been, and are being, maintained in all material respects in accordance with applicable legal and accounting requirements (including, without limitation, GAAP) and the Seller Financial Statements are consistent with such books and records.
Section 3.8 Indebtedness. Except as set forth on Section 3.8 of the Seller Disclosure Schedules (any Indebtedness set forth or required to be set forth on such Section of the Seller Disclosure Schedules, collectively, the “Seller Indebtedness”) or on the Seller Financial Statements, no Seller Entity has any outstanding Indebtedness in excess of $5,000,000 individually. The Seller has made available to Purchaser true, correct and complete copies of the First Lien Credit Agreement dated as of November 30, 2018 by and among MLN TopCo Ltd., MLN UK HoldCo Limited (now known as Mitel Networks (International) Limited), MLN US TopCo Inc., MLN US HoldCo LLC, the lenders and issuing banks party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent (the “First Lien Credit Agreement”), and the Second Lien Credit Agreement, dated as of November 30, 2018 by and among MLN TopCo Ltd., MLN UK HoldCo Limited (now known as Mitel Networks (International) Limited), MLN US TopCo Inc., MLN US HoldCo LLC, the lenders and issuing banks party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent (the “Second Lien Credit Agreement” and, together with the First Lien Credit Agreement, the “Credit Agreements”), including all amendments thereto (the “Seller Indebtedness Contracts”). Since January 1, 2020, (a) no Seller Entity has violated or breached, or committed any default under, any Seller Indebtedness Contract; (b) to the Seller’s Knowledge, no other Person that is party to any Seller Indebtedness Contract has violated or breached, or committed any default under, any such Seller Indebtedness Contract; (c) no Seller Entity has engaged in, and no lender of Seller Indebtedness has requested, any discussions or negotiations, regarding entered into any amendment, forbearance, covenant waiver, work-out, restructuring, including any chapter 11 proceeding or other foreign insolvency proceeding, or other modification or compromise of any Seller Indebtedness or Seller Indebtedness Contract, other than that certain Amendment No. 1 dated as of October 22, 2020 to the First Lien Credit Agreement (the “Credit Agreement Amendment”); (d) to the Knowledge of the Seller, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will or could reasonably be expected to: (i) result in a material violation or breach of any of the provisions of any Seller Indebtedness; (ii) give any Person the right to declare a default or exercise any remedy under any Seller Indebtedness Contract; (iii) give any Person the right to accelerate the maturity or performance of any Seller Indebtedness; or (iv) give any Person the right to cancel, terminate or modify any Seller Indebtedness Contract; (e) no Seller Entity has received any written (or, to the Knowledge of the Seller, other) notice regarding any actual or alleged violation or breach of, or default under, any Seller Indebtedness Contract; (f) no Seller Entity has waived any of its rights under any Seller Indebtedness Contract, other than under the Credit Agreement Amendment; (g) each Seller Entity has fulfilled all obligations, if any, required to have been performed by it pursuant to the Seller Indebtedness Contracts; and (h) no Person has threatened in writing (or, to the Knowledge of the Seller, otherwise) to terminate or refuse to perform its obligations under any Seller Indebtedness Contract (regardless of whether such Person has the right to do so under such Contract). The Liens on the Purchased Assets securing the obligations under the Credit Agreements will be released upon Closing.
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Section 3.9 Compliance with Laws.
(a) Since January 1, 2020, Seller and each other Seller Entity has been in compliance with all Laws, including those that are applicable to the Purchased Assets or to the conduct or operations of the MiC Business or the conduct of the CloudLink Activities, and neither Seller nor any of the other Seller Entities has received any written or, to the Knowledge of Seller, oral notice of any conflict or non-compliance with, or default or violation of, any applicable Laws by which it or any of its properties, assets, rights, employees, business or operations are or were bound or affected, including with respect to the Purchased Assets or to the conduct or operations of the MiC Business or the conduct of the CloudLink Activities, nor, to the Knowledge of Seller, is any Seller Entity currently threatened with or under any investigation by a Governmental Entity with respect to, any charge concerning noncompliance with any Laws except, in each case, as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits.
(b) Except as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits, since December 1, 2018, none of the Seller Entities nor any of their respective officers, directors, employees or, to the Knowledge of the Seller, agents or any other Person acting on behalf of any Seller Entity or any Affiliate thereof, in each case, with respect to the Purchased Assets, the MiC Business or the CloudLink Activities, has provided, attempted to provide, promised, made or accepted, or authorized the provision of anything of value (including but not limited to payments, meals, entertainment, travel expenses or accommodations, gifts, bribes, payoffs or kickbacks), directly or indirectly, to or from any Person, including a Governmental Official, for the purpose of (i) obtaining or retaining business; (ii) influencing any act or decision of a Governmental Official or other Person in their official capacity; (iii) inducing a Governmental Official or other Person to do or omit to do any act in violation of their lawful duties; (iv) inducing any Governmental Official or other Person to use their influence improperly including with a Governmental Entity to affect or influence any act or decision, including of a Governmental Entity; (v) directing business to another; or (vi) securing any advantage, in each case, in violation of any Anti-Corruption Laws. Except as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits, since December 1, 2018, none of the Seller Entities nor any of their respective officers, directors, employees or agents or other Person acting on behalf of such Seller Entity, with respect to the Purchased Assets, the MiC Business or the CloudLink Activities, has, to the Knowledge of Seller, been under investigation by any Governmental Entity for (or conducted any internal or government-initiated investigation, made a voluntary, directed, or involuntary disclosure to any Governmental Entity or similar agency, or received any written notice from a Governmental Entity, regarding) any violation of any Anti-Corruption Laws. No officer, director, employee or holder of any equity interest in any Seller Entity is a Governmental Official. To the Knowledge of Seller, there are no actions, conditions or circumstances pertaining to the Seller Entities’ or Affiliates’ activities that would reasonably be expected to give rise to any future material Legal Proceedings under any Anti-Corruption Laws with respect to the Purchased Assets, the MiC Business or the CloudLink Activities. Except as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits, since December 1, 2018, (i) no Seller Entity, nor any of their respective officers, directors, employees, nor, to the Knowledge of Seller, distributors, resellers, consultants, agents or other third parties acting on behalf of any Seller Entity, with respect to the Purchased Assets, the MiC Business or the CloudLink Activities, used any corporate funds to maintain any off-the-books funds or engaged in any off-the-books transactions nor has any of the before stated parties falsified any documents, and (ii) the Seller Entities have maintained sufficient internal controls and compliance programs to detect and prevent violations of the Anti-Corruption Laws and ensure its books and records are accurately maintained.
(c) Except as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits, since December 1, 2018, each Seller Entity has conducted all transactions with respect to the Purchased Assets, the MiC Business and the CloudLink Activities in accordance with all applicable import/export and trade sanctions laws and regulations, including those under the authority of U.S. Departments of Commerce (Bureau of Industry and Security) codified at 15 CFR, Parts 700-799; Homeland Security (Customs and Border Protection) codified at 19 CFR, Parts 1-199; State (Directorate of Defense Trade Controls) codified at 22 CFR, Parts 103, 120- 130; and Treasury (Office of Foreign
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Assets Control) codified at 31 CFR, Parts 500-599) and all comparable applicable export and import Laws outside the United States for each country where the Seller Entities conduct the MiC Business or the CloudLink Activities or operate or maintain the Purchased Assets (collectively, “Trade Laws”). There are no material pending or, to the Knowledge of Seller, threatened claims against any Seller Entity with respect to such Trade Laws. To the Knowledge of Seller, no Seller Entity is a Restricted Person and no Seller Entity has any presence, directly or indirectly, in a country subject to comprehensive sanctions under the Trade Laws, in each case, in violation of Trade Laws.
(d) Except as would not reasonably be expected, individually or in the aggregate, to be material and adverse to the Purchased Assets or to the performance by Seller or its applicable Affiliates of their obligations under the Transaction Documents, (i) the Seller Entities have all Governmental Authorizations necessary for the ownership and operation of the MiC Business and the CloudLink Activities as presently conducted, and each such Governmental Authorization is in full force and effect or subject to renewal in the ordinary course of business; and (ii) no suspension or cancellation of any such Governmental Authorizations is pending or, to the Knowledge of Seller, threatened.
Section 3.10 Taxes.
(a) Except as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits:
(i) All Tax Returns required to be filed with respect to the Purchased Assets have been timely filed (taking into account applicable extensions); such Tax Returns are true, complete and correct and have been prepared in compliance with applicable Law; all Taxes shown as due on such Tax Returns have been timely paid to the appropriate Taxing Authority;
(ii) no Tax Proceeding is pending or threatened in writing with respect to any Taxes due from any Seller Entity with respect to the Purchased Assets;
(iii) there is no Tax deficiency outstanding, assessed or proposed against Seller or Seller Entities with respect to the Purchased Assets, nor has Seller or any of the Seller Entities executed any outstanding waiver of any statute of limitations on or extension of the period for the assessment or collection of any Tax which is still outstanding;
(iv) no written claim has been made by any Tax authority in a jurisdiction where Seller or Seller Entities has not filed a Tax Return that it is or may be subject to Tax by such jurisdiction;
(v) there are (and immediately following the Closing there shall be) no Liens for Taxes upon any of the Purchased Assets (other than Liens for Taxes not yet due and payable);
(vi) no Seller Entity is organized under the Laws of a jurisdiction outside of the United States; and
(vii) there are no liens for Taxes on any Purchased Assets of the type described in clause (i)(B) of the definition of Permitted Liens.
(b) No Seller Entity is organized under the Laws of a jurisdiction outside of the United States.
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Section 3.11 Intellectual Property.
(a) Registered Transferred IP. Section 3.11(a) of the Seller Disclosure Schedules sets forth: (i) (A) a true and complete list of all registrations and applications for registration of Intellectual Property Rights that are included in the Purchased Assets (the “Registered Transferred IP”), and to the extent such records and lists are maintained in the ordinary course (B) the name of the record owner of each such Intellectual Property Right; (C) the jurisdiction in which such Intellectual Property Right has been registered or filed (or, for Internet Properties, the applicable registrar and expiration date), the applicable application, registration or serial number and the applicable application, filing or registration date; (D) any actions, to the Knowledge of Seller, that must be taken by any Seller Entity within 90 days after the date of this Agreement for the purposes of maintaining, perfecting, or preserving or renewing rights in or to each item of Registered Transferred IP, including the payment of any registration, maintenance or renewal fees or the filing of any documents, applications or certificates; and (E) any proceedings or actions before any court, tribunal (including the United States Patent and Trademark Office or equivalent authority anywhere in the world but other than ordinary course, non-adversarial proceedings associated with the application for, or renewal of, any Registered Transferred IP), arbitral body or mediator in which each item of Registered Transferred IP is involved or in which claims are raised relating to the validity, enforceability, scope, ownership, misappropriation or infringement of such item of Registered Transferred IP. Each item of material Registered Transferred IP is subsisting, valid and enforceable, except for pending applications. Seller and the Seller Entities are current in the payment of all registration, maintenance and renewal fees with respect to each item of Registered Transferred IP. Each inventor of a material Transferred Patent was adequately and sufficiently compensated if and to the extent required by applicable Law. No Seller Entity has claimed any status in the application for or registration of any item of Registered Transferred IP, including “small business status,” that would be invalid or inaccurate following the consummation of the Transaction.
(b) Non-Infringement. None of the material Transferred IP Rights are subject to any Judgment adversely affecting the use thereof or rights thereto by Guarantor and its Subsidiaries. Since December 1, 2018, there has been no opposition or cancellation Legal Proceeding pending against Guarantor and its Subsidiaries concerning the ownership, validity, or enforceability of any Registered Transferred IP. Since December 1, 2018, to the Knowledge of Seller, no Person has infringed, misappropriated, or otherwise violated, and no Person is currently infringing, misappropriating or otherwise violating, any material Transferred IP Rights, and neither Guarantor nor any of its Subsidiaries has, since December 1, 2018, made any written allegation against a third party of any infringement or misappropriation, or other violation of any material Transferred IP Rights. The Seller Entities Use and Exploitation of the Purchased Assets and conduct of the MiC Business and the CloudLink Activities, including the design, development, use, promotion, marketing, provision, delivery, sale, support, making available, and licensing out of any Transferred Product, does not and has not (i) infringed, misappropriated or otherwise violated any Intellectual Property Right of any other Person, or (ii) constituted unfair competition or trade practices under the laws of any jurisdiction, except as would not reasonably be expected, individually or in the aggregate, to be material and adverse to the Purchased Assets or to the performance by Seller or its applicable Affiliates of their obligations under the Transaction Documents. Without limiting the generality of the immediately foregoing sentence, since December 1, 2018 (A) no infringement, misappropriation or similar action, or action alleging unfair competition or trade practices, is pending or, to the Knowledge of Seller, has been threatened against any Seller Entity or, to the Knowledge of Seller, against any other Person who may be entitled to be indemnified, defended, held harmless or reimbursed by any Seller Entity with respect to such action and (B) neither Guarantor nor its Subsidiaries has received any written notice (x) alleging that any of the conduct of the MiC Business or CloudLink Activities or any Use or Exploitation of CloudLink, or the Transferred Technology, infringes, misappropriates, violates or otherwise conflicts with the Intellectual Property Rights of any other Person, (y) inviting any Seller Entity to license the Intellectual Property Rights of another Person or (z) seeking indemnification from any Seller Entity in connection with the infringement, misappropriation or violation of any Intellectual Property Rights, except as would not
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reasonably be expected, individually or in the aggregate, to be material and adverse to the Purchased Assets or to the performance by Seller or its applicable Affiliates of their obligations under the Transaction Documents. Guarantor and its Subsidiaries possess all rights necessary to grant the licenses set forth in Exhibit F, and the grant of such licenses will not conflict with any of their respective obligations owed to third parties.
(c) Intellectual Property Sufficiency.
(i) The Company-Owned Software and Company-Owned Technology which are CL Technology, MiC Technology or Internal Support Tools are all of the Company-Owned Software or Company-Owned Technology, in all material respects, necessary for the conduct of the MiC Business and CloudLink Activities as conducted by Guarantor and its Subsidiaries as of the date of this Agreement.
(ii) The Transferred IP Rights, and the Seller Licensed IP Rights licensed to Purchaser hereunder together constitute all of the Intellectual Property Rights owned by Guarantor or any of its Subsidiaries as of the date of this Agreement that would, absent the ownership thereof by Purchaser or license thereto as granted to Purchaser under this Agreement, be violated, infringed or misappropriated in any material respect by (1) the Seller Entities’ conduct of the MiC Business or the CloudLink Activities as of the date of this Agreement, (2) the Use or Exploitation of MiCloud Connect, CloudLink, Mitel Connectors or the Core Softphone Library by Purchaser or its Affiliates; or (3) the Use or Exploitation of any features or functionality of MiCloud Connect, CloudLink, Mitel Connectors or the Core Softphone Library in any form of Technology (the representation and warranty in this subsection (i) with respect to Patents owned by any Seller Entity, the “Hybrid Patent Sufficiency Representation”).
(iii) Purchaser’s sole remedy in the event the Hybrid Patent Sufficiency Representation is not true and correct is to avail itself of the remedy set forth in Section 5.4(c).
(d) Licensed IP. Section 3.11(d) of the Seller Disclosure Schedules sets forth a true and complete list of all material Licensed IP Contracts.
(e) Title to and Condition of Transferred IP. The Seller Entities exclusively own all right, title and interest to and in the Purchased Assets, including all Registered Transferred IP, free and clear of any Liens (other than Permitted Liens). No Purchased Asset is subject to any Legal Proceeding or outstanding Judgment that restricts in any manner the use, transfer, or licensing thereof or that may affect the validity, use of enforceability thereof in any material respect. Without limiting the generality of the foregoing:
| (i) | each Representative of a Seller Entity who is or was involved in the creation or development of any material Transferred IP Rights (each, a “Contributor”) has irrevocably assigned of all such material Transferred IP Rights to one of the Seller Entities, to the extent permitted by Law, either by execution of a patent invention assignment agreement or by operation of Law; |
| (ii) | no other Person, including any Contributor or former employer of any Contributor, has any claim, ownership right or interest to or in any material Transferred IP Rights; |
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| (iii) | no funding, facilities or personnel of any Governmental Entity or of any university, college, other educational institution, or research center were used to develop or create any Transferred IP/Technology such that such entity or any third party would have any right to such Transferred IP/Technology; |
| (iv) | no Seller Entity has permitted any material Transferred IP Rights that are or were material to its business to enter into the public domain, or to be abandoned or lapse; |
| (v) | no material Transferred IP is subject to any proceeding or outstanding decree, order, judgment or settlement agreement, or stipulation by which a Seller Entity is bound that restricts in any manner the use, transfer or licensing thereof by any Seller Entity; and |
| (vi) | no Seller Entity has assigned or otherwise transferred ownership of or granted an exclusive license with respect to, or agreed to assign or otherwise transfer ownership of or grant an exclusive license with respect to, any Transferred IP Right that is or was material to a Transferred Product. |
(f) Effects on Purchaser. Neither the execution, delivery or performance of this Agreement or any Transaction Document to which a Seller Entity is a party, nor the consummation of the Transaction or any transactions contemplated by a Transaction Document will, with or without notice or the lapse of time, as a consequence of a Contract binding on a Seller Entity, result in or give any other Person the right or option to cause or declare: (i) a loss of, or Lien on, any Transferred IP Rights; (ii) Purchaser or any of its Affiliates, or any Seller Entity, becoming bound by or subject to any non-compete or other restriction on the operation or scope of their respective businesses; (iii) the release, disclosure or delivery of any source code that is Transferred Technology (“Seller Source Code”) by or to any escrow agent or other Person; or (iv) the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in any of the Transferred IP Rights or Intellectual Property Rights of Purchaser or any of its Affiliates, except, for each of clauses (i) through (iv) above, as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits.
(g) Contaminants; Malicious Code.
(i) No Transferred Product: (A) contains any Contaminant, bug, defect or error that materially and adversely affects the use, functionality or performance of such Transferred Product or any product or system containing or used in conjunction with such Transferred Product or that could materially and adversely affect their availability, security, and integrity; or (B) fails to materially comply with any applicable warranty or other contractual commitment relating to the use, functionality or performance of, or any product or system containing or used in conjunction with, such Transferred Product.
(ii) None of the Transferred Products perform the following functions, without the knowledge and consent of the owner or user of an affected system, network, or device: (A) collect data stored on or transmitted by the system, network, or device; (B) interfere with the owner’s or an authorized user’s control of the system, network, or device; (C) change or interfere with settings or preferences of, or commands installed or stored on, the system, network, or device without
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the knowledge of the owner or an authorized user of the system, network, or device; (D) change or interfere with data that is stored on or transmitted by the system, network, or device in a manner that obstructs, interrupts or interferes with lawful access to or use of that data by the owner or an authorized user of the system, network, or device; (E) cause the system or device to communicate with another system or device without the authorization of the owner or an authorized user of the system or device; or (F) install a computer program or code that may be activated without the knowledge of the owner or an authorized user of the system, network, or device, in each case of (A)-(F) in a way material to the owner or user of an affected system, network, or device.
(h) Trade Secrets.
(i) Each Seller Entity has taken the reasonable steps necessary to protect information included in the Transferred Technology or related to the Transferred Products that is a material Trade Secret, including any such Trade Secrets of a third party provided to any Seller Entity with obligations of confidentiality, and there has been no loss of or unauthorized access to or disclosure of any such material Trade Secrets.
(ii) No Seller Entity, nor any other Person acting on any of their behalves, has disclosed, delivered or licensed to any Person, agreed to disclose, deliver or license to any Person, or deposited or agreed to deposit with any escrow agent or other Person, any Seller Source Code included in the Transferred Technology, other than disclosures to Representatives bound by confidentiality obligations. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) would reasonably be expected to result in the disclosure or delivery of any material Seller Source Code to any Person (including escrow agents) other than a Representative bound by a valid and enforceable invention assignment and confidentiality agreement. Without limiting the generality of the foregoing, no Seller Entity, nor any Person acting on any of their behalves, has made available any Transferred Technology in source code form. Except for Open Source Software, the Transferred Technology will not include or incorporate any material Technology that is not Seller Owned-Technology..
(i) Open Source. No Seller Entity has used, modified, or distributed any Open Source Software in a manner that: (A) could or does require (or could or does condition the use or distribution of such software on) the disclosure, licensing or distribution of any Transferred Technology; (B) imposes any restriction on the consideration to be charged for the distribution of any Transferred IP; (C) grants, or purports to grant, to any third party, any rights or immunities under any Transferred IP Right; or (D) could or does otherwise impose any other limitation, restriction or condition on the right or ability of any Seller Entity to use or distribute any Transferred IP. Each Representative of a Seller Entity has complied in all material respects with each applicable Open Source License, including all requirements pertaining to attribution and copyright notices. For each Open Source Software component that is contained in or distributed with any Transferred Product, or is used by, linked to, incorporated in, or from which any part of any Transferred Product is derived, the Seller Entities are in material compliance with all conditions imposed by the Open Source License for such Open Source Software.
(j) Industry Organizations. Except as set forth in Section 3.11(j) of the Seller Disclosure Schedules, no Seller Entity is currently or has been a member or promoter of, or a contributor to, any industry standards body or similar organization that would as a result thereof require or obligate any of them to grant or offer to any other Person any license or right to any Transferred IP (or that would, following the Closing, require or obligate Purchaser or any of its Affiliates to grant or offer to any other Person any license or right to any Technology or Intellectual Property Rights of the Purchaser or such Affiliate).
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(k) Retained Inventions. There are no Retained Inventions (the “Retained Invention Representation”).
(l) No Other Licenses. The are no Contracts by which Guarantor and each of its Subsidiaries receives or has a right to receive a license, sublicense, right, immunity, release, or covenant not to sue with respect to Transferred IP Rights or Transferred Derivative Other IPR (“Acquired IPR Agreements”).
Section 3.12 Listed Contracts; Material Contracts.
(a) Section 3.12(a) of the Seller Disclosure Schedules lists all Contracts, as of the date of this Agreement (each Contract satisfying any of the descriptions set forth in this Section 3.12(a), a “Listed Contract”):
(i) pursuant to which any Seller Entity is bound to or has committed to provide any Transferred Product or Transferred IP/Technology to any third party on a most favored nation basis or similar terms;
(ii) relating to the escrow of any Seller Source Code; or
(iii) granting to Guarantor or its Subsidiaries any rights or licenses to the Patents of a third person, the primary purpose of which Contract is the licensing of such Patents and not the delivery or use of any Technology.
(b) The Seller Entities have made available to Purchaser true, correct and complete copies of all Listed Contracts, including all amendments thereto. All Material Contracts are in writing. Except as would not reasonably be expected, individually or in the aggregate, to be material and adverse to the Purchased Assets or to the performance by Seller or its applicable Affiliates of their obligations under the Transaction Documents, each Material Contract is valid and in full force and effect and is enforceable by the applicable Seller Entity in accordance with its terms, subject to Laws of general application relating to bankruptcy, insolvency and the relief of debtors; and rules of law governing specific performance, injunctive relief and other equitable remedies. No Seller Entity is in material violation or breach of, or in material default under, any Material Contract and, to the Knowledge of Seller, no other Person that is party to a Material Contract is in material violation or breach of, or in material default under, such Material Contract. To the Knowledge of Seller, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will or would reasonably be expected to: (i) result in a material violation or breach of any Material Contract; (ii) give any Person the right to declare a material default or exercise any material remedy under any Material Contract; or (iii) give any Person the right to cancel, terminate or materially modify any Material Contract. Guarantor and its Subsidiaries have not received any notice (in writing or otherwise) regarding any actual or alleged material violation or breach of, or material default under, any Material Contract, which material violation, breach or default has not been cured or resolved. Since January 1, 2020, no Seller Entity has made any material waiver of any of its rights under any Material Contract. Since January 1, 2020, no Person has threatened Guarantor or any of its Subsidiaries in writing to terminate or refuse to perform substantially all of its obligations under any Material Contract (regardless of whether such Person has the right to do so under such Contract).
Section 3.13 Top End Users, Distributors and Suppliers.
(a) Since January 1, 2021, no Seller Entity has received written notice that any Top End User (i) has substantially reduced or will substantially reduce, the purchase, order and other use of MiCloud, or (ii) will cancel or terminate its relationship or Contract as it relates to the MiC Business for any reason. “Top End User” means the top one hundred (100) End Users of the MiC Business based on contracted annual recurring revenue (determined on an annualized basis for customers having contract terms less than one (1) year), determined as of the nine (9) months ended September 30, 2021. “End User” means a Person who purchases, accesses and uses MiCloud for their own benefit and not that of another Person, whether directly or indirectly.
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(b) Since January 1, 2021, no Seller Entity has received written notice that any Top Distributor (i) has substantially reduced or will substantially reduce, the purchase, order and other use of MiCloud or (ii) will cancel or terminate its relationship or Contract with such Seller Entity as it relates to MiCloud for any reason. “Top Distributor” means the top ten (10) channel partners, resellers or distributors, in each case of the MiC Business, by revenues generated for the nine (9) months ended September 30, 2021.
(c) Since January 1, 2021, no Seller Entity has received written notice that any Top Supplier intends to cancel or terminate its relationship with such Seller Entity as it relates to the MiC Business for any reason. “Top Suppliers” means the top ten (10) suppliers or vendors of the MiC Business, whether of products, services, Intellectual Property Rights or Technology or otherwise, by dollar volume of sales and purchases, respectively, for the nine (9) months ended September 30, 2021.
Section 3.14 Legal Proceedings. There are (i) no Legal Proceedings pending or, to the Knowledge of Seller, threatened against Guarantor or any of its Subsidiaries with respect to the Purchased Assets, the MiC Business or the CloudLink Activities and (ii) to the Knowledge of Seller, there is no investigation or other proceeding pending or threatened against any Guarantor or any of its Subsidiaries with respect thereto except, in the case of clauses (i) and (ii), as would not reasonably be expected, individually or in the aggregate, to be material to (x) the Purchased Assets or (y) the Anticipated Benefits.
Section 3.15 Purchase for Investment. Seller acknowledges that the shares of Purchaser Common Stock it will acquire hereunder will not have been registered under the Securities Act or under any state or other applicable securities laws. Seller (a) acknowledges that it is acquiring such shares of Purchaser Common Stock pursuant to an exemption from registration under the Securities Act solely for investment, and with no present intention or view to distribute any of such shares of Purchaser Common Stock to any Person in violation of the Securities Act, (b) will not sell or otherwise dispose of any of such shares of Purchaser Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable state securities laws, (c) is knowledgeable, sophisticated and experienced in financial and business matters, fully understands the limitations on transfer and the restrictions on sales of such Purchaser Common Stock and is able to bear the economic risk of its investment and afford the complete loss of such investment and (d) is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act).
Section 3.16 Private Placement Consideration. Seller understands and acknowledges that: (a) its representations and warranties contained herein are being relied upon by Purchaser as a basis for availing itself of such exemption and other exemptions under the securities Laws of all applicable states and for other purposes, (b) no U.S. state or federal agency has made any finding or determination as to the fairness of the terms of the Stock Consideration or any recommendation or endorsement thereof and (c) the shares of Purchaser Common Stock that Seller acquires hereunder are “restricted securities” under the Securities Act inasmuch as they are being acquired from Purchaser in a transaction not involving a public offering and that under applicable securities Laws such shares of Purchaser Common Stock may be resold without registration under the Securities Act only in accordance with an exemption therefrom.
Section 3.17 Solvency. Immediately after the date hereof, after giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, Guarantor and its Subsidiaries, on a consolidated basis, will be Solvent. No transfer of property is being made, and no obligation is being incurred in connection with the transactions contemplated by this Agreement or the other Transaction Documents, with the intent to hinder, delay or defraud either present or future creditors of Guarantor or any of its Subsidiaries, nor do the transactions contemplated by this Agreement and the other Transaction Documents constitute a fraudulent transfer or conveyance, or otherwise constitute an avoidable transfer under federal bankruptcy or applicable state Laws. Neither the Guarantor nor any of its Subsidiaries is contemplating the commencement of insolvency proceedings of any character, including, without limitation, bankruptcy, reorganization, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Guarantor, any of its Subsidiaries, or any of its or their assets, and no such insolvency proceedings affecting the Purchased Assets or Guarantor or any of its Subsidiaries is pending, or, to the Knowledge of Seller, threatened.
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Section 3.18 Fairness Opinion. Prior to the execution of this Agreement, the Seller Board has received an opinion (which, if initially rendered verbally, has been or will be confirmed by a written opinion dated the same date, the “Fairness Opinion”) of Houlihan Lokey Capital, Inc. Such opinion has been provided to Purchaser for informational purposes and has not been amended or rescinded as of the date of this Agreement.
Section 3.19 Brokers’ and Finders’ Fee. No broker, finder or investment banker is entitled to brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges from the Seller Entities in connection with the Transaction, this Agreement or any other Transaction Documents, in each case for which Purchaser would be responsible, other than the Financial Advisory Cost Sharing Letter.
Section 3.20 No Other Purchaser Representations or Warranties. Except for the representations and warranties expressly set forth in Article IV or any other Transaction Documents, Seller hereby acknowledges that neither Purchaser nor any of its Subsidiaries, nor any other Person, has made or is making any other express or implied representation or warranty, at law or in equity, with respect to Purchaser or any of its Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, including with respect to any information provided or made available to Seller or any of its Representatives or any information developed by Seller or any of its Representatives.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the Purchaser SEC Reports (as defined below) filed on or after January 1, 2020 and at least two (2) Business Days prior to the date of this Agreement (provided that in no event shall any disclosures contained under the captions “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk” that are not factual and/or historical in nature, any disclosure set forth in any “forward-looking statements” disclaimer or any other disclosures that are predictive, cautionary or forward-looking in nature that are included in any part of any Purchaser SEC Report be deemed to be an exception to, or, as applicable, disclosure for purposes of, any representations and warranties of the Purchaser contained in this Agreement) (it being agreed and understood that any matter disclosed in such Purchaser SEC Report shall not be deemed disclosed for the purposes of Section 4.1, Section 4.2 and Section 4.3), or, subject to Section 8.13, in a corresponding identified section of the Purchaser Disclosure Schedules, Purchaser represents and warrants to Seller that:
Section 4.1 Organization and Standing.
(a) Purchaser is a corporation duly organized, validly existing and in good standing pursuant to the DGCL. Purchaser has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties, assets and rights, except where the failure to have such power or authority has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser. Purchaser is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (with respect to jurisdictions that recognize the concept of good standing), except where the failure to be so qualified or in good standing has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser.
(b) Purchaser has made available to Seller true, correct and complete copies of the Purchaser Charter Documents, each as amended to the date hereof. Purchaser is not in violation of any provision of the Purchaser Charter Documents.
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(c) Each of the Subsidiaries of Purchaser is duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the laws of the jurisdiction of its organization. Each of the Subsidiaries of Purchaser has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties and assets, except, in each case, as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser. Each of the Subsidiaries of Purchaser is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (with respect to jurisdictions that recognize the concept of good standing), except where the failure to be so qualified or in good standing has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser.
Section 4.2 Capitalization.
(a) Capital Stock. The authorized capital stock of Purchaser consists of (i) 1,000,000,000 shares of Purchaser Common Stock, (ii) 250,000,000 shares of Class B Common Stock, and (iii) 100,000,000 shares of Purchaser Preferred Stock. As of September 23, 2021 (the “Capitalization Date”), there were (A) 82,087,514 shares of Purchaser Common Stock issued and outstanding; (B) 10,073,998 shares of Class B Common Stock issued and outstanding; (C) no shares of Purchaser Preferred Stock issued and outstanding; and (D) zero (0) shares of Purchaser Common Stock or Class B Common Stock (collectively, “Common Stock”) held by Purchaser as treasury shares. All issued and outstanding shares of Common Stock are validly issued, fully paid, nonassessable and free of any preemptive rights and were issued in compliance with all applicable securities Laws.
(b) Purchaser Common Stock. The shares of Purchaser Common Stock to be acquired by Seller hereunder are duly authorized, validly issued, fully paid, nonassessable and free of any preemptive rights and issued in compliance with all applicable securities Laws. The shares of Purchaser Common Stock to be acquired by Seller hereunder have the terms and conditions and entitle the holders thereof to the rights set forth in Purchaser Charter Documents and are free of restrictions on transfer other than restrictions (i) on transfer under applicable state and federal securities Laws and Liens created by or imposed by Seller and (ii) set forth in the Investor Rights Agreement, to be entered into at the Closing, by and between Purchaser and Seller (the “Investor Rights Agreement”) and the Registration Rights Agreement, to be entered into at the Closing, by and between Purchaser and Seller (the “Registration Rights Agreement”). Assuming the accuracy of the representations of Seller in Article III of this Agreement and subject to the filings described in Section 4.4 below, the shares of Purchaser Common Stock acquired by Seller hereunder were issued in compliance with all applicable federal and state securities Laws.
(c) Stock Reservation, Awards, Warrants and Convertible Notes. As of the Capitalization Date, the Purchaser has reserved 31,707,538 shares of Purchaser Common Stock for issuance pursuant to Purchaser Stock Plans and there are 3,915,372 shares of Purchaser Common Stock underlying outstanding Purchaser Equity Awards.
(d) Purchaser Securities. Except as set forth in this Section 4.2 (including, for the avoidance of doubt, under the Purchaser Stock Plans or the Purchase Equity Awards), as of the Capitalization Date, there are (i) no issued and outstanding shares of capital stock of, or other equity or voting interest in, Purchaser; (ii) no outstanding securities of Purchaser or any of its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock of, or other equity or voting interest (including voting debt) in, Purchaser, other than Purchaser’s 0% convertible senior notes due 2025 and Purchaser’s 0% convertible senior notes due 2026; (iii) no outstanding options, warrants or other rights or binding arrangements to acquire from Purchaser or any of its Subsidiaries, or that obligate Purchaser or any of its Subsidiaries to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable or exercisable for shares of capital stock of, or other equity or voting interest (including voting debt) in, Purchaser; (iv) no obligations of Purchaser or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible, exchangeable or exercisable security, or other similar Contract relating to any capital stock of, or other equity or voting interest (including any voting debt) in, Purchaser; and (v) no outstanding restricted shares, restricted share units, stock appreciation rights, performance shares, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or other securities or ownership interests in, Purchaser (the items in clauses (i), (ii), (iii), (iv) and (v), collectively, the “Purchaser Securities”).
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(e) Other Rights. There are no (i) voting trusts, proxies or similar arrangements or understandings to which Purchaser or any of its Subsidiaries is a party or by which Purchaser or any of its Subsidiaries is bound with respect to the voting of any shares of capital stock of, or other equity or voting interest in, Purchaser; (ii) obligations or binding commitments of any character to which Purchaser or any of its Subsidiaries is a party or by which it is bound (A) restricting the transfer of any shares of capital stock of, or other equity or voting interest in, Purchaser or (B) granting any preemptive rights, anti-dilutive rights or rights of first refusal or other similar rights with respect to any Purchaser Securities; or (iii) other obligations by Purchaser or any of its Subsidiaries to make any payments based on the price or value of any Purchaser Securities. Neither Purchaser nor any of its Subsidiaries is a party to any Contract that obligates it to repurchase, redeem or otherwise acquire any Purchaser Securities. There are no accrued and unpaid dividends with respect to any outstanding shares of Common Stock.
Section 4.3 Authority; Non-Contravention.
(a) Purchaser has the requisite corporate power and authority to (i) execute and deliver this Agreement and the other Transaction Documents; (ii) perform its covenants and obligations hereunder and thereunder; and (iii) consummate the Transaction and the other transactions contemplated by the Transaction Documents. The execution and delivery of this Agreement and the other Transaction Documents by Purchaser, the performance by Purchaser of its covenants and obligations hereunder and thereunder, and the consummation of the Transaction and the other transactions contemplated by the Transaction Documents, have been duly authorized and approved by the Board of Directors of Purchaser (the “Board”), and no other corporate action on the part of Purchaser is necessary to authorize the execution and delivery by Purchaser of this Agreement and the other Transaction Documents, the performance by Purchaser of its covenants and obligations and the consummation of the Transaction and the other transactions contemplated by the Transaction Documents. This Agreement and the other Transaction Documents have been duly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery by Seller and each other Seller Entity that is a party thereto, as applicable, constitute legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their terms, except that (A) such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws affecting or relating to creditors’ rights generally and (B) equitable remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought (such exceptions in clauses (A) and (B), the “Enforceability Exceptions”).
(b) The execution and delivery of this Agreement and the other Transaction Documents by Purchaser, the performance by Purchaser of its covenants and obligations hereunder and thereunder, and the consummation of the Transaction and the other transactions contemplated by the Transaction Documents do not and would not reasonably be expected to (i) violate or conflict with any provision of Purchaser Charter Documents; (ii) violate, conflict with, result in the breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) pursuant to, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration pursuant to any material Contract to which Purchaser or any of its Subsidiaries is a party; (iii) assuming the Governmental Authorizations referred to in Sections 3.3 and 4.4 are made and obtained, violate or conflict with any Law applicable to Purchaser or any of its Subsidiaries or by which any of their properties or assets are bound; or (iv) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of Purchaser or any of its Subsidiaries, except in the case of each of clauses (ii), (iii) and (iv) for such violations, conflicts, breaches, defaults, terminations, accelerations or Liens that have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser.
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Section 4.4 Governmental Approvals. Except for (a) the approval for listing on NYSE of the shares of Purchaser Common Stock to be acquired by Seller hereunder, subject to official notice of issuance and (b) the filing with the SEC of such current reports and other documents, if any, required to be filed with the SEC under the Exchange Act or Securities Act in connection with the Transaction or the transactions contemplated by the Transaction Documents, no consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Entity is necessary for the execution and delivery of this Agreement and the other Transaction Documents by Purchaser, the performance by Purchaser of its obligations hereunder and thereunder and the consummation by Purchaser of the Transaction or the other transactions contemplated by the Transaction Documents, other than such consents, approvals, filings, licenses, permits, authorizations, declarations or registrations the failure of which to obtain, make or give, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to Purchaser.
Section 4.5 Purchaser SEC Documents; Undisclosed Liabilities.
(a) Since January 1, 2020, Purchaser has timely filed or furnished all SEC Reports (“Purchaser SEC Reports”). Each Purchaser SEC Report complied, as of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseding filing) or in the case of registration statements, on the date of effectiveness thereof, in all material respects with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and/or the listing standards and rules of the securities exchange on which Purchaser was listed at the time of such filing, as the case may be, each as in effect on the date that such Purchaser SEC Report was filed. As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), or in the case of registration statements, on the date of effectiveness thereof, each Purchaser SEC Report did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Purchaser is, and since January 1, 2020 has been, in compliance in all material respects with the applicable provisions and requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and the listing standards and rules of the securities exchange on which the Purchaser Common Stock traded. Since January 1, 2020, each principal executive officer and principal financial officer of Purchaser, as applicable, has made all certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC and the statements contained in any such certifications are true, correct and complete. There are no outstanding or unresolved comments received from the SEC with respect to the Purchaser SEC Reports or any registration statement filed by Purchaser and to the Knowledge of Purchaser, none of the Purchaser SEC Reports is the subject of ongoing SEC review or investigation. No Subsidiary of Purchaser is, or since January 1, 2020 has been, required to file any forms, reports or documents with the SEC.
(b) The consolidated financial statements (including any related notes and schedules) of Purchaser and its Subsidiaries filed with the Purchaser SEC Reports (i) complied, as of their respective dates of filing with the SEC, in all material respects with the published rules and regulations of the SEC with respect thereto during the periods and at the dates indicated (except as may be indicated in the notes thereto or as otherwise permitted by Form 10-Q with respect to any financial statements filed on Form 10-Q); (ii) were prepared in accordance with GAAP (except as may be indicated in the notes thereto or as otherwise permitted by Form 10-Q with respect to any financial statements filed on Form 10-Q) applied on a consistent basis during the periods involved; and (iii) fairly present, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of Purchaser and its consolidated Subsidiaries as of the dates thereof or for the periods then ended (subject, in the case of the unaudited financial statements, to normal and recurring year-end adjustments described therein). None of Purchaser or its Subsidiaries is a party to, or has any obligation or other commitment to become a party to, any “off balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K promulgated by the SEC) that have not been so described in the Purchaser SEC Reports.
(c) Purchaser has established and maintains “disclosure controls and procedures” and “internal control over financial reporting” (in each case as defined pursuant to Rule 13a-15 and Rule 15d-15 promulgated under the Exchange Act). Purchaser’s disclosure controls and procedures are reasonably designed to ensure that (i) all material information required to be disclosed by Purchaser in the reports and other documents that it files or furnishes pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC; and (ii) such material information is accumulated and
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communicated to Purchaser’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure and to make the certifications required under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act. Since January 1, 2020, no events, facts or circumstances have occurred such that management would not be able to complete its assessment of the effectiveness of Purchaser’s internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act when next due, and conclude, after such assessment, that such system was effective. Since January 1, 2020, the principal executive officer and principal financial officer of Purchaser have made all certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act, and the statements contained in any such certifications were true, correct and complete as of their filing dates. Neither Purchaser nor its principal executive officer or principal financial officer has received notice from any Governmental Entity challenging or questioning the accuracy, completeness, form or manner of filing of such certifications.
(d) Purchaser has established and maintains a system of internal controls over financial reporting that are designed to ensure reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, including policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Purchaser and its Subsidiaries; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of Purchaser and its Subsidiaries are being made only in accordance with appropriate authorizations of Purchaser’s management and the Board; and (iii) provide assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of Purchaser and its Subsidiaries. Since January 1, 2020, neither Purchaser nor, Purchaser’s independent registered public accounting firm has identified or been made aware of (x) any material weakness in the system of internal control over financial reporting, including the design and operation thereof, used by Purchaser and its Subsidiaries that has not been subsequently remediated; (y) any fraud or illegal act that involves Purchaser’s management or other employees who have a role in the preparation of financial statements or the internal control over financial reporting utilized by Purchaser and its Subsidiaries; or (z) any claim or allegation regarding any of the foregoing. Purchaser’s auditors and the audit committee of the Board have identified or have been made aware of all matters described by the immediately preceding clauses (x) through (z).
(e) Neither Purchaser nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent, fixed or otherwise) required to be reflected or reserved against on the balance sheet prepared in accordance with GAAP or notes thereto, other than liabilities or obligations (i) reflected or otherwise adequately reserved against in the balance sheet (or the notes thereto) of Purchaser and its Subsidiaries as of June 30, 2021 or in the consolidated financial statements of Purchaser and its Subsidiaries included in Purchaser SEC Reports filed prior to the date of this Agreement or described in the notes thereto; (ii) arising pursuant to this Agreement or the other Transaction Documents or incurred in connection with the Transaction or the other transactions contemplated by the Transaction Documents; (iii) incurred in the ordinary course of business consistent with past practice on or after June 30, 2021; or (iv) that has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser.
Section 4.6 Listing and Maintenance Requirements. The Purchaser Common Stock is registered pursuant to Section 12(b) of the Exchange Act and listed on NYSE, and Purchaser has taken no action designed to (or which, to the Knowledge of Purchaser, is reasonably likely to) have the effect of, terminating the registration of the Purchaser Common Stock under the Exchange Act or delisting the Purchaser Common Stock from NYSE, nor has Purchaser received any notification that the SEC or NYSE is contemplating terminating such registration or listing.
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Section 4.7 Compliance with Laws.
(a) Since January 1, 2020, Purchaser and each of its Subsidiaries has been in compliance with all Laws that are applicable to Purchaser and its Subsidiaries or to the conduct of the business or operations of Purchaser and its Subsidiaries, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser, and since, January 1, 2020, neither Purchaser nor any of its Subsidiaries has received any written or, to the Knowledge of Purchaser, oral notice of any conflict or non-compliance with, or default or violation of, any applicable Laws by which it or any of its properties, assets, rights, employees, business or operations are or were bound or affected, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser, (i) Purchaser and its Subsidiaries have all Governmental Authorizations necessary for the ownership and operation of its business as presently conducted, and each such Governmental Authorization is in full force and effect or subject to renewal in the ordinary course of business; (ii) Purchaser and its Subsidiaries are, and since January 1, 2020 have been, in compliance with the terms of all Governmental Authorizations necessary for the ownership and operation of its businesses; and (iii) since January 1, 2020, (A) neither Purchaser nor any of its Subsidiaries has received written notice, or, to the Knowledge of Purchaser, oral notice from any Governmental Entity alleging any conflict with or breach of any such Governmental Authorization which remains unresolved and (B) no suspension or cancellation of any of the Governmental Authorizations is pending or, to the Knowledge of Purchaser, threatened.
(b) Since January 1, 2020, Purchaser, each of its Subsidiaries, each of its and their respective directors and officers, and to Purchaser’s Knowledge, each of its and their respective employees, and agents, and all other Persons acting on its or their behalf, in each case in their capacity as such, is and has been in material compliance with Anti-Corruption Laws. Except as has not been and would not reasonably be expected to be, individually or in the aggregate, material to Purchaser and its Subsidiaries, taken as a whole, since January 1, 2020, none of Purchaser, any of its Subsidiaries, any of its or their respective officers or directors, or to Purchaser’s Knowledge, each of its and their respective agents, employees or other Persons acting on their behalf, in each case in their capacity as such, has, directly or indirectly, (i) been charged with or convicted of violating any Anti-Corruption Laws; (ii) received any written notice, request or citation, or been made aware in writing of any allegation, investigation (formal or informal), inquiry, action, charge or other Legal Proceeding with regard to a potential violation of any Anti-Corruption Law; (iii) established or maintained any unrecorded or improperly recorded fund of corporate monies or other properties or assets or made any false entries on any books of account or other record for any purpose in violation of any Anti-Corruption Laws; (iv) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to government officials or government employees in violation of any Anti-Corruption Laws; (v) made, offered or authorized any unlawful payment, or other thing of value, to a Government Official in violation of any Anti-Corruption Laws; or (vi) made, offered or authorized any unlawful bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment in violation of any Anti-Corruption Laws. Purchaser and each of its Subsidiaries have developed and implemented an anti-corruption compliance program that includes internal controls and policies and procedures designed to reasonably promote compliance with all applicable Anti-Corruption Laws.
(c) Since January 1, 2020, none of Purchaser, its Subsidiaries, or any of their respective officers, directors, employees, agents, nor any other Person acting on their behalf, has violated, in any material respect, an applicable Law relating to economic or trade sanctions Laws, export, reexport, transfer, and import control Laws, or antiboycott Laws administered or enforced by a Governmental Entity, including the Trade Laws. Since January 1, 2020, neither Purchaser, nor any of its Subsidiaries has (i) received from any Governmental Entity any written or, to Purchaser’s Knowledge, oral notice, inquiry, or internal or external allegation related to Trade Laws; (ii) made any voluntary or involuntary disclosure to a Governmental Entity related to Trade Laws; or (iii) conducted any material internal investigation concerning any actual or potential violation or wrongdoing related to the Trade Laws. None of Purchaser, its Subsidiaries, or, to Purchaser’s Knowledge, any of their respective officers, directors, employees, agents, nor any other Person acting on their behalf, is a Person (A) that is organized, located or resident in a country or territory with which dealings are broadly prohibited under comprehensive U.S. sanctions (currently, the Crimea region of Ukraine, Cuba, Iran, North Korea, and Syria); (B) with whom dealings are restricted or prohibited by, or are sanctionable under, any applicable economic or trade sanctions Law; (C) engaged in any unlawful transaction, directly or, knowingly, indirectly, with any Person who is the target of any economic or trade sanctions Law; or (D) that is owned or controlled, directly or indirectly, by any Person identified in (A), (B), or (C).
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Section 4.8 Taxes. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser:
(a) each of Purchaser and its Subsidiaries has duly and timely filed (taking into account valid extensions) all Tax Returns required to be filed by any of them and each such Tax Return is true, correct and complete, and Purchaser and each of its Subsidiaries has timely and properly paid and remitted, or has adequately reserved and accrued (in accordance with GAAP on the appropriate financial statements) for the payment and remittance of, all Taxes (whether or not shown as due on any such Tax Return) that are required to be paid or remitted by any of them (including any Taxes required to be withheld or collected in connection with any amounts paid or owing to any Person);
(b) no audits, investigations, proceedings, actions or other examinations with respect to Tax Returns or Taxes of Purchaser or any of its Subsidiaries are presently in progress or have been asserted, threatened or proposed in writing;
(c) Purchaser is not and has not been within the time period specified in Section 897(c)(1A)(ii) of the Code a “United States real property holding corporation” within the meaning of Section 897 of the Code and the Treasury Regulations promulgated thereunder; and
(d) none of Purchaser or any of its Subsidiaries has engaged in a “listed transaction” as set forth in Treasury Regulation § 1.6011-4(b)(2) (or any similar provision of state, local or non-U.S. Law).
Section 4.9 Employees. Neither Purchaser nor any of its ERISA Affiliates maintains, sponsors or contributes to or is obligated to maintain, sponsor or contribute to, or has ever maintained, sponsored, or contributed to, or been obligated to maintain, sponsor or contribute to, (i) any plan that is subject to Section 302 or Title IV of ERISA or Section 412 or 4971 of the Code, (ii) any plan that is a “multiemployer plan” within the meaning of Section 3(37) of ERISA, or (iii) a plan that has two (2) or more contributing sponsors at least two (2) of whom are not under common control, within the meaning of Section 4063 of ERISA. Neither Purchaser nor any of its ERISA Affiliates provides or has ever provided, or is obligated to provide or has ever been obligated to provide, retiree or other post-termination medical or welfare benefits, except as required by Law.
Section 4.10 Intellectual Property. Except as would not have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser, (i) to the Knowledge of Purchaser, Purchaser owns or possesses or can acquire on commercially reasonable terms sufficient legal rights to all Intellectual Property Rights needed for the operation of Purchaser’s business without any known conflict with, or infringement of, the rights of others, (ii) other than with respect to commercially available software products under standard end-user object code license agreements, there are no outstanding options, licenses, agreements, claims, encumbrances or shared ownership interests of any kind relating to Purchaser Intellectual Property, nor is Purchaser bound by or a party to any options, licenses or agreements of any kind with respect to the Intellectual Property Rights of any other Person, (iii) none of Purchaser or any of its Subsidiaries has received any notice alleging that Purchaser or any of its Subsidiaries has violated or, by conducting its business, would violate any of the Intellectual Property Rights of any other Person and Purchaser is not aware that such notice may be forthcoming, or (iv) each employee and consultant engaged in the development of any material Intellectual Property for Purchaser or any of its Subsidiaries has entered into Purchaser’s standard employee invention assignment and confidentiality agreement.
Notwithstanding anything in this Agreement to the contrary, this Section 4.10 sets forth the sole and exclusive representations and warranties of Purchaser relating to Intellectual Property.
Section 4.11 Legal Proceedings. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to Purchaser, there are no Legal Proceedings pending or, to the Knowledge of Purchaser, threatened against Purchaser or any of its Subsidiaries.
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Section 4.12 Related Party Transactions. Except for compensation and other employment arrangements entered into in the ordinary course of business consistent with past practice, there are no Contracts, transactions, arrangements or understandings between Purchaser or any of its Subsidiaries, on the one hand, and any Affiliate (including any director or officer but not including any wholly owned Subsidiary) thereof, or any stockholder that, to the Knowledge of Purchaser, beneficially owns 5% or more of the Purchaser Common Stock, on the other hand, that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC in Purchaser’s Form 10-K or proxy statement pertaining to an annual meeting of stockholders.
Section 4.13 No Other Seller Representations or Warranties. Except for the representations and warranties expressly set forth in Article III or any other Transaction Documents, Purchaser hereby acknowledges that neither Guarantor nor any of its Subsidiaries, nor any other Person, has made or is making any other express or implied representation or warranty, at law or in equity, with respect to Guarantor or any of its Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, including with respect to any information provided or made available to Purchaser or any of its Representatives or any information developed by Purchaser or any of its Representatives.
ARTICLE V
COVENANTS
Section 5.1 Publicity. Purchaser and Seller shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to this Agreement or the Transaction and shall not issue any such press release or make any such public statement without the other party’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed), except (a) as such party may reasonably conclude may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system (and then only after as much advance notice or consultation as is feasible) or (b) such public statements principally directed to employees, suppliers, customers, partners or vendors that reconvey previous press releases or public statements issued in accordance with this Agreement.
Section 5.2 NYSE Listing of Shares. Purchaser shall promptly apply to cause the shares of Purchaser Common Stock to be acquired by Seller hereunder to be approved for listing on NYSE, such approval to be effective no later than the date that is 10 Business Days after the date hereof. Purchaser shall not voluntarily delist the Purchaser Common Stock from NYSE. In the event that the Purchaser Common Stock is delisted from NYSE, Purchaser shall use its reasonable best efforts to take, or cause to be taken, all actions necessary to have such shares of the Purchaser Common Stock to be promptly listed for trading on any of Nasdaq, NYSE or any other United States national securities exchange.
Section 5.3 Litigation Support. In the event that and for so long as either party hereto or any of its Affiliates is prosecuting, contesting or defending any Legal Proceeding, investigation, charge, claim or demand by or against a third party (excluding, for the avoidance of doubt, the other party or its Affiliates) in connection with the Transaction, any of the other transactions contemplated under this Agreement, or the Purchased Assets, the other party hereto shall, and shall cause its Representatives to, use commercially reasonable efforts to cooperate with such party and its Affiliates and their counsel in such prosecution, contest or defense, including providing access to information as may be reasonably necessary in connection with such prosecution, contest or defense.
Section 5.4 Misallocated Assets.
(a) If, at any time after the Closing Date, any asset held by Purchaser or any of its Affiliates is ultimately determined to be an Excluded Asset, (i) Purchaser shall return or transfer and convey (without further consideration) to Seller or the appropriate Affiliate of Seller such Excluded Asset, (ii) Seller and Purchaser shall, and shall cause their appropriate Affiliates to, execute such documents or instruments of conveyance or assumption and take such further acts as are reasonably necessary or desirable to effect the transfer of such Excluded Asset back to Seller or its appropriate Affiliate, in each case such that each Party is put into the same economic position as if such action had been taken on or prior to the Closing Date and (iii) except as otherwise required by applicable Law, the Parties shall treat for all applicable Tax purposes such Excluded Asset as not having been transferred to Purchaser at the Closing.
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(b) Except with respect to Omitted Licensed Patents, which are subject to Section 5.4(b) below, if, at any time after the Closing Date, any asset held by Seller or its Affiliates is ultimately determined to be a Purchased Asset, (i) the holder of such Purchased Asset shall be deemed to be a Seller Entity and execute the Assignment Agreement, (ii) Seller shall return or transfer and convey (without further consideration) to Purchaser such Purchased Asset, (iii) Seller and Purchaser shall, and shall cause their appropriate Affiliates to, execute such documents or instruments of conveyance or assumption and take such further acts as are reasonably necessary or desirable to effect the transfer of such Purchased Asset back to Purchaser, in each case such that each Party is put into the same economic position as if such action had been taken on or prior to the Closing Date and (iv) except as otherwise required by applicable Law, the Parties shall treat for all applicable Tax purposes such Purchased Asset as having been transferred to Purchaser at the Closing.
(c) In the event of a breach of the Hybrid Patent Sufficiency Representation or the Retained Invention Representation (in each case, determined as if such representations and warranties were to survive the Closing indefinitely, and disregarding for this purpose the materiality qualifier set forth therein), the Patent owned by Guarantor or its Subsidiaries, the existence of which resulted in such breach (the “Omitted Licensed Patent”), shall be added to, and be deemed to have been added to, the list of Listed Licensed Patents as of the Closing Date.
Section 5.5 Restrictive Legends. The book entry representing the shares of Purchaser Common Stock acquired by Seller hereunder shall bear the following legends:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS WHICH IS AVAILABLE.”
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THE PROVISIONS OF AN INVESTOR RIGHTS AGREEMENT AND A REGISTRATION RIGHTS AGREEMENT, IN EACH CASE, BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SECURITIES. A COPY OF THE INVESTOR RIGHTS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT MAY BE OBTAINED FROM THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SECURITIES TO THE EXTENT PROVIDED THEREIN AND ANY TRANSFER IN VIOLATION OF THE INVESTOR RIGHTS AGREEMENT OR THE REGISTRATION RIGHTS AGREEMENT IS VOID AND OF NO EFFECT.”
Section 5.6 Further Assurances. Each Party hereto shall execute and deliver after the date hereof such further certificates, agreements and other documents and take such other actions as any other Party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and to consummate or implement the Transaction or the other transactions contemplated herein. Such actions may include Seller obtaining and recording any necessary documentation to the extent reasonably required to demonstrate a complete chain of title with respect to the Purchased Assets. In addition, upon Purchaser’s request, the Seller shall use its commercially reasonable efforts to promptly deliver any documentation that is reasonably requested by Purchaser in a form reasonably satisfactory to Purchaser, evidencing the release of any applicable Liens of the nature described in clause (viii) of the definition of Permitted Liens with respect to the Purchased Assets, including such Liens arising under each Credit Agreement.
Section 5.7 Licenses. The Parties hereby agree to the terms and conditions set forth in Exhibit F.
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ARTICLE VI
CERTAIN TAX MATTERS
Section 6.1 Cooperation and Exchange of Information.
(a) Each Party shall, and shall cause its Affiliates to, cooperate with and provide to the other Party and its Affiliates such documentation, information and assistance as may reasonably be requested in connection with (i) the preparation of any Tax Return relating to the MiC Business or the Purchased Assets, (ii) the determination of liability for Taxes or a right to refund of Taxes or (iii) the conduct of any Tax Proceeding relating to the MiC Business or the Purchased Assets. Such cooperation shall include obtaining and providing appropriate forms, providing the necessary powers of attorney, retaining and providing records and information that are reasonably relevant to any such Tax Return or Tax Proceeding, and making employees available on a mutually convenient basis to provide additional information and explanation of any materials provided hereunder. Notwithstanding the foregoing, Seller shall not be required to provide any Tax Returns or related workpapers.
(b) Notwithstanding anything to the contrary in this Agreement, in no event shall Seller or any of its Affiliates be required to provide any Person with a copy of, or otherwise disclose the contents of, its Tax Returns.
Section 6.2 Transfer Taxes. Notwithstanding anything in this Agreement to the contrary, Purchaser and Seller shall each bear 50% of any and all sales, use, transfer (including real estate transfer), registration, documentary, conveyancing, franchise, stamp, value added, goods and services or similar Taxes and related fees and costs imposed on or with respect to the transactions contemplated by this Agreement (“Transfer Taxes”). The Party responsible under applicable Law for filing the Tax Returns with respect to such Transfer Taxes shall prepare and timely file such Tax Returns and promptly provide a copy of such Tax Return to the other Party. The Party responsible under applicable Law for paying such Transfer Taxes shall pay such Transfer Taxes, subject to reimbursement from the other Party. Seller and Purchaser shall, and shall cause their respective Affiliates to, reasonably cooperate to timely prepare and file any Tax Returns or other filings relating to such Transfer Taxes, including any claim for exemption or exclusion from the application or imposition of any Transfer Taxes.
Section 6.3 Straddle Periods. For purposes of this Agreement, in the case of any Straddle Period, periodic Taxes that are not based on income or receipts (e.g., real, personal and intangible ad valorem property Taxes) (“Periodic Taxes”) allocable to a Pre-Closing Tax Period shall be equal to the amount of such Periodic Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the number of calendar days in the entire Straddle Period, and the allocation of any other Taxes shall be determined on a “closing of the books” basis as of the end of the day on the date hereof.
ARTICLE VII
SURVIVAL; INDEMNIFICATION; REMEDIES
Section 7.1 Survival.
(a) All of the covenants or other agreements of the Parties contained in this Agreement shall survive until fully performed or fulfilled in accordance with their terms, unless and to the extent that non-compliance with such covenants or agreements is waived in writing by the party entitled to such performance.
(b) The representations and warranties of Seller set forth in the first and second sentence of Section 3.1, Section 3.2(a), Section 3.2(b)(i) and Section 3.4 (the “Seller Fundamental Representations”) shall survive the Closing and expire and terminate at 11:59 p.m. Prevailing Pacific Time on the date that is two (2) years after the date hereof, and all other representations and warranties shall terminate at and not survive the Closing; provided, however, that the foregoing shall not limit any claim of, or recourse for, Fraud with respect to any such representation or warranty. For the avoidance of doubt and notwithstanding anything to the contrary set forth herein, it is the intention of the parties hereto that the expiration dates and survival periods set forth in this
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Section 7.1(b) supersede any applicable statutes of limitations that would otherwise apply to such representations and warranties.
(c) The representations and warranties of Purchaser set forth in the first sentence of Section 4.1, Section 4.2, Section 4.3(a) and Section 4.3(b)(i) (the “Purchaser Fundamental Representations”) shall survive the Closing and expire and terminate at 11:59 p.m. Prevailing Pacific Time on the date that is two (2) years after the date hereof, and all other representations and warranties shall terminate at and not survive the Closing; provided, however, that the foregoing shall not limit any claim of, or recourse for, Fraud with respect to any such representation or warranty. For the avoidance of doubt and notwithstanding anything to the contrary set forth herein, it is the intention of the parties hereto that the expiration dates and survival periods set forth in this Section 7.1(c) supersede any applicable statutes of limitations that would otherwise apply to such representations and warranties.
Section 7.2 Indemnification.
(a) From and after and by virtue of the Closing, subject to the provisions of this Article VII, Seller agrees to indemnify, defend and hold harmless Purchaser and its Subsidiaries (the “Purchaser Indemnified Parties”) from and against all claims, losses, liabilities, damages, deficiencies, Taxes, costs, interest, awards, judgments, settlements, penalties and expenses, including reasonable attorneys’, consultants’, experts’ and other professionals’ fees and expenses (including in connection with investigation, defending against, prosecuting, or settling any of the foregoing) and court or arbitration costs (individually, a “Loss” and, collectively “Losses”), incurred, suffered, or sustained by the Purchaser Indemnified Parties, or any of them to the extent directly or indirectly resulting from, arising out of, or relating to any of the following:
(i) any breach of, or inaccuracy in, any Seller Fundamental Representation as of the execution and delivery of this Agreement or as of the Closing (as though made as of such time);
(ii) the non-performance or any breach of any covenant or agreement of any Seller Entity contained in this Agreement; and
(iii) any Seller Liability.
(b) From and after and by virtue of the Closing, subject to the provisions of this Article VII, Purchaser (the “Purchaser Indemnifying Party”) agrees to indemnify, defend and hold harmless the Seller Entities (the “Seller Indemnified Parties”) from and against all Losses incurred, suffered, or sustained by the Seller Indemnified Parties, or any of them to the extent directly or indirectly resulting from, arising out of, or relating to any of the following:
(i) any breach of, or inaccuracy in, any Purchaser Fundamental Representation as of the execution and delivery of this Agreement or as of the Closing (as though made as of such time);
(ii) the non-performance or any breach of any covenant or agreement of Purchaser contained in this Agreement; and
(iii) any Purchaser Liability.
(c) Each of Purchaser and Seller, in their capacities as such, are sometimes referred to herein as an “Indemnifying Party” and the Purchaser Indemnified Parties and the Seller Indemnified Parties, in their capacities as such, are sometimes referred to herein as an “Indemnified Party”.
(d) The Indemnifying Parties shall not have any right of contribution, indemnification or right of advancement from the Indemnified Parties or any of their Affiliates with respect to any Loss claimed by an Indemnified Party indemnifiable pursuant to this Article VII.
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(e) Any payments made to an Indemnified Party pursuant to any indemnification obligations under this Article VII will be treated as adjustments to the Purchase Price for Tax purposes and such agreed treatment will govern for purposes of this Agreement, unless otherwise required by applicable Laws.
(f) Except for the obligations of the Guarantor as expressly set forth in Section 8.15, this Agreement, the Assignment Agreement and the Patent Assignment Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, the Assignment Agreement or the Patent Assignment Agreement or the negotiation, execution or performance of this Agreement, the Assignment Agreement and the Patent Assignment Agreement may only be made against the applicable entities that are signatories hereto or to the Assignment Agreement, or Patent Assignment Agreement, as applicable, and no former, current or future equityholders, controlling persons, directors, officers, employees, agents or Affiliates of any Party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent or Affiliate of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities hereunder or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or any representations made or alleged to be made in connection herewith or any breach of or failure to comply with this Agreement, the Assignment Agreement or the Patent Assignment Agreement whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil, by or through a claim by or on behalf of any Party against any other Party or any Non-Recourse Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise. Without limiting the rights of any Party against the other Party hereto, but except for claims against the Guarantor pursuant to the express terms of Section 8.15, in no event shall any Party or any of its equityholders, controlling persons, directors, officers, employees, agents or Affiliates seek to enforce this Agreement, the Assignment Agreement or the Patent Assignment Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party in connection with this Agreement, the Assignment Agreement or the Patent Assignment Agreement.
(g) This Article VII shall be the sole and exclusive remedy of the Indemnified Parties from and after the Closing for any claims arising out of or in connection with this Agreement, the Transaction or the other transactions contemplated hereby (including claims of any inaccuracy in or breach of any representation, warranty or covenant in this Agreement, whether predicated on common law, statute, strict liability or otherwise); provided, however, that this Section 7.2(f) shall not be deemed a waiver by any party of any right to specific performance or injunctive or other equitable relief with respect to any breach or nonfullfilment of any covenant or agreement herein.
(h) Notwithstanding anything herein to the contrary (but, for the avoidance of doubt, without limiting Section 3.20 and Section 4.13), nothing in this Agreement shall limit any claim of Fraud with respect to any representation or warranty in this Agreement or the pursuit of any claims or remedies under or in connection with any other Transaction Document as permitted thereunder.
(i) In the event an Indemnified Party has suffered a Loss which would give rise to a right to be indemnified under more than one of the subclauses of Section 7.2(a) or Section 7.2(b), such Indemnified Party shall be entitled to make a claim for such Losses under any and all such subclauses; provided that, for the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, in no event shall any Indemnified Party be entitled to any double recovery with respect to any particular Loss or claim. For the avoidance of doubt, without limiting the limitations set forth in this Article VII, nothing in this Agreement shall require any Indemnified Party to make any claim under this Article VII and, subject to the survival periods and other limitations set forth in this Article VII, no such claim shall be waived or otherwise prejudiced as a result of any delay in making such claim.
(j) Notwithstanding anything to the contrary in this Agreement, with respect to the amount of any claim for indemnification by Seller under this Section 7.2 that Seller has agreed in writing is (or that is finally determined in a final and binding arbitration pursuant to Section 8.7 to be) owing to any Purchaser Indemnified Party, Purchaser shall have the right to, but shall not be required to, deduct such amount owing to such Purchaser Indemnified Party from any then-owing or future Holdback Payment (if any) that is payable pursuant to Section 2.3(c).
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(k) For the purposes of this Article VII, any breach of, or inaccuracy in, any representation or warranty, and the amount of any Losses associated therewith, shall be determined without regard to any materiality, Material Adverse Effect, or other similar qualification contained in or otherwise applicable to such representation or warranty.
Section 7.3 Limitations on Indemnification.
(a) Limitations on Purchaser Indemnified Parties
(i) Subject to Section 7.2(h), the aggregate amount the Purchaser Indemnified Parties, as a group, may recover under Section 7.2(a)(i) and Section 7.2(a)(ii) shall be limited, in the aggregate, to a dollar amount equal to $600,000,000, plus the value of the Total Holdback Payment, if any.
(ii) The aggregate amount the Purchaser Indemnified Parties, as a group, may recover under Section 7.2(a)(iii) shall not be limited.
(b) Limitations on Seller Indemnified Parties
(iii) Subject to Section 7.2(h), the aggregate amount the Seller Indemnified Parties, as a group, may recover under Section 7.2(b)(i) through Section 7.2(b)(ii) shall be limited, in the aggregate, to a dollar amount equal to $600,000,000, plus the value of the Total Holdback Payment, if any.
(iv) The aggregate amount the Seller Indemnified Parties, as a group, may recover under Section 7.2(b)(iii) shall not be limited.
(c) The rights of the Indemnified Parties to indemnification, compensation or reimbursement, payment of Losses or any other remedy under this Agreement shall not be affected by any investigation or examination conducted with respect to, or any knowledge possessed or acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing, by or on behalf of any of the Indemnified Parties or any of their Affiliates or any of their respective Representatives with respect to the accuracy or inaccuracy or breach of, or compliance with, any representation, warranty, covenant or any other matter. No Indemnified Party shall be required to show reliance on any representation, warranty, certificate or other agreement in order for such Indemnified Party to be entitled to indemnification, compensation or reimbursement hereunder.
(d) The amount of any Loss payable under this Article VII by an Indemnifying Party shall be net of any amounts actually recovered by the Indemnified Party under all insurance and indemnity, contribution or similar agreements or rights (it being agreed that if any such amounts are recovered by the Indemnified Party, subsequent to the Indemnifying Party’s making of an indemnification payment in satisfaction of its applicable indemnification obligation, the amount of any such proceeds shall be promptly remitted to the Indemnifying Party to the extent of the indemnification payment made), net of the following: (i) costs and expenses (including Taxes) incurred by such Indemnified Party or its Affiliates and its and their respective Representatives in procuring such recovery; (ii) any increases in premiums or premium adjustments to the extent attributable to such recovery (applicable to any past, present or future premiums); and (iii) deductibles and other amounts incurred in connection with pursuing such recovery. The Indemnified Parties shall use, and cause its Affiliates to use, commercially reasonable efforts to seek full recovery under all insurance and indemnity, contribution or similar agreements or rights covering any Loss payable under this Article VII to the same extent as it would if such Loss were not subject to indemnification hereunder, and, to the extent any such Loss may be recoverable any under any such agreements or rights, shall not be permitted to make a claim for indemnification hereunder in respect of a Loss unless and to the extent recovery has been so sought and not obtained. Upon making any payment to the
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Indemnified Party for any indemnification claim pursuant to this Article VII, the Indemnifying Party shall be subrogated, to the extent of such payment, to any rights which the Indemnified Party may have against third parties with respect to the subject matter underlying such indemnification claim, and the Indemnified Party shall assign any such rights to the Indemnifying Party to such extent.
(e) Notwithstanding anything to the contrary contained in this Agreement, no party shall have any liability for any punitive damages, except to the extent awarded against an Indemnified Party pursuant to a Third Party Claim.
Section 7.4 Claim Procedures.
(a) If an Indemnified Party wishes to make a claim under this Article VII (including in respect of a pending or threatened claim or demand asserted by a third party against the Indemnified Party (each, a “Third Party Claim”)), such Indemnified Party shall deliver a written notice (a “Claim Notice”) to the Indemnifying Party (i) stating that an Indemnified Party has incurred, suffered, or sustained, or reasonably anticipates that it may incur, suffer, or sustain, Losses, and (ii) to the extent reasonably available, specifying such claim and Losses in reasonable detail, the date that each such Loss was incurred, suffered, or sustained, or the basis for such anticipated Losses, and the nature of the misrepresentation, breach of warranty or covenant or other indemnifiable matter. An Indemnified Party may update a Claim Notice from time to time to reflect any change in circumstances following the date thereof. A failure by an Indemnified Party to give complete, accurate, or, subject to the survival periods set forth in Section 7.1, timely notice of a Claim Notice will not affect the rights or obligations of any party hereunder except to the extent the Indemnifying Party is prejudiced by such failure. If a claim under this Article VII may be brought under different or multiple sections, clauses or sub-clauses of Section 7.2(a) or Section 7.2(b) (or with respect to different or multiple representations, warrants or covenants), then the Indemnified Parties shall have the right to bring such claim under any or each such section, clause, subclauses, representation, warranty or covenant (each a “Subject Provision”) that it chooses and the Indemnified Parties will not be precluded from seeking indemnification under any Subject Provision by virtue of the Indemnified Parties not being entitled to seek indemnification under any other Subject Provision.
(b) The Indemnifying Party shall respond in writing within thirty (30) days of delivery of a Claim Notice by delivery of a written notice stating whether the Indemnified Party is prepared to make an objection to the applicable claim at such time (a “Claim Objection Notice”), which notice shall, to the extent reasonably available, describe the basis of such objection in reasonable detail. The failure to make an objection or to include or describe any basis therefor shall not constitute an acknowledgment by the Indemnifying Party that the Indemnified Party is entitled to all or any portion of such claim for Losses set forth in such Claim Notice or a waiver of the right to make any objection at any later time.
(c) In the event that the Indemnifying Party shall deliver a Claim Objection Notice in accordance with Section 7.4(b), the Indemnifying Party and Purchaser shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims. If the Indemnifying Party and Purchaser should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties (a “Resolution Memorandum”).
(d) The Indemnifying Parties shall make any payments made with respect to any Resolution Memorandum within five (5) Business Days of the delivery of such Resolution Memorandum.
(e) If no such agreement can be reached after good faith negotiation and prior to thirty (30) days after delivery of a Claim Objection Notice, either Purchaser or the Indemnifying Parties may submit the dispute (each such dispute, a “Dispute”) to mandatory, final and binding arbitration pursuant to Section 8.7.
Section 7.5 Third Party Claims.
(a) Upon receipt of a Claim Notice in respect of a Third Party Claim:
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(i) The Indemnifying Party shall have the right in its sole discretion to conduct the defense and prosecution of and, subject to Section 7.5(a)(iii), to settle or resolve any such Third Party Claim (at the expense of such Indemnifying Party). Notwithstanding an election to assume the defense of such Third Party Claim, the Indemnified Party shall have the right to employ one separate co-counsel (and one local co-counsel for each jurisdiction in which local counsel is reasonably required) and to participate in the defense as counsel of record, if applicable, in such Third Party Claim, and the Indemnifying Party shall bear the reasonable fees, costs and expenses of such separate counsel if (A) there exists a conflict of interest, as advised by outside counsel for the Indemnified Party, between the Indemnified Party and the Indemnifying Party in connection with the defense of the Third Party Claim in which both the Indemnified Party and Indemnifying Party are defendants, that would make representation by the same counsel or the counsel selected by the Indemnifying Party inappropriate or (B) such Third Party Claim seeks an injunction or other equitable relief against the Indemnified Party. In any other event not set forth in the preceding sentence, the Indemnifying Party shall allow the Indemnified Party a reasonable opportunity to participate in the defense of such Third Party Claim with its own counsel and at its own expense.
(ii) If the Indemnifying Party does not timely elect to assume the defense and control of any Third Party Claim pursuant to this Section 7.5(b), the Indemnified Party will be entitled to control such defense (and the reasonable costs of such defense shall be borne by the Indemnifying Party to the extent they constitute Losses), but the Indemnifying Party may nonetheless reasonably participate in the defense of such Third Party Claim with its own counsel and at its own expense.
(iii) If the Indemnifying Party has elected to assume the defense and control of a Third Party Claim, it shall not be authorized to consent to a settlement or compromise of, or the entry of any Judgment arising from, any Third Party Claim without the prior written consent of the Indemnified Party (which consent will not be unreasonably withheld, conditioned or delayed) unless (A) the Indemnified Party, as a condition to settlement, is given a complete and unconditional release of any and all Liabilities relating to such Third Party Claim by all relevant parties to such Third Party Claim, (B) the damages payable under the settlement are limited only to monetary payments for which the Indemnified Party is fully indemnified by the Indemnifying Party (net of any proceeds) and (C) such Third Party Claim does not involve any non-monetary relief of any kind (including any injunctive relief) against any Indemnified Party or finding or admission of any violation of Law or admission of any wrongdoing by any Indemnified Party. No Indemnified Party will consent to the entry of any Judgment or enter into any settlement or compromise with respect to a Third Party Claim without the prior written consent of the Indemnifying Party (which consent will not be unreasonably withheld, conditioned or delayed).
(b) Notwithstanding the foregoing provisions of this Section 7.5: If a Third Party Claim includes or could reasonably be expected to include both a claim for Taxes for which a Seller Entity is responsible pursuant to Section 7.2(a) (“Seller Taxes”) and a claim for Taxes for which Purchaser is responsible pursuant to Section 7.2(b) (“Purchaser Taxes,” and such a Third Party Claim, a “Mixed Tax Claim”), Seller and Purchaser shall use commercially reasonable efforts to sever such Third Party Claim into separate Tax Proceedings relating to Seller Taxes and Purchaser Taxes, respectively. If such Third Party Claim is not so severable, Seller (if the claim(s) for Seller Taxes exceeds or reasonably would be expected to exceed in amount the claim(s) for Purchaser Taxes) or otherwise Purchaser (Seller or Purchaser, as the case may be (the “Tax Controlling Party”), shall be entitled to control the defense of such Third Party Claim (such Third Party Claim, a “Tax Claim”). In such case, (i) the other party (the “Tax Non-Controlling Party”) shall be entitled to participate fully (at the Tax Non-Controlling Party’s sole cost and expense) in the conduct of such Tax Claim, (ii) the Tax Controlling Party shall provide the Tax Non-Controlling Party with a timely and reasonably detailed account of each stage of such Tax Claim, (iii) the Tax Controlling Party shall consult with the Tax Non-Controlling Party before taking any significant action in connection with such Tax Claim, (iv) the Tax Controlling Party shall consult with the Tax Non-Controlling Party and offer the Tax Non-Controlling Party an opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Claim, (v) the Tax Controlling Party shall defend such Tax Claim diligently and in good faith as if it were the only party in interest in connection with such Tax Claim, and (vi) the Tax Controlling Party shall not settle, compromise or abandon any such Tax Claim without obtaining the prior written consent of the Tax Non-Controlling Party, which consent shall not be unreasonably withheld, conditioned or delayed.
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ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Entire Agreement. This Agreement (including the exhibits hereto), the Seller Disclosure Schedules and the Purchaser Disclosure Schedules, together with the other Transaction Documents, constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof and thereof.
Section 8.2 Assignment. Except as otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by either of the parties without the prior written consent of the other party, except that Seller may transfer or assign its rights and obligations under this Agreement, in whole or in part, (a) to one or more of its Affiliates at any time or (b) to a successor in connection with a merger, acquisition, change of control or sale of all or substantially all of the assets or business to which this Agreement relates.
Section 8.3 Amendments and Waivers. This Agreement may be amended or waived if, and only if, such amendment is in writing and signed by both Parties or such waiver is in writing and signed by the Party against whom such waiver shall be enforced. The failure of any Party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other Party hereto with its obligations hereunder, shall not constitute a waiver by such Party of its right to exercise any such other right, power or remedy or to demand such compliance.
Section 8.4 No Third-Party Beneficiaries. Notwithstanding anything contained in this Agreement to the contrary, except as set forth in Section 7.2 with respect to Indemnified Parties, nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Parties any rights, remedies, obligations or liabilities under or by reason of this Agreement, and no Person that is not a party to this Agreement (including any partner, member, stockholder, director, officer, employee or other beneficial owner of any party, in its own capacity as such or in bringing a derivative action on behalf of a Party) shall have any standing as third-party beneficiary with respect to this Agreement or the Transaction.
Section 8.5 Notices. All notices, requests, permissions, waivers or other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered by hand or sent by postage prepaid, by registered, certified or express mail or overnight courier service and shall be deemed given when so delivered by hand, or electronic mail (which is confirmed), or if mailed, three days after mailing (one Business Day in the case of express mail or overnight courier service) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
| (a) | If to Purchaser: |
RingCentral, Inc.
20 Davis Drive
Belmont, CA 94002
Attn: John Marlow, Chief Administrative Officer, General Counsel and Senior Vice President of Corporate Development
Email: johnm@ringcentral.com
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with a copy (which copy alone shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
United States
Attn: Jeffrey D. Saper
Email: jsaper@wsgr.com
and
Wilson Sonsini Goodrich & Rosati, P.C.
One Market Plaza
Spear Tower, Suite 3300
San Francisco, CA 94105
United States
Attn: Mark Baudler & Rich Mullen
Email: mbaudler@wsgr.com & rich.mullen@wsgr.com
| (b) | If to Seller: |
Mitel US Holdings, Inc.
1146 North Alma School Rd.
Mesa, AZ 85201
Attn: Greg Hiscock, EVP Legal, General Counsel & Corporate Secretary
Email: greg.hiscock@mitel.com
with a copy (which copy alone shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Steven A. Cohen
Victor Goldfeld
Email: SACohen@wlrk.com
VGoldfeld@wlrk.com
Section 8.6 Specific Performance. The Parties acknowledge and agree that (i) irreparable damage would occur in the event of any breach or threatened breach by the other Party of this Agreement, (ii) monetary damages, even if available, would not be an adequate remedy, (iii) the non-breaching Party shall be entitled, without any proof of actual damages (and in addition to any other remedy that may be available to it), to a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other agreement and an injunction preventing or restraining such breach or threatened breach, and (iv) no Party hereto shall be required to provide or post any bond or other security or collateral in connection with any such decree, order or injunction or in connection with any related action or legal proceeding. Any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy.
Section 8.7 Governing Law; Arbitration; Waiver of Jury Trial.
(a) This Agreement, and all claims, causes of action (whether in contract, tort or statute) or other matter that may result from, arise out of, or be in connection with or relating to this Agreement, or the negotiation, administration, performance, or enforcement of this Agreement, including any claim or cause of action resulting from, arising out of, in connection with, or relating to any representation or warranty made in connection with this Agreement (the “Relevant Matters”), shall be governed by, and construed and enforced in
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accordance with, the laws of the State of Delaware, including its statutes of limitations, regardless of the laws that might otherwise govern under any applicable principles of conflicts of laws that would result in the application of any such other law. For the avoidance of doubt, neither the U.N. Convention on Contracts for the International Sale of Goods nor any international treaties that would require the application of the laws of any jurisdiction other than the State of Delaware shall be applicable to any Relevant Matter.
(b) Any dispute, claim, or cause of action (whether based on contract, tort, or otherwise) that may result from, arise out of, be in connection with or relating to any Relevant Matters shall be finally settled by binding arbitration in New York, New York and shall be administered by the Judicial Arbitration and Mediation Services, Inc. pursuant to its Comprehensive Arbitration Rules and Procedures then in effect by three arbitrators, with each party being entitled to appoint one arbitrator, and the third arbitrator to be nominated by such first two arbitrators (or, if such an agreement is not reached, with the third arbitrator (and any other arbitrator that a party fails to appoint) being appointed in accordance with such Rules). The language of the arbitration shall be English and all written materials in connection with such arbitration, including but not limited to all pleadings and evidence, shall be in the English language. The arbitrators shall apply the laws of the State of Delaware to the merits of any such dispute, claim, or cause of action (whether in contract, tort, or statute) in accordance with Section 8.7(a). The arbitrators shall have the power to decide all questions of arbitrability. The arbitrators shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding. At the request of either Party, the arbitrators will enter an appropriate protective order to maintain the confidentiality of information produced or exchanged in the course of the arbitration proceedings. The award must be in writing and state the reasons on which it is based. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Notwithstanding anything to the contrary in this Section 8.7(b), any Party hereto may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief without breach of this Section 8.7(b) and without any abridgment of the powers of the arbitrators in the event of acts or breaches of this Agreement that such Party believes may cause irreparable harm or with respect to which such Party believes monetary damages would not provide adequate compensation.
(c) EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTION, OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT, OR ANY OTHER RELEVANT MATTER.
(d) The arbitrators may award to the prevailing Party, if any, as determined by the arbitrator(s), its reasonable costs and fees incurred in connection with any arbitration or related judicial proceeding hereunder. Such costs and fees awarded may include, without limitation, administrative fees, arbitrator fees, attorneys’ fees, expert fees, witness fees, court costs, travel expenses, and out-of-pocket expenses (including, without limitation, such expenses as copying, telephone, facsimile, postage, and courier fees).
Section 8.8 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced because of any Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect to the extent that the economic or legal substance of the Transaction is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transaction be consummated as originally contemplated to the greatest extent possible.
Section 8.9 Counterparts. This Agreement may be executed in two or more identical counterparts (including by facsimile or electronic transmission), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the Parties hereto and delivered (by facsimile, electronic transmission or otherwise) to the other Party.
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Section 8.10 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the Transaction shall be paid by the party incurring such costs and expenses.
Section 8.11 Interpretation; Absence of Presumption. When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” 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. The words “date hereof” shall refer to the date of this Agreement. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and shall not simply mean “if.” Documents or other information or materials will be deemed to have been “made available” by Purchaser if such documents, information or materials have been (i) posted to a virtual data room managed by Purchaser on or prior to the date hereof, or (ii) filed or furnished to the SEC at least two (2) Business Days prior to the date hereof. All references to “$” mean the lawful currency of the United States of America. References to tangible personal property do not refer to electronically-stored data or computer files. 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. Except as specifically stated herein, any statute defined or referred to herein means such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. Except as otherwise specified herein, references to a Person are also to its successors and permitted assigns. Each of the parties hereto has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
Section 8.12 Acknowledgment of Securities Laws. Seller hereby acknowledges that it is aware, and that it will advise its Affiliates and Representatives who are provided material non-public information concerning Purchaser or its securities, in each case, in accordance with this Agreement, that the United States securities Laws prohibit any Person who has received from an issuer material, non-public information from purchasing or selling securities of such issuer or from communication of such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities.
Section 8.13 Disclosure Schedule References. The Parties hereto agree that the disclosure set forth in any particular section or subsection of the Seller Disclosure Schedules or Purchaser Disclosure Schedules, as applicable, shall be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (a) the representations and warranties of Seller or Purchaser, as applicable that are set forth in the corresponding section or subsection of this Agreement; and (b) any other representations and warranties of Seller or Purchaser, as applicable, that are set forth in this Agreement, but in the case of this clause (b) only if the relevance of that disclosure as an exception to (or a disclosure for purposes of) such other representations and warranties is reasonably apparent on the face of such disclosure.
Section 8.14 Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement shall impair any such right, power, or remedy of such Party, nor shall it be construed to be a waiver of or acquiescence to any breach or default, or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default. All remedies, either under this Agreement or by Law or otherwise afforded to any holder, shall be cumulative and not alternative.
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Section 8.15 Guaranty.
(a) Guarantor hereby absolutely, unconditionally and irrevocably guarantees the full and prompt performance by each of the Seller Entities of all of their obligations to Purchaser pursuant to the terms of this Agreement, the Assignment Agreement and the Patent Assignment Agreement, including all payment obligations (the “Guaranteed Obligations”), and the Guaranteed Obligations shall be enforceable against Guarantor to the same extent as if Guarantor were the primary obligor under this Agreement. Without limiting the foregoing, Guarantor hereby agrees to cause each of the Seller Entities to comply with the terms and conditions of this Agreement, the Assignment Agreement and the Patent Assignment Agreement. The liability of Guarantor under this guaranty shall be absolute, direct and immediate and not conditional or contingent upon the pursuit of any remedies against any Seller Entity. A separate action or actions may be brought and prosecuted against Guarantor to enforce this guaranty irrespective of whether any action is brought against any Seller Entity or whether any Seller Entity is joined in such action or actions.
(b) Guarantor hereby waives and agrees not to assert or take advantage of any of the following: (i) without limiting the defense of statute of limitations with respect to claims to be asserted against any Seller Entity, the defense of the statute of limitations in any action hereunder or for the collection of or the performance of any Guaranteed Obligation; (ii) any defense that may arise by reason of the incapacity or lack of authority of Guarantor; (iii) any defense based on the failure of Purchaser or any of its Affiliates to give notice of the existence, creation, or incurring of any new or additional obligation or of any action or non-action on the part of any other person whomsoever, in connection with any Guaranteed Obligation; (iv) acceptance or notice of acceptance of this guaranty by Purchaser; (v) notice of presentment and demand for payment of or performance of any Guaranteed Obligation; and (vi) protest and notice of dishonor or of default to Guarantor or to any other party with respect to any Guaranteed Obligation.
(c) Guarantor hereby represents and warrants that as of the date of this Agreement, (a) it is a corporation or other legal entity duly incorporated or formed, validly existing and in good standing under the applicable Laws; (b) it and its Affiliates have all requisite corporate, partnership, and other organizational (as applicable) power and authority to execute, deliver and perform its and their obligations under this Agreement; (c) the execution, delivery and performance of this Agreement has been duly authorized by it and its Affiliates, as applicable; (d) this Agreement has been duly executed and delivered by it and its Affiliates and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of it and its Affiliates, as applicable, enforceable against it in accordance with their respective terms, subject to Laws of general application relating to bankruptcy, insolvency, moratorium, the relief of debtors and enforcement of creditors’ rights in general, (e) as of the date of this Agreement, it and its Subsidiaries are in compliance in all material respects with all applicable Laws in connection with its and their obligations under this Agreement; and (f) as of the date of this Agreement, there is no outstanding litigation, arbitrated matter or other dispute to which it or any of its Affiliates is a party, and which, if decided unfavorably to it or its Affiliates, would reasonably be expected to have a material adverse effect on the ability of it or its Affiliates to fulfill its or their respective obligations under this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Seller, Purchaser and Guarantor have duly executed this Agreement as of the date first written above.
| MITEL US HOLDINGS, INC. | ||
| By: | /s/ | |
| Name: Graham Bevington | ||
| Title: Chairman & President | ||
| RINGCENTRAL, INC. | ||
| By: | /s/ | |
| Name: John Marlow | ||
| Title: Chief Administrative Officer | ||
| Solely for the purposes set forth herein, | ||
| MITEL NETWORKS (INTERNATIONAL) LIMITED | ||
| By: | /s/ | |
| Name: | Gregory Hiscock | |
| Title: | Secretary | |
[Signature Page to Asset Purchase Agreement]
Exhibit 10.2
INVESTMENT AGREEMENT
by and between
SEARCHLIGHT II MLN, L.P.
and
RINGCENTRAL, INC.
Dated as of November 8, 2021
STRICTLY PRIVATE AND CONFIDENTIAL DRAFT FOR DISCUSSION PURPOSES ONLY. CIRCULATION OF THIS DRAFT SHALL NOT GIVE RISE TO ANY DUTY TO NEGOTIATE OR CREATE OR IMPLY ANY OTHER LEGAL OBLIGATION. NO LEGAL OBLIGATION OF ANY KIND WILL ARISE UNLESS AND UNTIL A DEFINITIVE WRITTEN AGREEMENT IS EXECUTED AND DELIVERED BY ALL PARTIES.
TABLE OF CONTENTS
| Page | ||||||||
| ARTICLE I Definitions |
1 | |||||||
| SECTION 1.01. | Definitions | 1 | ||||||
| ARTICLE II Purchase and Sale |
8 | |||||||
| SECTION 2.01. | Purchase and Sale | 8 | ||||||
| SECTION 2.02. | Closing | 8 | ||||||
| SECTION 2.03. | Restrictive Legends | 9 | ||||||
| ARTICLE III Representations and Warranties of the Company |
9 | |||||||
| SECTION 3.01. | Organization; Standing | 9 | ||||||
| SECTION 3.02. | Capitalization | 10 | ||||||
| SECTION 3.03. | Authority; Non-contravention | 11 | ||||||
| SECTION 3.04. | Governmental Approvals | 12 | ||||||
| SECTION 3.05. | Company SEC Documents; Undisclosed Liabilities | 13 | ||||||
| SECTION 3.06. | Listing and Maintenance Requirements | 15 | ||||||
| SECTION 3.07. | Compliance with Laws | 15 | ||||||
| SECTION 3.08. | Taxes | 16 | ||||||
| SECTION 3.09. | Employees | 17 | ||||||
| SECTION 3.10. | Intellectual Property | 17 | ||||||
| SECTION 3.11. | Legal Proceedings | 18 | ||||||
| SECTION 3.12. | Related Party Transactions | 18 | ||||||
| SECTION 3.13. | No Other Investor Representations or Warranties | 18 | ||||||
| ARTICLE IV Representations and Warranties of the Investor |
19 | |||||||
| SECTION 4.01. | Organization | 19 | ||||||
| SECTION 4.02. | Authority | 19 | ||||||
| SECTION 4.03. | Non-contravention | 19 | ||||||
| SECTION 4.04. | Government Filings | 19 | ||||||
| SECTION 4.05. | Purchase for Investment | 19 | ||||||
| SECTION 4.06. | Independent Investigation | 20 | ||||||
| SECTION 4.07. | Private Placement Consideration | 20 | ||||||
| SECTION 4.08. | No Broker | 20 | ||||||
| SECTION 4.09. | No Other Company Representations or Warranties | 20 | ||||||
| ARTICLE V Additional Agreements |
21 | |||||||
| SECTION 5.01. | Public Announcements | 21 | ||||||
| SECTION 5.02. | Corporate Action | 21 | ||||||
| SECTION 5.03. | NYSE Listing of Shares | 21 | ||||||
| SECTION 5.04. | Expenses | 21 | ||||||
| SECTION 5.05. | Certain Tax Matters | 22 | ||||||
| ARTICLE VI Survival; Remedies |
23 | |||||||
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| SECTION 6.01. | Survival |
23 | ||||||
| SECTION 6.02. | Limitation on Damages |
23 | ||||||
| SECTION 6.03. | Non-Recourse |
23 | ||||||
| ARTICLE VII Miscellaneous |
24 | |||||||
| SECTION 7.01. | Notices |
24 | ||||||
| SECTION 7.02. | Amendments, Waivers, etc. |
25 | ||||||
| SECTION 7.03. | Counterparts and Facsimile |
25 | ||||||
| SECTION 7.04. | Further Assurances |
25 | ||||||
| SECTION 7.05. | Governing Law; Arbitration; Waiver of Jury Trial |
25 | ||||||
| SECTION 7.06. | Specific Performance |
26 | ||||||
| SECTION 7.07. | Interpretation |
27 | ||||||
| SECTION 7.08. | Severability |
27 | ||||||
| SECTION 7.09. | No Third-Party Beneficiaries |
27 | ||||||
| SECTION 7.10. | Assignment |
28 | ||||||
| SECTION 7.11. | Acknowledgment of Securities Laws |
28 | ||||||
| SECTION 7.12. | Disclosure Schedule References |
28 | ||||||
| SECTION 7.13. | Delays or Omissions |
28 | ||||||
| SECTION 7.14. | Entire Agreement |
28 | ||||||
| Exhibits |
||||
| Certificate of Designations |
Exhibit A | |||
| Investor Rights Agreement |
Exhibit B |
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INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT, dated as of November 8, 2021 (this “Agreement”), is between RingCentral, Inc., a Delaware corporation (the “Company”), and Searchlight II MLN, L.P. (the “Investor”).
WHEREAS, the Company desires to issue, sell and deliver to the Investor, and the Investor desires to purchase and acquire from the Company, pursuant to the terms and subject to the conditions set forth in this Agreement, an aggregate of 200,000 shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), having the powers, preferences and rights, and the qualifications, limitations and restrictions, as set forth in the Certificate of Designations attached hereto as Exhibit A, which has been duly adopted and filed with the Secretary of State of the State of Delaware (the “Certificate of Designations”); and
WHEREAS, at the Closing, in connection with the transactions contemplated hereby, the Company and the Investor are entering into the Investor Rights Agreement attached hereto as Exhibit B (the “Investor Rights Agreement”) and the Registration Rights Agreement attached hereto as Exhibit C.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions.
(a) As used in this Agreement (including the recitals hereto), the following terms shall have the following meanings:
“Action” means any action, hearing, claim, demand, suit, litigation, subpoena or investigation or proceeding of any nature, whether civil, criminal or regulatory, in law or in equity, or otherwise, by or before any Governmental Entity.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, directly or indirectly controlled by, or under direct or indirect common control with, such Person or a member of such Person’s immediate family; provided that, with respect to the Investor and its Affiliates, “Affiliate” shall not include any portfolio company or investment fund, vehicle or similar entity affiliated with Searchlight Capital Partners, L.P., other than for purposes of Section 7.10 (Assignment) or for purposes of uses of the term “Non-Recourse Parties” with respect to the Investor and its Affiliates; provided, further, that the preceding proviso shall not apply to MLN TopCo Ltd., Mitel Networks, Inc. and each of their respective Subsidiaries; provided, further, that the Investor and its Affiliates shall be deemed not to be an Affiliate of the Company or any of its Subsidiaries and the Company and its Subsidiaries shall not be deemed to be Affiliates of the Investor. For purposes of this definition, the term “control” (including the correlative terms “controlling”, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning set forth in the preamble hereto.
“Anti-Corruption Laws” means the Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78dd-1, et seq.), any rules or regulations thereunder, the U.S. Travel Act, the United Kingdom Bribery Act of 2010, the Organization of Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or any other Laws concerning anti-corruption, anti-bribery, or money laundering applicable to the Company or any of its Subsidiaries.
“Board” means the board of directors of the Company.
“Business Day” means any day except a Saturday, a Sunday or other day on which the SEC or banking institutions in New York, New York or San Francisco, California are authorized or required by law, regulation or executive order to be closed.
“Bylaws” means the Amended and Restated Bylaws of the Company, as may be amended and restated from time to time.
“Capitalization Date” has the meaning set forth in Section 3.02(a).
“Certificate of Designations” has the meaning set forth in the recitals hereto.
“Certificate of Incorporation” means the Second Amended and Restated Certificate of Incorporation of the Company, as may be amended and restated from time to time.
“Class A Common Stock” means the Class A common stock, par value $0.0001 per share, of the Company.
“Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of the Company.
“Closing” has the meaning set forth in Section 2.02(a).
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means, collectively, the Class A Common Stock and the Class B Common Stock.
“Company” has the meaning set forth in the preamble hereto.
“Company Charter Documents” means the Certificate of Incorporation and the Bylaws.
“Company Intellectual Property” means any Intellectual Property that is owned in whole or in part or purported to be owned in whole or in part, by the Company or any of its Subsidiaries.
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“Company Equity Awards” means each compensatory equity award granted by the Company, whether granted under a Company Stock Plan or otherwise, that relates to Class A Common Stock.
“Company Preferred Stock” means the preferred stock, par value $0.0001 per share, of the Company.
“Company Registered Intellectual Property” means all the Intellectual Property that is the subject of an application or registration issued, filed with, or recorded by any Governmental Entity or domain name registrar which is owned in whole or in part by, or with respect to which a pending application has been filed by and in the name of, the Company or any of its Subsidiaries.
“Company Securities” has the meaning set forth in Section 3.02(d).
“Company Stock Plan” means the Company’s 2003 Equity Incentive Plan, the Company’s 2010 Equity Incentive Plan, the Company’s 2013 Incentive Equity Plan and the Company’s Amended and Restated Employee Stock Purchase Plan.
“Contract” has the meaning set forth in Section 3.03(b).
“Conversion Shares” means the Class A Common Stock issuable upon the conversion of the Preferred Shares.
“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions or variants thereof or related or associated epidemics, pandemics or disease outbreaks.
“DGCL” means the General Corporation Law of the State of Delaware.
“Enforceability Exceptions” has the meaning set forth in Section 3.03(a).
“ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade or business, or that is, or was at the relevant time, a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
“Exchange Act” means the Securities Exchange Act of 1934.
“Fraud” means actual common law fraud in the making of a representation, warranty, or other statement committed by a Person making such representation, warranty, or statement with the intent to deceive another Person, and to induce any Person to enter into this Agreement or any Related Agreement and requires (a) a false representation, warranty, or statement of material fact; (b) actual knowledge or belief that such representation, warranty, or statement is false; (c) an intention to induce a such other Person to whom such representation, warranty, or statement was made to act or refrain from acting in reliance upon it; (d) causing that Person, in justifiable reliance upon such false representation, warranty, or statement to take or refrain from taking
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action; and (e) causing such Person or any party hereto to suffer damage by reason of such reliance. For clarity, a claim for Fraud may only be made against such Person committing such Fraud, it being understood that if a Representative of a party commits Fraud, then such party shall be deemed to have committed such Fraud.
“Fundamental Representations” means the representations and warranties of the Company contained in Section 3.01, Section 3.02 and Section 3.03.
“GAAP” means generally accepted accounting principles in the United States, consistently applied and as in effect from time to time.
“Governmental Authorization” means any authorizations, approvals, licenses, franchises, clearances, permits, certificates, waivers, consents, exemptions, variances, expirations and terminations of any waiting period requirements issued by or obtained from, and any notices, filings, registrations, qualifications, declarations and designations with, a Governmental Entity.
“Governmental Entity” means any (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, (b) federal, state, provincial, local, municipal, foreign or other government or supra national entity, regulatory or administrative authority, (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or entity and any court or other judicial, tribunal or arbitral body), or (d) organization, entity or body or individual exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature (including stock exchanges).
“Intellectual Property” means any rights protectable by applicable Law, throughout the world, in or to the following: (i) patents, utility models and applications therefor, including any reissues, divisionals, continuations, continuations-in-part, provisionals, renewals and extensions and counterparts thereof (“Patents”); (ii) copyrights, including in works of authorship (including Software), copyright registrations and applications therefor and any other rights thereto (“Copyrights”); (iii) trademarks, service marks, logos, trade names, trade dress rights and similar designation of origin and rights therein, and registrations and applications (including intent-to-use applications) for registration thereof, together with all of the goodwill associated with any of the foregoing; (iv) Copyrights or sui generis rights in databases and data collections (including knowledge databases, customer lists and customer databases); (v) domain names; (vi) social media usernames (e.g., Twitter handles) and the goodwill associated with any of the forgoing; (vii) trade secrets, rights in confidential information and know-how (“Trade Secrets”); (viii) any registrations of or applications to register any of the foregoing throughout the world; and (ix) all other intellectual property rights.
“Investor” has the meaning set forth in the preamble hereto.
“Knowledge” of the Company, with respect to any matter in question, shall mean the actual knowledge, as of the date of this Agreement, of Vlad Shmunis, Anand Eswaran, Mitesh Druv and John Marlow.
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“Law” means any U.S. or non-U.S. federal, state, provincial, local or other constitution, law, statute, ordinance, rule, regulation, published policy or requirement, or controlling principle of common law, or any order, in any case issued, enacted, adopted, promulgated, implemented or otherwise put into legal effect by or under the authority of any Governmental Entity.
“Legal Proceeding” means any litigation, investigation, suit, claim, charge, action, demand, complaint, citation, summons, subpoena, audit, hearing, inquiry, proceeding, or mediation of any nature, whether at law or equity, judicial or administrative, by or before any Governmental Entity.
“Liens” means, with respect to any property or asset, any pledge, lien, charge, mortgage, deed of trust, lease, sublease, license, restriction, hypothecation, right of first refusal or offer, conditional sales or other title retention agreement, adverse claim of ownership or use, easement, encroachment, right of way or other title defect, encumbrance, option to purchase or lease or otherwise acquire any interest, and security interest of any kind or nature whatsoever.
“Material Adverse Effect” means any change, event, development or occurrence (“Change”) that has a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided that none of the following, and no Changes or effects arising out of or resulting from the following (in each case, by itself or when aggregated) will be deemed to be or constitute a Material Adverse Effect or will be taken into account when determining whether a Material Adverse Effect has occurred or may, would or could occur (subject to the limitations set forth below):
(i) Changes in general economic conditions, or Changes in conditions in the global or international economy generally;
(ii) (A) Changes in conditions in the financial markets, credit markets or capital markets, including changes in interest rates or credit ratings; (B) changes in exchange rates for the currencies of any country; or (C) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over the counter market;
(iii) Changes in conditions in the industries in which the Company and its Subsidiaries conduct business;
(iv) Changes in regulatory, legislative or political conditions;
(v) any acts of God, natural disasters, epidemics, pandemics or disease outbreaks (including COVID-19) or any geopolitical conditions, outbreak of hostilities, acts of war (whether or not declared), sabotage, cyberterrorism (including by means of cyber-attack by or sponsored by a Governmental Entity), terrorism or military actions (including any escalation or general worsening of any of the foregoing);
(vi) the negotiation, execution or announcement of this Agreement or the pendency or consummation of the Transactions, including the impact thereof on the relationships, contractual or otherwise, of the Company and its Subsidiaries with customers, suppliers, lenders, lessors, business partners, employees, regulators,
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Governmental Entities or vendors (it being understood and agreed that the foregoing shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address the consequences resulting from this Agreement or the consummation of the Transactions, including the representations and warranties contained in Section 3.03(b));
(vii) any action required to be taken pursuant to the express terms of this Agreement;
(viii) changes or proposed changes in GAAP or other accounting standards or in any applicable Laws (or the enforcement or interpretation of any of the foregoing);
(ix) changes in the price or trading volume of the Common Stock (provided that the facts and circumstances giving rise to such changes may be taken into account in determining whether a Material Adverse Effect has occurred); and
(x) any failure by the Company and its Subsidiaries to meet (A) any public estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period; or (B) any budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (provided that the underlying cause of any such failure may be taken into consideration when determining whether a Material Adverse Effect has occurred).
except, in the case of each of clauses (i), (ii), (iii), (iv), (v), and (viii), to the extent such Change has had a disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, relative to other companies operating in the industries in which the Company and its Subsidiaries operate.
“NYSE” means the New York Stock Exchange and its successors.
“Patents” has the meaning set forth in the definition of Intellectual Property.
“Permitted Liens” means any of the following: (i) liens for Taxes, assessments and governmental charges or levies either not yet delinquent or that are being contested in good faith and by appropriate proceedings and for which adequate reserves have been established in the financial statements in accordance with GAAP; (ii) mechanics, carriers’, workmen’s, warehouseman’s, repairmen’s, materialmen’s or other liens or security interests that are not yet due or that are being contested in good faith and by appropriate proceedings; (iii) recorded leases, subleases and licenses (other than capital leases and leases underlying sale and leaseback transactions); (iv) pledges or deposits to secure obligations pursuant to workers’ compensation Law or similar legislation or to secure public or statutory obligations; (v) pledges and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business consistent with past practice; (vi) defects, imperfections or irregularities in title, charges, easements, covenants and rights of way (unrecorded and of record) and other similar liens (or other encumbrances of any type), and zoning, building and other similar codes or restrictions, in each case that, individually or in the aggregate, do not, and would not reasonably be expected to, impair in any material respect the current use of the applicable property; (vii) any non-exclusive
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license to or covenant not to sue with respect to any Company Intellectual Property; (viii) liens pursuant to any Company indebtedness; and (ix) statutory, common law or contractual liens, or other encumbrances, of record securing payments not yet due, including liens of landlords pursuant to the terms of any lease or liens against the interests of the landlord or owner of any leased real property unless caused by the Company or any of its Subsidiaries.
“Person” means an individual or entity, including a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a Governmental Entity (or any department, agency, or political subdivision thereof), or any syndicate or group that would be deemed to be a Person under Section 13(d)(3) of the Exchange Act.
“Preferred Shares” has the meaning set forth in Section 2.01.
“Purchase Price” has the meaning set forth in Section 2.01
“Related Agreements” means the Certificate of Designations and the Investor Rights Agreement.
“Representative” means, with respect to a Person, such Person’s Affiliates and the directors, managers, members, officers, employees, agents, contractors, subcontractors, or other representatives of such Person and its Affiliates.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the Securities and Exchange Commission.
“SEC Reports” means all schedules, forms, reports, statements, certifications, prospectuses, registration statements and documents with the SEC that have been required to be filed or furnished, as the case may be, by it pursuant to applicable Laws, together with all exhibits and schedules thereto and all information incorporated therein by reference.
“Securities Act” means the Securities Act of 1933.
“Series A Preferred Stock” has the meaning set forth in the recitals hereto.
“Software” means any and all computer programs, including any and all application software (including mobile digital applications), system software, firmware, middleware, assemblers, applets, compilers and binary libraries, and software implementations of algorithms, models and methodologies, whether in source code or object code form.
“Subsidiary” means, with respect to any Person, any other Person (other than a natural Person) of which securities or other ownership interests (i) having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions or (ii) representing more than 50% of such securities or ownership interests, in each case, are at the time directly or indirectly owned by such first Person.
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“Tax” means any U.S. federal, state, local and non-U.S. taxes, including sales and use taxes, transaction privilege taxes, gross receipts taxes, income taxes, business and occupation taxes, social security taxes, payroll taxes, employment taxes, estimated taxes, real property taxes, stamp taxes, franchise taxes, transfer taxes, value added taxes, withholding taxes, unemployment taxes, and other similar charges in the nature of tax imposed by any Governmental Entity, together with any interest, penalties and additions to tax imposed thereon or with respect thereto.
“Tax Return” means any return, declaration, report, statement, or information return filed or required to be filed with a Governmental Entity with respect to Taxes, including any forms, elections or declarations of estimated Tax, and including any schedule or attachment thereto and any amendment thereof.
“Trade Secrets” has the meaning set forth in the definition of Intellectual Property.
“Transactions” means the transactions contemplated by this Agreement and the Related Agreements.
“Transfer Tax” has the meaning set forth in Section 5.05(b).
ARTICLE II
Purchase and Sale
SECTION 2.01. Purchase and Sale. On the terms and subject to the conditions set forth in this Agreement, the Investor agrees to purchase and acquire from the Company, and the Company agrees to issue, sell and deliver to the Investor, at the Closing, free and clear of any Liens (other than generally applicable restrictions on transfer under applicable securities Laws and restrictions contemplated under the Investor Rights Agreement), an aggregate of two-hundred thousand (200,000) shares of Series A Preferred Stock (the “Preferred Shares”) for a purchase price per Preferred Share equal to one-thousand dollars ($1,000). The aggregate purchase price of the Preferred Shares shall be two-hundred million dollars ($200,000,000) (the “Purchase Price”), payable by the Investor against delivery of the Preferred Shares at the Closing, in accordance with Section 2.02.
SECTION 2.02. Closing.
(a) The closing of the purchase by the Investor of the Preferred Shares (the “Closing”) shall take place at 4:00 p.m. (Prevailing Eastern Time) on November 9, 2021 by remote electronic exchange of documents or at such other time as shall be mutually agreed between the Company and the Investor.
(b) At the Closing, to effect the purchase and sale of the Preferred Shares, (i) the Investor shall pay or cause to be paid to the Company, by wire transfer to a bank account designated in writing by the Company prior to the date hereof, in immediately available funds, the Purchase Price for the Preferred Shares, (ii) the Company shall deliver to the Investor evidence of the Preferred Shares in book entry, and (iii) each of the Company and the Investor shall execute and deliver to the other the Investor Rights Agreement.
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SECTION 2.03. Restrictive Legends. The book entry representing the Preferred Shares purchased hereunder shall bear the following legends:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS WHICH IS AVAILABLE.”
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THE PROVISIONS OF AN INVESTOR RIGHTS AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SECURITIES DATED AS OF NOVEMBER 8, 2021. A COPY OF THE INVESTOR RIGHTS AGREEMENT MAY BE OBTAINED FROM THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SECURITIES TO THE EXTENT PROVIDED THEREIN AND ANY TRANSFER IN VIOLATION OF THE INVESTOR RIGHTS AGREEMENT IS VOID AND OF NO EFFECT.”
ARTICLE III
Representations and Warranties of the Company
Except as set forth in the Company SEC Reports filed on or after January 1, 2019 and at least two (2) Business Days prior to the date of this Agreement (provided that in no event shall any disclosures contained under the captions “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk” that are not factual and/or historical in nature, any disclosure set forth in any “forward-looking statements” disclaimer or any other disclosures that are predictive, cautionary or forward-looking in nature that are included in any part of any Company SEC Report be deemed to be an exception to, or, as applicable, disclosure for purposes of, any representations and warranties of the Company contained in this Agreement) (it being agreed and understood that any matter disclosed in such Company SEC Report shall not be deemed disclosed for the purposes of Section 3.01, Section 3.02 and Section 3.03), or, subject to Section 7.12, in a corresponding identified schedule attached hereto (such schedules, collectively, the “Disclosure Schedules”), the Company represents and warrants to the Investor that:
SECTION 3.01. Organization; Standing.
(a) The Company is a corporation duly organized, validly existing and in good standing pursuant to the DGCL. The Company has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties, assets and rights, except where the failure to have such power or authority has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company is duly qualified to do business and is in good standing in each
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jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (with respect to jurisdictions that recognize the concept of good standing), except where the failure to be so qualified or in good standing has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) The Company has made available to Investor true, correct and complete copies of the Company Charter Documents, each as amended to the date hereof. The Company is not in violation of any provision of the Company Charter Documents.
(c) Each of the Subsidiaries of the Company is duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the laws of the jurisdiction of its organization. Each of the Subsidiaries of the Company has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties and assets, except, in each case, as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each of the Subsidiaries of the Company is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (with respect to jurisdictions that recognize the concept of good standing), except where the failure to be so qualified or in good standing has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.02. Capitalization.
(a) Capital Stock. The authorized capital stock of the Company consists of (i) 1,000,000,000 shares of Class A Common Stock, (ii) 250,000,000 shares of Class B Common Stock, and (iii) 100,000,000 shares of Company Preferred Stock. As of September 23, 2021 (the “Capitalization Date”), there were (A) 82,087,514 shares of Class A Common Stock issued and outstanding; (B) 10,073,998 shares of Class B Common Stock issued and outstanding; (C) no shares of Company Preferred Stock issued and outstanding; and (D) zero (0) shares of Common Stock held by the Company as treasury shares. All issued and outstanding shares of Common Stock are validly issued, fully paid, nonassessable and free of any preemptive rights and were issued in compliance with all applicable securities Laws.
(b) Series A Preferred Stock. Prior to the execution and delivery of this Agreement, the Company duly and validly adopted and filed the Certificate of Designations with the Secretary of State of the State of Delaware. The Preferred Shares are, and the Conversion Shares will be, when issued, duly authorized, validly issued, fully paid, nonassessable and free of any preemptive rights and issued in compliance with all applicable securities Laws. The Preferred Shares are, and the Conversion Shares, when issued, will have the terms and conditions and entitle the holders thereof to the rights set forth in the Company Charter Documents, as amended by the Certificate of Designations. The shares of Class A Common Stock issuable upon conversion of the Preferred Shares have been duly reserved for issuance.
(c) Stock Reservation, Awards, Warrants and Convertible Notes. As of the Capitalization Date, the Company has reserved 31,707,538 shares of Class A Common Stock for issuance pursuant to the Company Stock Plans and there are 3,915,372 shares of Class A Common Stock underlying outstanding Company Equity Awards.
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(d) Company Securities. Except as set forth in this Section 3.02 (including, for the avoidance of doubt, under the Company Stock Plans or the Company Equity Awards), as of the Capitalization Date, there are (i) no issued and outstanding shares of capital stock of, or other equity or voting interest in, the Company; (ii) no outstanding securities of the Company or any of its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock of, or other equity or voting interest (including voting debt) in, the Company, other than the Company’s 0% convertible senior notes due 2025 and the Company’s 0% convertible senior notes due 2026; (iii) no outstanding options, warrants or other rights or binding arrangements to acquire from the Company or any of its Subsidiaries, or that obligate the Company or any of its Subsidiaries to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable or exercisable for shares of capital stock of, or other equity or voting interest (including voting debt) in, the Company; (iv) no obligations of the Company or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, right, convertible, exchangeable or exercisable security, or other similar Contract relating to any capital stock of, or other equity or voting interest (including any voting debt) in, the Company; and (v) no outstanding restricted shares, restricted share units, stock appreciation rights, performance shares, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or other securities or ownership interests in, the Company (the items in clauses (i), (ii), (iii), (iv) and (v), collectively, the “Company Securities”).
(e) Other Rights. There are no (i) voting trusts, proxies or similar arrangements or understandings to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound with respect to the voting of any shares of capital stock of, or other equity or voting interest in, the Company; (ii) obligations or binding commitments of any character to which the Company or any of its Subsidiaries is a party or by which it is bound (A) restricting the transfer of any shares of capital stock of, or other equity or voting interest in, the Company or (B) granting any preemptive rights, anti-dilutive rights or rights of first refusal or other similar rights with respect to any Company Securities or (iii) other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any Company Securities. Neither the Company nor any of its Subsidiaries is a party to any Contract that obligates it to repurchase, redeem or otherwise acquire any Company Securities. There are no accrued and unpaid dividends with respect to any outstanding shares of Common Stock.
SECTION 3.03. Authority; Non-contravention.
(a) The Company has the requisite corporate power and authority to (i) execute and deliver this Agreement and the Related Agreements; (ii) perform its covenants and obligations hereunder and thereunder; and (iii) consummate the Transactions. The execution and delivery of this Agreement and the Related Agreements by the Company, the performance by the Company of its covenants and obligations hereunder and thereunder, and the consummation of the Transactions, have been duly authorized and approved by the Board, and no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the
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Company of this Agreement and the Related Agreements, the performance by the Company of its covenants and obligations and the consummation of the Transactions. This Agreement and the Related Agreements have been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Investor, constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except that (A) such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws affecting or relating to creditors’ rights generally and (B) equitable remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought (such exceptions in clauses (A) and (B), the “Enforceability Exceptions”).
(b) The execution and delivery of this Agreement and the Related Agreements by the Company, the performance by the Company of its covenants and obligations hereunder and thereunder, and the consummation of the Transactions do not and would not reasonably be expected to (i) violate or conflict with any provision of the Company Charter Documents; (ii) violate, conflict with, result in the breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) pursuant to, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration pursuant to any material loan or credit agreement, debenture, note, bond, mortgage, indenture, deed of trust, lease, sublease, license, contract or other agreement, arrangement or understanding (each, a “Contract”) to which the Company or any of its Subsidiaries is a party; (iii) assuming the Governmental Authorizations referred to in Section 3.04 are made and obtained, violate or conflict with any Law applicable to the Company or any of its Subsidiaries or by which any of their properties or assets are bound; or (iv) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company or any of its Subsidiaries, except in the case of each of clauses (ii), (iii) and (iv) for such violations, conflicts, breaches, defaults, terminations, accelerations or Liens that have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or prevent or materially impede or delay the consummation of the Transactions.
SECTION 3.04. Governmental Approvals. Except for (a) the approval of the Conversion Shares for listing on NYSE, subject to official notice of issuance and (b) the filing with the SEC of such current reports and other documents, if any, required to be filed with the SEC under the Exchange Act or Securities Act in connection with the Transactions, no consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Entity are necessary for the execution and delivery of this Agreement and the Related Agreements by the Company, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the Transactions, other than such consents, approvals, filings, licenses, permits, authorizations, declarations or registrations the failure of which to obtain, make or give, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent or materially impede or delay the consummation of the Transactions.
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SECTION 3.05. Company SEC Documents; Undisclosed Liabilities.
(a) Since January 1, 2020, the Company has timely filed or furnished all SEC Reports (“Company SEC Reports”). Each Company SEC Report complied, as of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseding filing) or in the case of registration statements, on the date of effectiveness thereof, in all material respects with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and/or the listing standards and rules of the securities exchange on which the Company was listed at the time of such filing, as the case may be, each as in effect on the date that such Company SEC Report was filed. As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), or in the case of registration statements, on the date of effectiveness thereof, each Company SEC Report did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Company is, and since January 1, 2020 has been, in compliance in all material respects with the applicable provisions and requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and the listing standards and rules of the securities exchange on which the Class A Common Stock traded. Since January 1, 2020, each principal executive officer and principal financial officer of the Company, as applicable, has made all certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC and the statements contained in any such certifications are true, correct and complete. There are no outstanding or unresolved comments received from the SEC with respect to the Company SEC Reports or any registration statement filed by the Company and, to the Knowledge of the Company, none of the Company SEC Reports is the subject of ongoing SEC review or investigation. No Subsidiary of the Company is, or since January 1, 2020 has been, required to file any forms, reports or documents with the SEC.
(b) The consolidated financial statements (including any related notes and schedules) of the Company and its Subsidiaries filed with the Company SEC Reports (i) complied, as of their respective dates of filing with the SEC, in all material respects with the published rules and regulations of the SEC with respect thereto during the periods and at the dates indicated (except as may be indicated in the notes thereto or as otherwise permitted by Form 10-Q with respect to any financial statements filed on Form 10-Q); (ii) were prepared in accordance with GAAP (except as may be indicated in the notes thereto or as otherwise permitted by Form 10-Q with respect to any financial statements filed on Form 10-Q) applied on a consistent basis during the periods involved; and (iii) fairly present, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries as of the dates thereof or for the periods then ended (subject, in the case of the unaudited financial statements, to normal and recurring year-end adjustments described therein). None of the Company or its Subsidiaries is a party to, or has any obligation or other commitment to become a party to, any “off balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K promulgated by the SEC) that have not been so described in the Company SEC Reports.
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(c) The Company has established and maintains “disclosure controls and procedures” and “internal control over financial reporting” (in each case as defined pursuant to Rule 13a-15 and Rule 15d-15 promulgated under the Exchange Act). The Company’s disclosure controls and procedures are reasonably designed to ensure that (i) all material information required to be disclosed by the Company in the reports and other documents that it files or furnishes pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC; and (ii) such material information is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure and to make the certifications required under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act. Since January 1, 2020, no events, facts or circumstances have occurred such that management would not be able to complete its assessment of the effectiveness of the Company’s internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act when next due, and conclude, after such assessment, that such system was effective. Since January 1, 2020, the principal executive officer and principal financial officer of the Company have made all certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act, and the statements contained in any such certifications were true, correct and complete as of their filing dates. Neither the Company nor its principal executive officer or principal financial officer has received notice from any Governmental Entity challenging or questioning the accuracy, completeness, form or manner of filing of such certifications.
(d) The Company has established and maintains a system of internal controls over financial reporting that are designed to ensure reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, including policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with appropriate authorizations of the Company’s management and the Board; and (iii) provide assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries. Since January 1, 2020, neither the Company nor, the Company’s independent registered public accounting firm has identified or been made aware of (x) any significant deficiency or material weakness in the system of internal control over financial reporting, including the design and operation thereof, used by the Company and its Subsidiaries that has not been subsequently remediated; (y) any fraud or illegal act that involves the Company’s management or other employees who have a role in the preparation of financial statements or the internal control over financial reporting utilized by the Company and its Subsidiaries; or (z) any claim or allegation regarding any of the foregoing. The Company’s auditors and the audit committee of the Board have identified or have been made aware of all matters described by the immediately preceding clauses (x) through (z).
(e) Neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent, fixed or otherwise) required to be reflected or reserved against on a balance sheet prepared in accordance with GAAP or notes thereto, other than liabilities or obligations (i) reflected or otherwise adequately reserved against in the balance sheet (or the notes thereto) of the Company and its Subsidiaries as of June 30, 2021 or in the consolidated financial statements of the Company and its Subsidiaries included in the Company
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SEC Reports filed prior to the date of this Agreement or described in the notes thereto; (ii) arising pursuant to this Agreement or the Related Agreements or incurred in connection with the Transactions; (iii) incurred in the ordinary course of business consistent with past practice on or after June 30, 2021; or (iv) that has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.06. Listing and Maintenance Requirements. The Class A Common Stock is registered pursuant to Section 12(b) of the Exchange Act and listed on NYSE, and the Company has taken no action designed to (or which, to the Knowledge of the Company, is reasonably likely to) have the effect of, terminating the registration of the Class A Common Stock under the Exchange Act or delisting the Class A Common Stock from NYSE, nor has the Company received any notification that the SEC or NYSE is contemplating terminating such registration or listing.
SECTION 3.07. Compliance with Laws.
(a) Since January 1, 2020, the Company and each of its Subsidiaries has been in compliance with all Laws that are applicable to the Company and its Subsidiaries or to the conduct of the business or operations of the Company and its Subsidiaries, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and since, January 1, 2020, neither the Company nor any of its Subsidiaries has received any written or, to the Knowledge of the Company, oral notice of any conflict or non-compliance with, or default or violation of, any applicable Laws by which it or any of its properties, assets, rights, employees, business or operations are or were bound or affected, except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) the Company and its Subsidiaries have all Governmental Authorizations necessary for the ownership and operation of its business as presently conducted, and each such Governmental Authorization is in full force and effect or subject to renewal in the ordinary course of business; (ii) the Company and its Subsidiaries are, and since January 1, 2020 have been, in compliance with the terms of all Governmental Authorizations necessary for the ownership and operation of its businesses; and (iii) since January 1, 2020, (A) neither the Company nor any of its Subsidiaries has received written notice, or, to the Knowledge of the Company, oral notice from any Governmental Entity alleging any conflict with or breach of any such Governmental Authorization which remains unresolved and (B) no suspension or cancellation of any of the Governmental Authorizations is pending or, to the Knowledge of the Company, threatened.
(b) Since January 1, 2020, the Company, each of its Subsidiaries, each of its and their respective directors and officers, and to the Company’s Knowledge, each of its and their respective employees, and agents, and all other Persons acting on its or their behalf, in each case in their capacity as such, is and has been in material compliance with Anti-Corruption Laws. Except as has not been and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole, since January 1, 2020, none of the Company, any of its Subsidiaries, any of its or their respective officers or directors, or to the Company’s Knowledge, each of its and their respective agents, employees or other Persons acting on their behalf, in each case in their capacity as such, has, directly or indirectly,
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(i) been charged with or convicted of violating any Anti-Corruption Laws; (ii) received any written notice, request or citation, or been made aware in writing of any allegation, investigation (formal or informal), inquiry, action, charge or other Legal Proceeding with regard to a potential violation of any Anti-Corruption Law; (iii) established or maintained any unrecorded or improperly recorded fund of corporate monies or other properties or assets or made any false entries on any books of account or other record for any purpose in violation of any Anti-Corruption Laws; (iv) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to government officials or government employees in violation of any Anti-Corruption Laws; (v) made, offered or authorized any unlawful payment, or other thing of value, to foreign or domestic government officials or government employees in violation of any Anti-Corruption Laws; or (vi) made, offered or authorized any unlawful bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment in violation of any Anti-Corruption Laws. The Company and each of its Subsidiaries have developed and implemented an anti-corruption compliance program that includes internal controls and policies and procedures designed to reasonably promote compliance with all applicable Anti-Corruption Laws.
(c) Since January 1, 2020, none of the Company, its Subsidiaries, or any of their respective officers, directors, employees, agents, nor any other Person acting on their behalf, has violated, in any material respect, an applicable Law relating to economic or trade sanctions Laws, export, reexport, transfer, and import control Laws, or antiboycott Laws administered or enforced by a Governmental Entity, including the U.S. government (such as those administered or enforced by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the Internal Revenue Service of the U.S. Department of the Treasury, the U.S. Department of State, or the Bureau of Industry and Security of the U.S. Department of Commerce), the United Nations Security Council, the European Union, or Her Majesty’s Treasury (collectively, “Trade Control Laws”). Since January 1, 2020, neither the Company, nor any of its Subsidiaries has (i) received from any Governmental Entity any written or, to the Company’s Knowledge, oral notice, inquiry, or internal or external allegation related to Trade Control Laws; (ii) made any voluntary or involuntary disclosure to a Governmental Entity related to Trade Control Laws; or (iii) conducted any material internal investigation concerning any actual or potential violation or wrongdoing related to the Trade Control Laws. None of the Company, its Subsidiaries, or, to the Company’s Knowledge, any of their respective officers, directors, employees, agents, nor any other Person acting on their behalf, is a Person (A) that is organized, located or resident in a country or territory with which dealings are broadly prohibited under comprehensive U.S. sanctions (currently, the Crimea region of Ukraine, Cuba, Iran, North Korea, and Syria); (B) with whom dealings are restricted or prohibited by, or are sanctionable under, any applicable economic or trade sanctions Law; (C) engaged in any unlawful transaction, directly or, knowingly, indirectly, with any Person who is the target of any economic or trade sanctions Law; or (D) that is owned or controlled, directly or indirectly, by any Person identified in (A), (B), or (C).
SECTION 3.08. Taxes. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:
(a) each of the Company and its Subsidiaries has duly and timely filed (taking into account valid extensions) all Tax Returns required to be filed by any of them and each such Tax
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Return is true, correct and complete, and the Company and each of its Subsidiaries has timely and properly paid and remitted, or has adequately reserved and accrued (in accordance with GAAP on the appropriate financial statements) for the payment and remittance of, all Taxes (whether or not shown as due on any such Tax Return) that are required to be paid or remitted by any of them (including any Taxes required to be withheld or collected in connection with any amounts paid or owing to any Person);
(b) no audits, investigations, proceedings, actions or other examinations with respect to Tax Returns or Taxes of the Company or any of its Subsidiaries are presently in progress or have been asserted, threatened or proposed in writing;
(c) the Company is not and has not been within the time period specified in Section 897(c)(1A)(ii) of the Code a “United States real property holding corporation” within the meaning of Section 897 of the Code and the Treasury Regulations promulgated thereunder; and
(d) none of the Company or any of its Subsidiaries has engaged in a “listed transaction” as set forth in Treasury Regulation § 1.6011-4(b)(2) (or any similar provision of state, local or non-U.S. Law).
SECTION 3.09. Employees. Neither the Company nor any of its ERISA Affiliates maintains, sponsors or contributes to or is obligated to maintain, sponsor or contribute to, or has ever maintained, sponsored, or contributed to, or been obligated to maintain, sponsor or contribute to, (i) any plan that is subject to Section 302 or Title IV of ERISA or Section 412 or 4971 of the Code, (ii) any plan that is a “multiemployer plan” within the meaning of Section 3(37) of ERISA, or (iii) a plan that has two (2) or more contributing sponsors at least two (2) of whom are not under common control, within the meaning of Section 4063 of ERISA. Neither the Company nor any of its ERISA Affiliates provides or has ever provided, or is obligated to provide or has ever been obligated to provide, retiree or other post-termination medical or welfare benefits, except as required by Law.
SECTION 3.10. Intellectual Property.
(a) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company or one of its Subsidiaries is the sole and exclusive owner of all of the Company Registered Intellectual Property free and clear of all Liens other than Permitted Liens. Each item of Company Registered Intellectual Property is subsisting and, to the Knowledge of the Company, not invalid or unenforceable.
(b) Except as has not been and would not reasonably be expected to be, individually or in the aggregate, a Material Adverse Effect, (i) since January 1, 2020, the Company and its Subsidiaries have taken commercially reasonable steps to maintain and protect the confidentiality of any material Trade Secrets included in the Company Intellectual Property (other than Trade Secrets that the Company, in its business judgment, decided to no longer protect as confidential) and, (ii) to the Knowledge of the Company, there has been no material unauthorized disclosure of any material Trade Secrets included in the Company Intellectual Property to any third party, except for any Trade Secrets whose disclosure would not reasonably be expected to material to the Company and its Subsidiaries, taken as a whole.
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(c) Except as has not been and would not reasonably be expected to be, individually or in the aggregate, a Material Adverse Effect, to the Knowledge of the Company, (i) none of the Company Intellectual Property is subject to any judgment, injunction, settlement or order adversely affecting the use thereof or rights thereto by the Company and its Subsidiaries; (ii) there is no opposition or cancellation Legal Proceeding pending against the Company and its Subsidiaries concerning the ownership, validity, or enforceability of any Company Registered Intellectual Property; (iii) since January 1, 2020, neither the Company nor any of its Subsidiaries has made any written allegation against a third party of any infringement or misappropriation, or other violation of any material Company Intellectual Property; and (iv) since January 1, 2020, neither the Company nor its Subsidiaries has received any written notice alleging that any of the operation of their businesses or any use of the Company Intellectual Property, Software or other technology infringes, misappropriates, violates or otherwise conflicts with the Intellectual Property of any other Person.
(d) Notwithstanding anything in this Agreement to the contrary, this Section 3.10 sets forth the sole and exclusive representations and warranties of the Company relating to Intellectual Property.
SECTION 3.11. Legal Proceedings. Except as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened against the Company, any of its Subsidiaries, any present or former officer or director of the Company or any of its Subsidiaries in such individual’s capacity as such.
SECTION 3.12. Related Party Transactions. Except for compensation and other employment arrangements entered into in the ordinary course of business consistent with past practice, there are no Contracts, transactions, arrangements or understandings between the Company or any of its Subsidiaries, on the one hand, and any Affiliate (including any director or officer but not including any wholly owned Subsidiary) thereof, or any stockholder that, to the Knowledge of the Company, beneficially owns 5% or more of the Class A Common Stock, on the other hand, that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC in the Company’s Form 10-K or proxy statement pertaining to an annual meeting of stockholders.
SECTION 3.13. No Other Investor Representations or Warranties. Except for the representations and warranties expressly set forth in ARTICLE IV, the Company hereby acknowledges that neither the Investor nor any of its Subsidiaries, nor any other Person, has made or is making any other express or implied representation or warranty with respect to the Investor or any of its Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, including with respect to any information provided or made available to the Company or any of its Representatives or any information developed by the Company or any of its Representatives.
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ARTICLE IV
Representations and Warranties of the Investor
The Investor represents and warrants to the Company:
SECTION 4.01. Organization. Investor is duly organized, validly existing and in good standing pursuant to the Laws of its jurisdiction of organization.
SECTION 4.02. Authority. Investor has the requisite corporate power and authority to (a) execute and deliver this Agreement and the Related Agreements; (b) perform its covenants and obligations hereunder and thereunder; and (c) consummate the Transactions. The execution and delivery of this Agreement and the Related Agreements by Investor, the performance by Investor of its covenants and obligations hereunder, and the consummation of the Transactions, have been duly authorized and approved by all necessary action on the part of Investor and no additional actions on the part of Investor are necessary to authorize the execution and delivery of this Agreement and the Related Agreements by Investor, the performance by Investor of its respective covenants and obligations hereunder, and the consummation of the Transactions. This Agreement and the Related Agreements have been duly executed and delivered by Investor and, assuming the due authorization, execution and delivery by the Company, constitute legal, valid and binding obligations of Investor, enforceable against Investor in accordance with their terms, subject to the Enforceability Exceptions.
SECTION 4.03. Non-contravention. The execution and delivery of this Agreement and the Related Agreements by Investor, the performance by Investor of its covenants and obligations hereunder and thereunder, and the consummation of the Transactions do not (a) violate or conflict with any provision of the organizational documents of Investor; (b) violate, conflict with, result in the breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) pursuant to, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration pursuant to any of the terms, conditions or provisions of any Contract or other instrument or obligation to which Investor is a party; (c) violate or conflict with any Law applicable to Investor or by which any of its properties or assets are bound; or (d) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of Investor, except in the case of each of clauses (b), (c) and (d) for such violations, conflicts, breaches, defaults, terminations, accelerations or Liens that would not, individually or in the aggregate, prevent or materially delay the consummation of the Transactions.
SECTION 4.04. Government Filings. No consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental Entity is necessary for the execution and delivery of this Agreement and the Related Agreements by the Investor, the performance by the Investor of its obligations hereunder and thereunder and the consummation by the Investor of the Transactions, other than such other consents, approvals, filings, licenses, permits, authorizations, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, be material to the Investor’s ability to consummate the Transactions.
SECTION 4.05. Purchase for Investment. The Investor acknowledges that the Preferred Shares have not been registered under the Securities Act or under any state or other applicable securities laws. The Investor (a) acknowledges that it is acquiring the Preferred Shares (and the Conversion Shares) pursuant to an exemption from registration under the Securities Act solely for investment, and with no present intention or view to distribute any of the Preferred Shares (or the Conversion Shares) to any Person in violation of the Securities Act,
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(b) will not sell or otherwise dispose of any of the Preferred Shares or the Conversion Shares, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable state securities laws, (c) is knowledgeable, sophisticated and experienced in financial and business matters, fully understands the limitations on transfer and the restrictions on sales of such Preferred Shares and Conversion Shares and is able to bear the economic risk of its investment and afford the complete loss of such investment and (d) is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act).
SECTION 4.06. Independent Investigation. Without limiting the representations and warranties of the Company in ARTICLE III, the Investor (a) is not relying on the Company for any legal, tax, investment, accounting or regulatory advice, (b) has consulted with its own advisors concerning such matters, and (c) shall be responsible for making its own independent investigation and appraisal of the Transactions.
SECTION 4.07. Private Placement Consideration. The Investor understands and acknowledges that: (a) its representations and warranties contained herein are being relied upon by the Company as a basis for availing itself of such exemption and other exemptions under the securities Laws of all applicable states and for other purposes, (b) no U.S. state or federal agency has made any finding or determination as to the fairness of the terms of the sale of the Preferred Shares or any recommendation or endorsement thereof and (c) the Preferred Shares are “restricted securities” under the Securities Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under applicable securities Laws such Preferred Shares (and the Conversion Shares) may be resold without registration under the Securities Act only in accordance with an exemption therefrom.
SECTION 4.08. No Broker. There is no financial advisor, investment banker, broker, finder, agent or other Person that has been retained by or is authorized to act on behalf of Investor or any of its Affiliates who is entitled to any financial advisor’s, investment banking, brokerage, finder’s or other fee or commission for which the Company would be responsible in connection with the Transactions.
SECTION 4.09. No Other Company Representations or Warranties. Except for the representations and warranties expressly set forth in ARTICLE III, the Investor hereby acknowledges that neither the Company nor any of its Subsidiaries, nor any other Person, has made or is making any other express or implied representation or warranty, at law or in equity, with respect to the Company or any of its Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, including with respect to any information provided or made available to the Investor or any of its Representatives, in each case, in order to induce Investor to purchase the Preferred Shares. Without limiting the generality of the foregoing, neither the Company nor any other Person makes or has made any express or implied representation or warranty to Investor or any of its respective Representatives with respect to (a) any financial projection, forecast, estimate, or budget relating to the Company, any of its Subsidiaries or their respective businesses or (b) except for the representations and warranties made by the Company in ARTICLE III, any oral or written information presented to Investor or any of its respective Representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or the course of the Transactions, in each case, in order to induce Investor to purchase the Preferred Shares.
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ARTICLE V
Additional Agreements
SECTION 5.01. Public Announcements. The Company and Investor shall consult with each other before issuing, and give each other the opportunity to review and comment upon any press release or other public statements with respect to this Agreement or the Transactions and shall not issue any such press release or make any such public statement without the other party’s prior written consent (which shall not be unreasonably, withheld, conditioned or delayed), except (a) as such party may reasonably conclude may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system (and then only after as much advance notice and consultation as is feasible) or (b) such public statements principally directed to employees, suppliers, customers, partners or vendors that reconvey previous press releases or public statements.
SECTION 5.02. Corporate Action. At any time that any Preferred Shares are outstanding, the Company shall at all times take all lawful action to reserve and keep available, free from preemptive rights, out of its authorized but unissued Class A Common Stock, the full number of shares of Class A Common Stock then issuable upon conversion of the Preferred Shares. All shares of Class A Common Stock delivered upon conversion of the Preferred Shares shall be newly issued shares or shares held in treasury by the Company, shall have been duly authorized and validly issued and shall be fully paid and nonassessable, and shall be free from preemptive rights and free of any Lien (other than generally applicable restrictions on transfer under applicable securities Laws and restrictions contemplated under the Investor Rights Agreement).
SECTION 5.03. NYSE Listing of Shares. The Company shall promptly apply to cause the Conversion Shares to be approved for listing on NYSE, subject to official notice of issuance. The Company shall not voluntarily delist the Class A Common Stock from NYSE. In the event that the Class A Common Stock is delisted from NYSE, the Company shall use its reasonable best efforts to take, or cause to be taken, all actions necessary to have such shares of Class A Common Stock to be promptly listed for trading on any of Nasdaq, NYSE or any other United States national securities exchange.
SECTION 5.04. Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such costs and expenses.
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SECTION 5.05. Certain Tax Matters.
(a) The Company and the Investor acknowledge and agree that for U.S. federal income Tax purposes:
(i) the Series A Preferred Stock is not “preferred stock” within the meaning of Section 305 of the Code and the Treasury Regulations promulgated thereunder;
(ii) no dividend shall be treated as accruing with respect to any Series A Preferred Stock held by the Investor unless and until any amount is distributed in cash with respect to the Series A Preferred Stock;
(iii) the Series A Preferred Stock shall not be treated as having been issued with a “redemption premium” or with a difference between “redemption price” and “issue price,” in each case, treated (or to be treated) as a constructive distribution (or series of constructive distributions) under Section 305(c) of the Code, Treasury Regulations Section 1.305-5 and/or Treasury Regulations Section 1.305-7; and
(iv) the conversion of the Series A Preferred Stock into Conversion Shares shall be treated as a transaction pursuant to which no gain or loss is recognized.
Except as otherwise required by a binding change in Law after the date hereof or a contrary “determination” as defined in Section 1313(a) of the Code, the Investor and the Company shall take no position inconsistent with the treatment described in this Section 5.05(a) on any Tax Return, in any Tax Proceeding or otherwise. In the event that the Company receives notice in writing or otherwise in the context of a pending or threatened Tax Proceeding from any Governmental Entity that any Tax treatment described in this Section 5.05(a) is or will be challenged by any Governmental Entity or otherwise raised as an issue by any Governmental Entity in connection with any claim, audit, investigation, examination, assessment, suit, action, proceeding, or other dispute (each, a “Tax Proceeding”), (x) the Company shall promptly provide written notice thereof to the Investor and (y) the Company shall control the defense of any such challenge or claim; provided, however, that the Investor shall be entitled to participate in (but not control the conduct of), at its own expense, the defense of any such challenge or claim at its written election and the Company shall (and shall cause its counsel to) consult with, and provide information to, the Investor as it reasonably requests in connection with any such challenge or claim, and the Company shall not settle or compromise such challenge or claim without the Investor’s prior written consent (not to be unreasonably withheld, conditioned or delayed).
(b) The Company shall pay any and all documentary, stamp and similar issue or transfer Tax (“Transfer Tax”) due on the issue of the Series A Preferred Stock or any Conversion Shares issued upon the conversion of any shares of Series A Preferred Stock. However, in the case of conversion of Series A Preferred Stock, the Company shall not be required to pay any such Transfer Tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Series A Preferred Stock or shares of Common Stock to a beneficial owner other than the beneficial owner of the Series A Preferred Stock immediately prior to such conversion, and shall not be required to make any such issuance or delivery unless and until the Person requesting such issuance or delivery has paid to the Company the amount of any such Transfer Tax or has established, to the satisfaction of the Company, that such Transfer Tax has been paid or is not payable.
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(c) In the event that any cash dividend is declared in respect of the Series A Preferred Stock or a binding change in Law or a “determination” (as defined in Section 1313(a) of the Code) requires any amounts in respect of the Series A Preferred Stock to be treated as a dividend for U.S. federal income Tax purposes, the Company shall reasonably cooperate with the Investor to mitigate or eliminate any applicable withholding Tax and provide the Investor with a reasonable opportunity (x) to provide additional information to mitigate or eliminate any applicable withholding Tax and/or (y) to apply for an exemption from, or a reduced rate of, any applicable withholding Tax.
ARTICLE VI
Survival; Remedies
SECTION 6.01. Survival. All of the covenants or other agreements of the parties contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent that non-compliance with such covenants or agreements is waived in writing by the party entitled to such performance. None of the representations and warranties made herein shall survive the Closing, except for the Fundamental Representations, which shall survive the Closing and expire and terminate at 11:59 p.m. New York City time on the date that is twelve (12) months after the date hereof; provided, however, that the foregoing shall not limit any claim of, or recourse for, Fraud with respect to any such representation or warranty. For the avoidance of doubt and notwithstanding anything to the contrary set forth herein, it is the intention of the parties hereto that the expiration dates and survival periods set forth in this Section 6.01 supersede any applicable statutes of limitations that would otherwise apply to such representations and warranties.
SECTION 6.02. Limitation on Damages. Notwithstanding any other provision of this Agreement, no party shall have any liability to the other for breach of this Agreement in excess of the Purchase Price, and no party shall be liable for any speculative, consequential, special or punitive damages with respect to a breach of this Agreement. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall limit any claim or recourse under or in connection with any Related Agreement.
SECTION 6.03. Non-Recourse This Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are signatories hereto, and no former, current or future equityholders, controlling persons, directors, officers, employees, agents or Affiliates of any party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent or Affiliate of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or in respect of any representations made or alleged to be made in connection herewith, whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil, by or through a claim by or on behalf of the Company against the Investor or any Affiliate thereof, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party in connection with this Agreement.
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ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All notices, requests, permissions, waivers or other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered by hand or sent by postage prepaid, by registered, certified or express mail or overnight courier service and shall be deemed given when so delivered by hand, or electronic mail (which is confirmed), or if mailed, three days after mailing (one Business Day in the case of express mail or overnight courier service) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
| (a) | If to the Company: |
RingCentral, Inc.
20 Davis Drive
Belmont, CA 94002
| Attn: | John Marlow, Chief Administrative Officer, General Counsel and |
Senior Vice President of Corporate Development
| Email: | johnm@ringcentral.com |
with a copy (which copy alone shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
United States
| Attn: | Jeffrey D. Saper |
| Email: | jsaper@wsgr.com |
and
Wilson Sonsini Goodrich & Rosati, P.C.
One Market Plaza
Spear Tower, Suite 3300
San Francisco, CA 94105
United States
| Attn: | Mark Baudler & Rich Mullen |
| Email: | mbaudler@wsgr.com & rich.mullen@wsgr.com |
| (b) | If to the Investor: |
Searchlight II MLN, L.P.
c/o Searchlight Capital Partners, L.P.
745 Fifth Avenue, 27th Floor
| Attn: | Nadir Nurmohamed |
| Email: | nnurmohamed@searchlightcap.com |
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with a copy (which copy alone shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
| Attn: | Steven A. Cohen |
Victor Goldfeld
| Email: | SACohen@wlrk.com |
VGoldfeld@wlrk.com
SECTION 7.02. Amendments, Waivers, etc. This Agreement may be amended or waived if, and only if, such amendment is in writing and signed by both parties or such waiver is in writing and signed by the party against whom such waiver shall be enforced. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, shall not constitute a waiver by such party of its right to exercise any such other right, power or remedy or to demand such compliance.
SECTION 7.03. Counterparts and Facsimile. This Agreement may be executed in two or more identical counterparts (including by facsimile or electronic transmission), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered (by facsimile, electronic transmission or otherwise) to the other parties.
SECTION 7.04. Further Assurances. Each party hereto shall execute and deliver after the date hereof such further certificates, agreements and other documents and take such other actions as any other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and to consummate or implement the Transactions.
SECTION 7.05. Governing Law; Arbitration; Waiver of Jury Trial.
(a) This Agreement, and all claims, causes of action (whether in contract, tort or statute) or other matter that may result from, arise out of, or be in connection with or relating to this Agreement, or the negotiation, administration, performance, or enforcement of this Agreement, including any claim or cause of action resulting from, arising out of, in connection with, or relating to any representation or warranty made in connection with this Agreement (the “Relevant Matters”), shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, including its statutes of limitations, regardless of the laws that might otherwise govern under any applicable principles of conflicts of laws that would result in the application of any such other law. For the avoidance of doubt, neither the U.N. Convention on Contracts for the International Sale of Goods nor any international treaties that would require the application of the laws of any jurisdiction other than the State of Delaware shall be applicable to any Relevant Matter.
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(b) Any dispute, claim, or cause of action (whether based on contract, tort, or otherwise) that may result from, arise out of, be in connection with or relating to any Relevant Matters shall be finally settled by binding arbitration in New York, New York and shall be administered by the Judicial Arbitration and Mediation Services, Inc. pursuant to its Comprehensive Arbitration Rules and Procedures then in effect by three arbitrators, with each of the Company and the Investor being entitled to appoint one arbitrator, and the third arbitrator to be nominated by such first two arbitrators (or, if such an agreement is not reached, with the third arbitrator (and any other arbitrator that a party fails to appoint) being appointed in accordance with such Rules). The language of the arbitration shall be English and all written materials in connection with such arbitration, including but not limited to all pleadings and evidence, shall be in the English language. The arbitrators shall apply the laws of the State of Delaware to the merits of any such dispute, claim, or cause of action (whether in contract, tort, or statute) in accordance with Section 7.05(a). The arbitrators shall have the power to decide all questions of arbitrability. The arbitrators shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding. At the request of either party, the arbitrators will enter an appropriate protective order to maintain the confidentiality of information produced or exchanged in the course of the arbitration proceedings. The award must be in writing and state the reasons on which it is based. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Notwithstanding anything to the contrary in this Section 7.05(b), any party hereto may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief without breach of this Section 7.05(b) and without any abridgment of the powers of the arbitrators in the event of acts or breaches of this Agreement that such party believes may cause irreparable harm or with respect to which such party believes monetary damages would not provide adequate compensation.
(c) EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS, OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT, OR ANY OTHER RELEVANT MATTER.
(d) The arbitrators may award to the prevailing party, if any, as determined by the arbitrators, its reasonable costs and fees incurred in connection with any arbitration or related judicial proceeding hereunder. Cost and fees awarded may include, without limitation, administrative fees, arbitrator fees, attorneys’ fees, expert fees, witness fees, court costs, travel expenses, and out-of-pocket expenses (including, without limitation, such expenses as copying, telephone, facsimile, postage, and courier fees).
SECTION 7.06. Specific Performance. The parties acknowledge and agree that (i) irreparable damage would occur in the event of any breach or threatened breach by the other party of this Agreement, (ii) monetary damages, even if available, would not be an adequate remedy, (iii) the non-breaching party shall be entitled, without any proof of actual damages (and in addition to any other remedy that may be available to it), to a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant,
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obligation or other agreement and an injunction preventing or restraining such breach or threatened breach, and (iv) no party hereto shall be required to provide or post any bond or other security or collateral in connection with any such decree, order or injunction or in connection with any related action or legal proceeding. Any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.
SECTION 7.07. Interpretation. When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. 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. The words “date hereof” shall refer to the date of this Agreement. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and shall not simply mean “if”. Documents or other information or materials will be deemed to have been “made available” by the Company if such documents, information or materials have been (i) posted to a virtual data room managed by the Company on or prior to the date hereof, or (ii) filed or furnished to the SEC at least two (2) Business Days prior to the date hereof. All references to “$” mean the lawful currency of the United States of America. 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. Except as specifically stated herein, any statute defined or referred to herein means such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. Except as otherwise specified herein, references to a Person are also to its successors and permitted assigns. Each of the parties hereto has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
SECTION 7.08. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced because of any Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect to the extent that the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the greatest extent possible.
SECTION 7.09. No Third-Party Beneficiaries. Notwithstanding anything contained in this Agreement to the contrary, except as set forth in Section 6.03, nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties any rights,
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remedies, obligations or liabilities under or by reason of this Agreement, and no Person that is not a party to this Agreement (including any partner, member, stockholder, director, officer, employee or other beneficial owner of any party, in its own capacity as such or in bringing a derivative action on behalf of a party) shall have any standing as third-party beneficiary with respect to this Agreement or the Transactions.
SECTION 7.10. Assignment. Except as otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by either of the parties without the prior written consent of the other party, except that the Investor may transfer or assign its rights and obligations under this Agreement, in whole or in part, to one or more of its Affiliates at any time.
SECTION 7.11. Acknowledgment of Securities Laws. The Investor hereby acknowledges that it is aware, and that it will advise its Affiliates and Representatives who are provided material non-public information concerning the Company or its securities, that the United States securities Laws prohibit any Person who has received from an issuer material, non-public information from purchasing or selling securities of such issuer or from communication of such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities.
SECTION 7.12. Disclosure Schedule References. The parties hereto agree that the disclosure set forth in any particular section or subsection of the Disclosure Schedules shall be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (a) the representations and warranties of the Company that are set forth in the corresponding section or subsection of this Agreement; and (b) any other representations and warranties of the Company that are set forth in this Agreement, but in the case of this clause (b) only if the relevance of that disclosure as an exception to (or a disclosure for purposes of) such other representations and warranties is reasonably apparent on the face of such disclosure.
SECTION 7.13. Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement shall impair any such right, power, or remedy of such party, nor shall it be construed to be a waiver of or acquiescence to any breach or default, or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default. All remedies, either under this Agreement or by Law or otherwise afforded to any holder, shall be cumulative and not alternative.
SECTION 7.14. Entire Agreement. This Agreement (including the Exhibits hereto), together with the Related Agreements, constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof and thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Investment Agreement as of the day and year first above written.
| SEARCHLIGHT II MLN, L.P. | ||
| By | /s/ | |
| Name: | Andrew Frey | |
| Title: | Authorized Person | |
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IN WITNESS WHEREOF, the parties hereto have executed this Investment Agreement as of the day and year first above written.
| RINGCENTRAL, INC. | ||
| By | /s/ | |
| Name: | John Marlow | |
| Title: | Chief Administrative Officer | |
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Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is made and entered into as of November 8, 2021 and effective as of November 9, 2021 (the “Effective Date”), between RingCentral, Inc., a Delaware corporation (the “Company”), and Searchlight II MLN, L.P. (the “Investor”).
WHEREAS, the Investor and the Company have entered into that certain Investment Agreement, (the “Investment Agreement”), pursuant to which the Investor is purchasing an aggregate of 200,000 shares (the “Preferred Shares”) of Series A Convertible Preferred Stock, par value $0.0001 per share, of the Company (the “Series A Preferred Stock”); and
WHEREAS, the parties desire to enter into this Agreement to provide for certain rights and obligations of the parties following the consummation of the transactions contemplated by the Investment Agreement and the other Transaction Documents.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
Section 1. Registration Rights.
(a) Shelf Registration.
(i) Filing. The Company shall file at least 180 days prior to the expiration of the Lock-Up Period (or if a later time for filing is requested by the Investor, at such later time) a Registration Statement for a Shelf Registration on Form S-3 (the “Form S-3 Shelf”) (it being agreed that the Form S-3 Shelf shall be an Automatic Shelf Registration Statement if the Company is a Well-Known Seasoned Issuer) or, if the Company is ineligible to use a Form S-3 Shelf, a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf” and, together with the Form S-3 Shelf (and any Subsequent Shelf Registration), the “Shelf”) covering the resale of the Registrable Securities on a delayed or continuous basis. If such Shelf is not immediately effective, the Company shall use reasonable best efforts to cause the Shelf to promptly be declared or otherwise become effective under the Securities Act (and in any event such Shelf shall be effective before the expiration of the Lock-Up Period).
(ii) Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall use reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use reasonable efforts to as promptly as is reasonably practicable amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration”) registering the resale from time to time by the Investor thereof of all securities that are Registrable Securities as of the time of such filing. If a Subsequent Shelf Registration is filed, the
Company shall use reasonable efforts to cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an Automatic Shelf Registration Statement if the Company is a Well-Known Seasoned Issuer). Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on Form S-1.
(iii) The Shelf shall provide for the resale of Registrable Securities from time to time, and pursuant to any method or combination of methods legally available to, and requested by, the Investor. The Company shall use reasonable efforts to keep the Shelf continuously effective and usable until there are no longer any Registrable Securities and maintain the Shelf in accordance with the terms hereof, and shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements as may be necessary to keep such Shelf effective and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its reasonable best efforts to convert the Form S-1 Shelf (including any Subsequent Shelf Registration that is a Form S-1 Shelf) to a Form S-3 Shelf as soon as practicable after the Company is eligible to use Form S-3. At any time and from time to time after the Shelf has been declared effective by the SEC, the Investor may request to sell all or any portion of its Registrable Securities in an offering or sale that is registered pursuant to the Shelf (each, a “Shelf Takedown”).
(iv) Requests for Underwritten Shelf Takedowns. All requests for Shelf Takedowns that the Investor elects to take the form of an underwritten offering (each, an “Underwritten Shelf Takedown”) shall be made by giving written notice to the Company (the “Underwritten Shelf Takedown Notice”). Notwithstanding anything to the contrary in this Agreement, the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include either (x) securities with a total offering price (before deduction of underwriting discounts) reasonably expected to exceed $50,000,000 or (y) all remaining Registrable Securities. Each Underwritten Shelf Takedown Notice shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown and the expected price range (net of underwriting discounts and commissions) of such Underwritten Shelf Takedown. The Investor shall have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the Company’s prior approval which shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the delivery of any Underwritten Shelf Takedown Notice, all determinations as to whether to complete any Underwritten Shelf Takedown and as to the timing, manner, price and other terms of any Underwritten Shelf Takedown shall be at the discretion of the Investor. Notwithstanding the foregoing, the Investor shall be entitled to effectuate no more than two (2) Underwritten Shelf Takedowns pursuant to this Agreement.
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(v) Requests for Non-Underwritten Shelf Takedowns. If the Investor desires to effect a Shelf Takedown that does not constitute an Underwritten Shelf Takedown (a “Non-Underwritten Shelf Takedown”), the Investor shall so indicate in a written request delivered to the Company no later than five (5) Business Days prior to the expected date of such Non-Underwritten Shelf Takedown (or such shorter period as the Company may agree), which request shall include (i) the aggregate number and class or classes of Registrable Securities expected to be offered and sold in such Non-Underwritten Shelf Takedown, (ii) the expected plan of distribution of such Non-Underwritten Shelf Takedown and (iii) the action or actions required (including the timing thereof) in connection with such Non-Underwritten Shelf Takedown, and, if necessary, the Company shall use its reasonable best efforts to file and effect an amendment or supplement to its Shelf for such purpose as soon as is reasonably practicable.
(b) Company Undertakings. Whenever Registrable Securities are registered or sold pursuant to this Agreement, the Company shall use its reasonable efforts to effect the registration and the sale of such Registrable Securities as soon as reasonably practicable in accordance with the intended method of disposition thereof and pursuant thereto the Company shall as expeditiously as possible:
(i) at least ten (10) days but no more than fifteen (15) days before filing a Registration Statement or Prospectus or any amendments or supplements thereto, at the Company’s expense, furnish to the Investor copies of all such documents, other than exhibits or documents that are incorporated by reference, proposed to be filed and such other documents reasonably requested by the Investor and provide a reasonable opportunity for review and comment on such documents by the Investor (with respect to information regarding the Investor or the intended plan of distribution);
(ii) use its commercially reasonable efforts to remain a Well-Known Seasoned Issuer (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act));
(iii) notify the Investor in writing of the effectiveness of each Registration Statement and prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective until the date on which all Registrable Securities have been sold under such Registration Statement or have otherwise ceased to be Registrable Securities, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;
(iv) furnish to the Investor, and the managing underwriters, without charge, such number of copies of the applicable Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus, final Prospectus, and any other Prospectus (including any Prospectus filed under Rule 424, Rule 430A or Rule 430B promulgated under the Securities Act and any Free Writing Prospectus)), all exhibits and other documents filed therewith and such other documents as such seller or such managing underwriters may reasonably request including in order to facilitate the disposition of the Registrable Securities owned by such seller, and upon request, a copy of any and all transmittal letters or other correspondence to or received from, the SEC or any other Governmental Entity relating to such offer;
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(v) use all reasonable efforts (x) to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as the Investor reasonably requests, (y) to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and (z) to do any and all other acts and things which may be reasonably necessary or advisable to enable the Investor to consummate the disposition in such jurisdictions of the Registrable Securities owned by it (provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction);
(vi) notify the Investor and its counsel and the managing underwriters on a timely basis: (x) at any time when a Prospectus relating to the applicable Registration Statement is required to be delivered under the Securities Act, (A) upon discovery that, or upon the happening of any event as a result of which, such Registration Statement, or the Prospectus or Free Writing Prospectus relating to such Registration Statement, or any document incorporated or deemed to be incorporated therein by reference contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements in the Registration Statement or the Prospectus or Free Writing Prospectus relating thereto not misleading or otherwise requires the making of any changes in such Registration Statement, Prospectus, Free Writing Prospectus or document, and, at the request of the Investor, the Company shall promptly prepare a supplement or amendment to such Prospectus or Free Writing Prospectus, furnish a reasonable number of copies of such supplement or amendment to the Investor, its counsel and the managing underwriters and file such supplement or amendment with the SEC so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus or Free Writing Prospectus as so amended or supplemented shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (B) as soon as the Company becomes aware of any comments or inquiries by the SEC or any requests by the SEC or any Federal or state Governmental Entity for amendments or supplements to a Registration Statement or related Prospectus or Free Writing Prospectus covering Registrable Securities or for additional information relating thereto, (C) as soon as the Company becomes aware of the issuance or threatened issuance by the SEC of any stop order suspending or threatening to suspend the effectiveness of a Registration Statement covering the Registrable Securities (and use its reasonable efforts to obtain the lifting of any such stop order as soon as reasonably practicable) or (D) promptly upon the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any Registrable Security for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; (y) when each Registration Statement or any amendment thereto has been filed with the SEC and when each Registration Statement or the related Prospectus or Free Writing Prospectus or any Prospectus supplement or any post-effective amendment thereto has become effective; and (z) if at any time the Company has reason to believe that the representations and warranties of the Company contained in any agreement contemplated by Section 1(b)(ix) below relating to any applicable offering cease to be true and correct;
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(vii) use its reasonable best efforts to cause all such Registrable Securities to be listed on the Principal Stock Exchange;
(viii) provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities from and after the effective date of the applicable Registration Statement and deliver to such transfer agent and registrar such customary forms, legal opinions from its outside or in-house legal counsel, agreements and other documentation as such transfer agent and/or registrar so request;
(ix) enter into and perform under such customary agreements (including underwriting agreements in customary form, including customary representations and warranties and provisions with respect to indemnification and contribution) as the Investor or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (and, without limiting the foregoing, the Company shall as expeditiously as possible enter into an agreement with respect to indemnification and contribution in connection with an offering of the type contemplated by Section 1(h));
(x) upon reasonable notice and during normal business hours, make available for inspection and copying by the Investor and its counsel, any underwriter participating in any disposition pursuant to any Registration Statement or Shelf Takedown, and any other attorney, accountant or other agent retained by the Investor or underwriter, all financial and other records and pertinent corporate documents of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information and participate in any due diligence sessions reasonably requested by the Investor, underwriter, attorney, accountant or agent in connection with such Registration Statement or Shelf Takedown, as applicable; provided that recipients of such financial and other records and pertinent corporate documents agree in writing to keep the confidentiality thereof pursuant to a written agreement reasonably acceptable to the Company and the applicable underwriter (which shall contain customary exceptions thereto);
(xi) permit the Investor and its counsel, any underwriter participating in any disposition pursuant to a Registration Statement, and any other attorney, accountant or other agent retained by the Investor or underwriter, to participate (including, but not limited to, reviewing, commenting on and attending all meetings) in the preparation of such Registration Statement and any Prospectus supplements relating to a Shelf Takedown;
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(xii) in the event of the issuance or threatened issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any security included in such Registration Statement for sale in any jurisdiction, the Company shall use all reasonable efforts promptly to (x) prevent the issuance of any such stop order, and in the event of such issuance, to obtain the withdrawal of such order and (y) obtain the withdrawal of any order suspending or preventing the use of any related Prospectus or Free Writing Prospectus or suspending qualification of any Registrable Securities included in such Registration Statement for sale in any jurisdiction at the earliest practicable date;
(xiii) obtain and furnish to the Investor a signed counterpart of (w) a customary cold comfort and bring down letter from the Company’s independent public accountants, (x) a customary legal opinion of counsel to the Company addressed to the relevant underwriters and/or the Investor, in each case in customary form and covering such matters of the type customarily covered by such letters as the managing underwriters and/or the Investor reasonably request, (y) a negative assurances letter of counsel to the Company in customary form and covering such matters of the type customarily covered by such letters as the managing underwriters and/or the Investor, and (z) customary certificates executed by authorized officers of the Company as may be requested by the Investor or any underwriter of such Registrable Securities included in such Shelf Takedown;
(xiv) with respect to each Free Writing Prospectus or other materials to be included in the Disclosure Package, ensure that no Registrable Securities be sold “by means of” (as defined in Rule 159A(b) promulgated under the Securities Act) such Free Writing Prospectus or other materials without the prior written consent of the Investor, which Free Writing Prospectuses or other materials shall be subject to the review of its counsel;
(xv) provide or maintain a CUSIP number for the Registrable Securities prior to the effective date of the first Registration Statement including Registrable Securities;
(xvi) promptly notify in writing the Investor, the sales or placement agent, if any, therefor and the managing underwriters of the securities being sold, (x) when such Registration Statement or related Prospectus or Free Writing Prospectus or any Prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to any such Registration Statement or any post-effective amendment, when the same has become effective and (y) of any written comments by the SEC and by the blue sky or securities commissioner or regulator of any state with respect thereto;
(xvii) prepare and file with the SEC such amendments and supplements to each Registration Statement as (A) reasonably requested by the Investor (to the extent such request related to information relating to it) or (B) may be necessary to comply with the provisions of the Securities Act, including post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period required hereunder, and if applicable, file any Registration Statements pursuant to Rule 462(b) promulgated under the Securities Act; (w) cause the related Prospectus to be supplemented by any required
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Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; (x) comply with the provisions of the Securities Act and the Exchange Act and any applicable securities exchange or other recognized trading market with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; (y) provide additional information related to each Registration Statement as requested by, and obtain any required approval necessary from, the SEC or any Federal or state Governmental Entity; and (z) respond promptly to any comments received from the SEC and request acceleration of effectiveness promptly after it learns that the SEC will not review the Registration Statement or after it has satisfied comments received from the SEC;
(xviii) cooperate with the Investor and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA, including using all reasonable efforts to obtain FINRA’s pre-clearance and pre-approval of the Registration Statement and applicable Prospectus upon filing with the SEC;
(xix) within the deadlines specified by the Securities Act, make all required filing fee payments in respect of any Registration Statement or Prospectus used under this Agreement (and any offering covered thereby);
(xx) if requested by the Investor or the managing underwriters, promptly include in a Prospectus supplement or amendment such information as the Investor or managing underwriters may reasonably request, including in order to permit the intended method of distribution of such securities, and make all required filings of such Prospectus supplement or such amendment as soon as reasonably practicable after the Company has received such request;
(xxi) in the case of certificated Registrable Securities, cooperate with the Investor and the managing underwriters to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from the Investor that the Registrable Securities represented by the certificates so delivered by the Investor will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the Investor or managing underwriters may reasonably request at least two (2) Business Days prior to any sale of Registrable Securities; and
(xxii) use its reasonable efforts to take all other actions necessary or customarily taken by issuers to effect the registration of, and its reasonable efforts to take all other actions necessary to effect the sale of, the Registrable Securities contemplated hereby.
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(c) Registration Expenses. All Registration Expenses shall be borne by the Company. All Selling Expenses relating to Registrable Securities registered shall be borne by the Investor.
(d) Indemnification and Contribution.
(i) Indemnification by the Company. The Company agrees to indemnify and hold harmless the Investor and its Affiliates, directors, officers, employees, members, managers and agents and each Person who controls the Investor within the meaning of either the Securities Act or the Exchange Act, to the fullest extent permitted by applicable Law, from and against any losses, claims, expenses, damages and liabilities of whatever kind (including legal or other expenses reasonably incurred in connection with investigating, preparing or defending same and the cost of enforcing any right to indemnification hereunder) (collectively, “Losses”) to which they or any of them may become subject insofar as such Losses (or actions in respect thereof) arise out of or are based upon (x) any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement as originally filed or in any amendment thereof, or the Disclosure Package, or any preliminary, final or summary Prospectus or Free Writing Prospectus included in any such Registration Statement, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (y) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other federal Law, any state or foreign securities Law, or any rule or regulation promulgated under of the foregoing Laws, relating to the offer or sale of the Registrable Securities, and in any such case, the Company agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating, preparing or defending any such Loss, claim, damage, liability, action or investigation (whether or not the indemnified party is a party to any proceeding); provided, however, that the Company will not be liable in any case to the extent that any such Loss arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information relating to the Investor furnished to the Company by or on behalf of the Investor specifically for inclusion therein, including any notice and questionnaire. This indemnity agreement will be in addition to any liability which the Company may otherwise have.
(ii) Indemnification by the Investor. The Investor agrees to indemnify and hold harmless the Company and each of its Affiliates, directors, employees, members, managers and agents and each Person who controls the Company within the meaning of either the Securities Act or the Exchange Act, to the fullest extent permitted by applicable Law, from and against any and all Losses to which they or any of them may become subject insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement as originally filed or in any amendment thereof, or in the Disclosure Package or any Investor Free Writing Prospectus, preliminary, final or summary Prospectus included in any such Registration Statement, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein
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a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that any such untrue statement or alleged untrue statement or omission or alleged omission is contained in any written information relating to the Investor furnished to the Company by or on behalf the Investor specifically for inclusion therein; provided, however, that the total amount to be indemnified by the Investor pursuant to this Section 1(d)(ii) shall be limited to the net proceeds (after deducting underwriters’ discounts and commissions) received by the Investor in the offering to which such Registration Statement or Prospectus relates; provided, further, that the Investor shall not be liable in any case to the extent that prior to the filing of any such Registration Statement or Disclosure Package, or any amendment thereof or supplement thereto, it has furnished in writing to the Company, information expressly for use in, and within a reasonable period of time prior to the effectiveness of such Registration Statement or Disclosure Package, or any amendment thereof or supplement thereto which corrected or made not misleading information previously provided to the Company. This indemnity agreement will be in addition to any liability which the Investor may otherwise have.
(iii) Notification. If any Person shall be entitled to indemnification under this Section 1(d) (each, an “Indemnified Party”), such Indemnified Party shall give prompt notice to the party required to provide indemnification (each, an “Indemnifying Party”) of any claim or of the commencement of any proceeding as to which indemnity is sought. The Indemnifying Party shall have the right, exercisable by giving written notice to the Indemnified Party as promptly as reasonably practicable after the receipt of written notice from such Indemnified Party of such claim or proceeding, to assume, at the Indemnifying Party’s expense, the defense of any such claim or litigation, with counsel reasonably satisfactory to the Indemnified Party and, after notice from the Indemnifying Party to such Indemnified Party of its election to assume the defense thereof, the Indemnifying Party will not (so long as it shall continue to have the right to defend, contest, litigate and settle the matter in question in accordance with this Section 1(d)(iii)) be liable to such Indemnified Party hereunder for any legal expenses and other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof; provided, however, that an Indemnified Party shall have the right to employ separate counsel in any such claim or litigation, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless the Indemnifying Party shall have failed within a reasonable period of time to assume such defense and the Indemnified Party is or would reasonably be expected to be materially prejudiced by such delay. The failure of any Indemnified Party to give notice as provided herein shall relieve an Indemnifying Party of its obligations under this Section 1(d) only to the extent that the failure to give such notice is materially prejudicial or harmful to such Indemnifying Party’s ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the prior written consent of each Indemnified Party (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. The indemnity agreements contained in this Section 1(d) shall not apply to amounts paid in settlement of any claim, loss, damage, liability or action if such settlement is effected without the prior written consent of the
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Indemnifying Party, which consent shall not be unreasonably withheld or delayed. The indemnification set forth in this Section 1(d) shall be in addition to any other indemnification rights or agreements that an Indemnified Party may have. An Indemnifying Party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such Indemnifying Party with respect to such claim, unless in the reasonable judgment of any Indemnified Party a conflict of interest may exist between such Indemnified Party and any other Indemnified Parties with respect to such claim.
(iv) Contribution. If the indemnification provided for in this Section 1(d) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party, other than pursuant to its terms, with respect to any Losses or action referred to therein, then, subject to the limitations contained in this Section 1(d), the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and the Indemnified Party, on the other, in connection with the actions, statements or omissions that resulted in such Losses or action, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made (or omitted) by, or relates to information supplied by such Indemnifying Party or such Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission. The Company and the Investor agree that it would not be just and equitable if contribution pursuant to this Section 1(d)(iv) was determined solely upon pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding sentence of this Section 1(d)(iv). Notwithstanding the foregoing, the amount the Investor will be obligated to contribute pursuant to this Section 1(d)(iv) will be limited to an amount equal to the net proceeds received by the Investor in respect of the Registrable Securities sold pursuant to the registration statement which gives rise to such obligation to contribute. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
(e) Rule 144. With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act, the Company covenants that it will (x) make and keep available such information as is necessary to make Rule 144 available with respect to resales of the Registrable Securities under the Securities Act, at all times, (y) file with the Commission in a timely manner all reports and other documents required of the Company under the Exchange Act and (z) take such further action as the Investor may reasonably request, all to the extent required from time to time to enable it to sell Registrable Securities without registration under the Securities Act pursuant to the exemption provided by Rule 144 promulgated under the Securities Act, as such rule may be amended from time to time. Upon the reasonable request of the Investor, the Company will deliver to it a written statement as to
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whether it has complied with such requirements, and, if not, the specific reasons for non-compliance. The Company shall, in connection with any request by the Investor in connection with a sale, transfer or other disposition by the Investor of any Registrable Securities (whether pursuant to Rule 144 or in a registered offering) either currently or with unspecified timing, to promptly (and in no event longer than five (5) Business Days after such request) (i) cause the removal of any restrictive legend or similar restriction on the Registrable Securities, and, in the case of book-entry shares, make or cause to be made appropriate notifications on the books of the Company’s transfer agent for such number of shares and registered in such names as the Investor may reasonably request and (ii) provide a customary opinion of counsel and instruction letter required by the Company’s transfer agent.
(f) Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, the Investor shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration Statement at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Investor, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than 75 days, determined in good faith by the Board to be necessary for such purpose; provided that such right to delay or suspend shall be exercised by the Company not more than two times, which may be consecutive, in any 12-month period, but shall not be for more than 120 days in the aggregate in any 12-month period. In the event the Company exercises its rights under the preceding sentence, the Investor agrees to suspend, immediately upon their receipt of the notice referred to above, its use of the Prospectus relating to any sale or offer to sell Registrable Securities. The Company shall immediately notify the holders of Registrable Securities of the expiration of any period during which it exercised its rights under this Section 1(f).
(g) Restrictions on Transfer. In connection with any underwritten offering of equity securities of the Company (other than an offering pursuant to this Agreement), the Investor agrees that it shall not, and it shall cause its Affiliates not to, transfer any equity securities of the Company, or any rights or interests therein, without the prior written consent of the Company, during the seven days prior to and the 90-day period beginning on the date of pricing of such offering, except in the event the underwriter managing the offering otherwise agrees by written consent. The Investor agrees to execute a customary lock-up agreement in favor of the underwriters of such offering to such effect. The Investor’s obligations under the foregoing provisions of this Section 1(g) shall only apply for so long as the Investor (together with its Affiliates) holds at least 5% of the issued and outstanding shares of Common Stock (calculated on an as converted basis). The Investor shall not be required to enter into any restriction on transfer under this Section 1(g) unless the Company’s shareholders holding more than 5% of the Common Stock and its officers and directors agree to restrictions on transfer in connection with such offering that are at least as restrictive as those to be entered into by the Investor. In the event that the underwriter of such offering releases any other party from such restrictions on transfer prior to the expiration of such restrictions, any restrictions on transfer entered into by the Investor pursuant to this Section 1(g) shall automatically terminate.
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(h) Broker-Assisted Offerings. Upon Investor’s request, any registered offering involving a broker or other banking or financial institution or intermediary shall be treated as an underwritten offering hereunder whether or not such broker or other financial institution or intermediary is acting as an underwriter in connection with such offering, in which case Investor shall have all the rights associated with underwritten offerings hereunder (and such broker or other banking or financial institution or intermediary shall be treated as an underwriter hereunder in connection with such offering (each, a “Broker-Assisted Offering”), whether or not it is acting as an underwriter) in connection with such Broker-Assisted Offering ; provided, that, notwithstanding anything to the contrary in this Agreement, the Investor shall be permitted to conduct up to one (1) Broker-Assisted Offering during each fiscal quarter; provided, further, that the Company shall not be required to provide the assistance in connection with a Broker-Assisted Offering contemplated by this Section 1(h) that is a Block Trade (as defined in the Investor Rights Agreement) unless it is executed outside of the Company’s then generally applicable blackout period with respect to sales of Company securities by the Company and its directors and officers. Upon request by the Investor, the Company shall use commercially reasonable efforts to prepare in advance of any Broker-Assisted Offering permitted hereunder and cooperate with Investor and its broker or other banking or financial institution or intermediary so that offers and sales can commence promptly after notice of the intent to undertake such Broker-Assisted Offering is received from Investor. For the avoidance of doubt, Section 1(g) shall not apply to any Broker-Assisted Offering requested by Investor.
(i) Termination. The right of Investor to request registration or inclusion of Registrable Securities in any registration pursuant to this Section 1 shall terminate upon a Change of Control.
Section 2. Definitions.
“Activist” means, as of any date of determination, any Person identified on the most recently available “SharkWatch 50” list (or, if “SharkWatch 50” is no longer available, then the prevailing comparable list as reasonably determined by the Company), or any Person who, to the knowledge of the Investor, after reasonable inquiry, is an Affiliate of such Person.
“Adverse Disclosure” means any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Board (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the Company has a bona fide business purpose for not making such information public.
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“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, directly or indirectly controlled by, or under direct or indirect common control with, such Person or a member of such Person’s immediate family; provided that, with respect to the Investor and its Affiliates, “Affiliate” shall not include Searchlight Capital Partners, L.P. or any portfolio company (other than Mitel Networks (International) Limited and its Subsidiaries (collectively, the “Mitel Entities”)) or investment fund, vehicle or similar entity affiliated with Searchlight Capital Partners, L.P., other than for purposes of Section 1(d) (Indemnification and Contribution), Section 1(g) (Restrictions on Transfer), Section 8 (Specific Performance; Remedies), Section 12 (Assignment), or the definition of “Registrable Securities”; provided, further, that the Investor and its Affiliates shall be deemed not to be an Affiliate of the Company or any of its Subsidiaries and the Company and its Subsidiaries shall not be deemed to be Affiliates of the Investor or any of its Affiliates. For purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning set forth in the preamble hereto.
“Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined in Rule 405 promulgated under the Securities Act.
“beneficially own” or “beneficial ownership” have the meanings specified in Rule 13d-3 promulgated under the Exchange Act, including the provision that any member of a “group” will be deemed to have beneficial ownership of all securities beneficially owned by other members of the group, and a Person’s beneficial ownership of securities will be calculated in accordance with the provisions of such Rule; provided, however, that a Person will be deemed to be the beneficial owner of any security which may be acquired by such Person whether within sixty (60) days or thereafter, upon the conversion, exchange or exercise of any rights, options, warrants or similar securities to subscribe for, purchase or otherwise acquire (x) capital stock of any Person or (y) securities directly or indirectly convertible into, or exercisable or exchangeable for, such capital stock of such Person.
“Board” means the board of directors of the Company.
“Business Day” means any day except a Saturday, a Sunday or other day on which the SEC or banking institutions in New York, New York or San Francisco, California are authorized or required by law, regulation or executive order to be closed.
“Certificate of Designations” means the Certificate of Designations for the Series A Preferred Stock.
“Change of Control” means any transaction or series of related transactions involving (i) any direct or indirect purchase or other acquisition by any un-Affiliated Person or the equityholders of such Person, whether from the Company or any other Person(s), of securities representing more than 50% of the total outstanding voting power of the Company
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after giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any Person that, if consummated in accordance with its terms, would result in such Person beneficially owning more than 50% of the total outstanding voting power of the Company after giving effect to the consummation of such tender or exchange offer; (ii) any direct or indirect purchase or other acquisition by, or license or grant of other quasi-ownership or similar interest to, any Person or the equityholders of such Person of, in, or to more than 50% of (a) the consolidated assets or (b) consolidated revenues, in each case, of the Company and its Subsidiaries taken as a whole (measured by the fair market value thereof as of the date of such purchase or acquisition); or (iii) any merger, consolidation, business combination, recapitalization, reorganization, or other transaction involving the Company or any of its Subsidiaries pursuant to which any Person would hold securities representing more than 50% of the total outstanding voting power of the Company or of the surviving or resulting entity of such transaction after giving effect to the consummation of such transaction.
“Class A Common Stock” means the Company’s Class A Common Stock, par value $0.0001 per share.
“Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of the Company.
“Common Stock” means, collectively, the Class A Common Stock and the Class B Common Stock.
“Company” has the meaning set forth in the preamble hereto.
“Disclosure Package” means, with respect to any offering of securities, (i) the preliminary Prospectus, (ii) the price to the public and the number of securities included in the offering, (iii) each Free Writing Prospectus and (iv) all other information that is deemed, under Rule 159 promulgated under the Securities Act, to have been conveyed to purchasers of securities at the time of sale of such securities (including a contract of sale).
“Distressed Investor” means (a) any Person known by Investor, after reasonable inquiry, to be a loan to own fund, vulture fund, distressed debt fund or any other entity (including a business group within a bank or financial institution) which is established for the principal purpose of investing in, or which principally invests in, distressed debt and (b) any Person whose controlling Affiliate is known by Investor, after reasonable inquiry, to be a “Distressed Investor” under clause (a) of this sentence.
“Effective Date” has the meaning set forth in the preamble hereto.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“FINRA” means the Financial Industry Regulatory Authority.
“Form S-1 Shelf” has the meaning set forth in Section 1(a)(i).
“Form S-3 Shelf” has the meaning set forth in Section 1(a)(i).
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“Free Writing Prospectus” means any “free writing prospectus” as defined in Rule 405 promulgated under the Securities Act.
“Indemnified Party” has the meaning set forth in Section 1(d)(iii).
“Indemnifying Party” has the meaning set forth in Section 1(d)(iii).
“Investment Agreement” has the meaning set forth in the recitals hereto.
“Investor” has the meaning set forth in the preamble hereto.
“Investor Rights Agreement” means that certain Investor Rights Agreement, dated as of the date hereof, by and between the Company and the Investor.
“Investor Free Writing Prospectus” means each Free Writing Prospectus prepared by or on behalf of the Investor or used or referred to by the Investor in connection with the offering of Registrable Securities.
“Joinder” has the meaning set forth in Section 12.
“Law” means any federal, national, state, county, municipal, provincial, local, foreign or multinational, treaty, statute, constitution, common law, ordinance, code, decree, order, judgment, rule, regulation, ruling, published policy or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity and any award, order or decision of an arbitrator or arbitration panel with jurisdiction over the parties and subject matter of the dispute.
“Lock-Up Period” means the period commencing on the Effective Date and continuing until the date that is eighteen (18) months following the Effective Date.
“Losses” has the meaning set forth in Section 1(d)(i).
“Misstatement” means an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus, in the light of the circumstances under which they were made, not misleading.
“Mitel Entities” has the meaning set forth in the definition of “Affiliate”.
“Non-Underwritten Shelf Takedown” has the meaning set forth in Section 1(a)(v).
“NYSE” means the New York Stock Exchange.
“Permitted Transferee” has the meaning set forth in the Investor Rights Agreement.
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“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or Governmental Entity or other entity.
“Principal Stock Exchange” means the NYSE or, if the NYSE is not the principal market for the Class A Common Stock, then the principal securities exchange or securities market on which the Class A Common Stock are then traded.
“Prospectus” means the prospectus used in connection with a Registration Statement.
“Registrable Securities” means, at any time, (i) any shares of Class A Common Stock issuable or issued upon conversion of the Preferred Shares held or beneficially owned by the Investor, its Affiliates or its transferees in accordance with the Investor Rights Agreement and (ii) any securities issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend, stock split, recapitalization or other distribution with respect to, or in exchange for, or in replacement of, the Registrable Securities described in clause (i) above; provided, however, that as to any Registrable Securities, such securities shall cease to constitute Registrable Securities upon the earliest to occur of: (i) the date on which such securities are disposed of pursuant to an effective registration statement under the Securities Act; and (ii) the date on which such securities cease to be outstanding; provided, further, that Registrable Securities shall not include securities that may be resold without restriction under Rule 144.
“Registration Expenses” means all expenses (other than underwriting discounts and commissions) arising from or incident to the registration of Registrable Securities in compliance with this Agreement, including:
(i) stock exchange, SEC, FINRA and other registration and filing fees,
(ii) all fees and expenses incurred in connection with complying with any securities or blue sky laws (including fees, charges and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses,
(iv) the fees, charges and disbursements of counsel to the Company and of its independent public accountants and any other accounting and legal fees, charges and expenses incurred by the Company (including any expenses arising from any special audits or “comfort letters” required in connection with or incident to any sale of Registrable Securities pursuant to a registration),
(v) the fees and expenses incurred in connection with the listing of the Registrable Securities on the Principal Stock Exchange,
(vi) the fees and expenses incurred in connection with any “road show” for underwritten offerings, including travel expenses, and
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(vii) reasonable and documented out-of-pocket fees, charges and disbursements of one counsel to the Investor, including, for the avoidance of doubt, any expenses of counsel of the Investor in connection with the filing or amendment of any Registration Statement, Prospectus or Free Writing Prospectus hereunder (provided that in no event shall such fees, charges and disbursements of counsel exceed $50,000);
provided that in no instance shall Registration Expenses include Selling Expenses.
“Registration Statement” means any registration statement filed hereunder.
“Relevant Matters” has the meaning set forth in Section 7(a).
“Rule 144” means Rule 144 promulgated under the Securities Act and any successor provision.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended from time to time.
“Selling Expenses” means the underwriting fees, discounts, selling commissions and stock transfer taxes applicable to all Registrable Securities registered by the Investor and legal expenses not included within the definition of Registration Expenses.
“Series A Preferred Stock” has the meaning set forth in the recitals hereto.
“Shelf” has the meaning set forth in Section 1(a)(i).
“Shelf Registration” means a registration of securities pursuant to a registration statement filed with the SEC in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).
“Shelf Takedown” has the meaning set forth in Section 1(a)(i).
“Subsequent Shelf Registration” has the meaning set forth in Section 1(a)(ii).
“Subsidiary” has the meaning set forth in the Investment Agreement.
“Transaction Documents” means this Agreement, the Investor Rights Agreement, the Investment Agreement and the Certificate of Designations.
“Transfer” means any sale, transfer, assignment, pledge, or other disposition of (whether with or without consideration and whether voluntary or involuntary or by operation of law).
“Underwritten Shelf Takedown” has the meaning set forth in Section 1(a)(iii).
“Underwritten Shelf Takedown Notice” has the meaning set forth in Section 1(a)(iii).
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“Well-Known Seasoned Issuer” means a “well-known seasoned issuer” as defined in Rule 405 promulgated under the Securities Act and which (i) is a “well-known seasoned issuer” under paragraph (1)(i)(A) of such definition or (ii) is a “well-known seasoned issuer” under paragraph (1)(i)(B) of such definition and is also eligible to register a primary offering of its securities relying on General Instruction I.B.1 of Form S-3 or Form F-3 under the Securities Act.
Section 3. Notices. All notices, requests, permissions, waivers or other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered by hand or sent by electronic mail, or sent, postage prepaid, by registered, certified or express mail or overnight courier service and shall be deemed given when so delivered by hand, by electronic mail (which is confirmed), or if mailed, three days after mailing (one (1) Business Day in the case of express mail or overnight courier service) to the parties at the following addresses (or at such other address or facsimile for a party as shall be specified by like notice).
| (a) | If to the Company: |
RingCentral, Inc.
20 Davis Drive
Belmont, CA 94002
Attn: John Marlow, Chief Administrative Officer, General Counsel and Senior Vice President of Corporate Development
Email: johnm@ringcentral.com
with a copy (which copy alone shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
United States
Attn: Jeffrey D. Saper
Email: jsaper@wsgr.com
and
Wilson Sonsini Goodrich & Rosati, P.C.
One Market Plaza
Spear Tower, Suite 3300
San Francisco, CA 94105
United States
Attn: Mark Baudler & Rich Mullen
Email: mbaudler@wsgr.com & rich.mullen@wsgr.com
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| (b) | If to the Investor: |
Searchlight II MLN, L.P.
c/o Searchlight Capital Partners, L.P.
745 Fifth Avenue, 27th Floor
Attn: Nadir Nurmohamed
Email: nnurmohamed@searchlightcap.com
with a copy (which copy alone shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Steven A. Cohen
Victor Goldfeld
Email: SACohen@wlrk.com
VGoldfeld@wlrk.com
Section 4. Amendments, Waivers, etc. This Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed by the party against whom such amendment or waiver shall be enforced. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, shall not constitute a waiver by such party of its right to exercise any such other right, power or remedy or to demand such compliance.
Section 5. Counterparts and Facsimile. This Agreement may be executed in two or more identical counterparts (including by facsimile or electronic transmission), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered (by facsimile, electronic transmission or otherwise) to the other parties.
Section 6. Further Assurances. Each party hereto shall execute and deliver after the Effective Date such further certificates, agreements and other documents and take such other actions as any other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and to consummate or implement the transactions contemplated by this Agreement.
Section 7. Applicable Law; Arbitration; Jury Waiver.
(a) This Agreement, and all claims, causes of action (whether in contract, tort or statute) or other matter that may result from, arise out of, or be in connection with or relating to this Agreement, or the negotiation, administration, performance, or enforcement of this Agreement, including any claim or cause of action resulting from, arising out of, in connection with, or relating to any representation or warranty made in connection with this Agreement (the “Relevant Matters”), shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, including its statutes of limitations, regardless of the laws that might otherwise govern under any applicable principles of conflicts of laws that would result in the application of any such other law. For the avoidance of doubt, neither the U.N. Convention on Contracts for the International Sale of Goods nor any international treaties that would require the application of the laws of any jurisdiction other than the State of Delaware shall be applicable to any Relevant Matter.
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(b) Any dispute, claim, or cause of action (whether based on contract, tort, or otherwise) that may result from, arise out of, be in connection with or relating to any Relevant Matters shall be finally settled by binding arbitration in New York, New York and shall be administered by the Judicial Arbitration and Mediation Services, Inc. pursuant to its Comprehensive Arbitration Rules and Procedures then in effect by three arbitrators, with each of the Company and the Investor being entitled to appoint one arbitrator, and the third arbitrator to be nominated by such first two arbitrators (or, if such an agreement is not reached, with the third arbitrator (and any other arbitrator that a party fails to appoint) being appointed in accordance with such Rules). The language of the arbitration shall be English and all written materials in connection with such arbitration, including but not limited to all pleadings and evidence, shall be in the English language. The arbitrators shall apply the laws of the State of Delaware to the merits of any such dispute, claim, or cause of action (whether in contract, tort, or statute) in accordance with Section 7(a). The arbitrators shall have the power to decide all questions of arbitrability. The arbitrators shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding. At the request of either party, the arbitrators will enter an appropriate protective order to maintain the confidentiality of information produced or exchanged in the course of the arbitration proceedings. The award must be in writing and state the reasons on which it is based. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Notwithstanding anything to the contrary in this Section 7(b), any party hereto may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief without breach of this Section 7(b) and without any abridgment of the powers of the arbitrators in the event of acts or breaches of this Agreement that such party believes may cause irreparable harm or with respect to which such party believes monetary damages would not provide adequate compensation.
(c) EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS, OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT, OR ANY OTHER RELEVANT MATTER.
(d) The arbitrators may award to the prevailing party, if any, as determined by the arbitrators, its reasonable costs and fees incurred in connection with any arbitration or related judicial proceeding hereunder. Cost and fees awarded may include, without limitation, administrative fees, arbitrator fees, attorneys’ fees, expert fees, witness fees, court costs, travel expenses, and out-of-pocket expenses (including, without limitation, such expenses as copying, telephone, facsimile, postage, and courier fees).
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Section 8. Specific Performance; Remedies. The parties agree that, in the event of any breach or threatened breach by a party of this Agreement, (i) the other party shall be entitled, without proof of actual damages (and in addition to any other remedy that may be available to it), to a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other agreement and an injunction preventing or restraining such breach or threatened breach, and (ii) no party shall be required to provide or post any bond or other security or collateral in connection with any such decree, order or injunction or in connection with any related action or legal proceeding. Any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. Notwithstanding the foregoing, this Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are signatories hereto, and no former, current or future equityholders, controlling persons, directors, officers, employees, agents or Affiliates of any party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent or Affiliate of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities hereunder or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or any representations made or alleged to be made in connection herewith or any breach of or failure to comply with this Agreement, whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil, by or through a claim by or on behalf of the Company against the Investor or any Non-Recourse Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its equityholders, controlling persons, directors, officers, employees, agents or Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party in connection with this Agreement.
Section 9. Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. 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. The words “date hereof” shall refer to the date of this Agreement. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and shall not simply mean “if”. All references to “$” mean the lawful currency of the United States of America. 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. Except as specifically stated herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Except as otherwise specified herein, references to a
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Person are also to its successors and permitted assigns. Each of the parties hereto has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
Section 10. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced because of any Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 11. Third-Party Beneficiaries. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties any rights, remedies, obligations or liabilities under or by reason of this Agreement, and no Person that is not a party to this Agreement (including any partner, member, stockholder, director, officer, employee or other beneficial owner of any party, in its own capacity as such or in bringing a derivative action on behalf of a party) shall have any standing as third-party beneficiary with respect to this Agreement or the other Transaction Documents.
Section 12. Assignment. Except as otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by either of the parties without the prior written consent of the other party, except that the Investor may transfer or assign its rights under this Agreement, in whole or in part, to one or more of its Affiliates or other Permitted Transferees at any time in connection with any Transfer thereto permitted under this Agreement or the Investor Rights Agreement; provided, that such Affiliate or other Permitted Transferee has delivered to the Company a written joinder in the form set forth in Exhibit A executed by such Person (a “Joinder”).
Section 13. Entire Agreement. This Agreement, together with the other Transaction Documents, constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof and thereof. The Company represents and warrants that it has not entered into, and agrees that it will not enter into, any agreement with respect to its securities that violates or is otherwise inconsistent with the rights granted to the Investor under this Agreement.
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Section 14. Acknowledgment of Securities Laws. The Investor hereby acknowledges that it is aware, and that it will advise its Affiliates and Representatives who are provided material non-public information concerning the Company or its securities, that the United States securities Laws prohibit any Person who has received from an issuer material, non-public information from purchasing or selling securities of such issuer or from communication of such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities.
Section 15. Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement shall impair any such right, power, or remedy of such party, nor shall it be construed to be a waiver of or acquiescence to any breach or default, or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default. All remedies, either under this Agreement or by law or otherwise afforded to the Investor, shall be cumulative and not alternative.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
| Company: | ||
| RINGCENTRAL, INC. | ||
| By: | /s/ | |
| Name: | John Marlow | |
| Title: | Chief Administrative Officer | |
| Investor: | ||
| SEARCHLIGHT II MLN, L.P. | ||
| By: | /s/ | |
| Name: | Andrew Frey | |
| Title: | Authorized Person | |
Exhibit A
Joinder
This Joinder to the Registration Rights Agreement (this “Joinder”) is made as of _________________, ______ by and between RingCentral, Inc., a Delaware corporation (the “Company”) and _____________________________________________ (the “Transferee”) pursuant to the terms of that certain Registration Rights Agreement, made and entered into as of November 8, 2021 and effective as of November 9, 2021, by and between the Company and Searchlight II MLN, L.P. (the “Investor”). Capitalized terms used and not otherwise defined in this Joinder shall have the respective meanings ascribed to them in the Registration Rights Agreement.
1. Effect of Execution. By execution of this Joinder, the Transferee hereby:
(a) acknowledges receipt and review of the Registration Rights Agreement;
(b) represents that he, she or it has, or has had an opportunity to, consult with legal counsel and other advisors before entering into the Registration Rights Agreement;
(c) adopts and agrees to become party to the Registration Rights Agreement and to be bound by all of the terms and conditions set forth in the Registration Rights Agreement as the “Investor” with the same force and effect as if the undersigned were originally the “Investor” party thereto; provided, that, for purposes of the definition of “Affiliate,” each reference to Searchlight Capital Partners, L.P. shall be deemed a reference to the Transferee; and
(d) further authorizes the Company and the Investor to attach this Joinder to the Registration Rights Agreement and take such other actions as necessary in order to make the undersigned a party to the Registration Rights Agreement.
2. Counterparts and Facsimile. This Joinder may be executed in two or more identical counterparts (including by facsimile or electronic transmission), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered (by facsimile, electronic transmission or otherwise) to the other parties.
3. Notice. Any notice required or permitted by the Registration Rights Agreement shall be given to the undersigned at the address listed beside the Transferee’s signature below.
4. Governing Law. This Joinder, and all rights, obligations, claims, causes of action (whether in contract, tort or statute) or other matter that may result from, arise out of, be in connection with or relating to this Joinder, or the negotiation, administration, performance, or enforcement of this Joinder, shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof, including its statutes of limitations.
[Signature page follows]
The parties hereto have executed this Joinder to the Registration Rights Agreement as of the date set forth in the first paragraph hereof.
| COMPANY: | ||
| RINGCENTRAL, INC. | ||
| By: |
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| Name: |
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| Title: |
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| TRANSFEREE: | ||
| By: |
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| (if applicable) | ||
| Its: |
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| (if applicable) | ||
| By: |
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| (signature) | ||
| Name: ____________________________________ |
| Title: _____________________________________ |
| Address: __________________________________ |
| ___________________________________ |
| Email: _____________________________________ |
Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is made and entered into as of November 8, 2021 and effective as of November 9, 2021 (the “Effective Date”), between RingCentral, Inc., a Delaware corporation (the “Company”), and Mitel US Holdings, Inc. (the “Stockholder”).
WHEREAS, the Stockholder and the Company have entered into that certain Purchase and Sale Agreement by and among the Stockholder, Mitel Networks (International) Limited (solely for the purposes set forth therein), and the Company (the “Purchase and Sale Agreement”) and that certain Framework Agreement by and among the Company, the Stockholder, Mitel Networks (International) Limited (solely for the purposes set forth therein) and Mitel Networks, Inc. (the “Framework Agreement”), pursuant to each of which the Stockholder will receive shares of Class A Common Stock, par value $0.0001 per share, of the Company (“Class A Common Stock”); and
WHEREAS, the parties desire to enter into this Agreement to provide for certain rights and obligations of the parties following the consummation of the transactions contemplated by the Purchase and Sale Agreement, the Framework Agreement and the other Transaction Documents.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
Section 1. Registration Rights.
(a) Shelf Registration.
(i) Filing. The Company shall file as promptly as reasonably practicable, and in any event within ten (10) Business Days of the Effective Date, a Registration Statement for a Shelf Registration on Form S-3 (the “Form S-3 Shelf”) (it being agreed that the Form S-3 Shelf shall be an Automatic Shelf Registration Statement if the Company is a Well-Known Seasoned Issuer) or, if the Company is ineligible to use a Form S-3 Shelf, a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf” and, together with the Form S-3 Shelf (and any Subsequent Shelf Registration), the “Shelf”) covering the resale of the Registrable Securities on a delayed or continuous basis. If such Shelf is not immediately effective, the Company shall use reasonable best efforts to cause the Shelf to promptly be declared or otherwise become effective under the Securities Act (and in any event such Shelf shall be effective before the date that is ten (10) Business Days after the Effective Date).
(ii) Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall use reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use reasonable efforts to as promptly as is reasonably practicable
amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration”) registering the resale from time to time by the Stockholder thereof of all securities that are Registrable Securities as of the time of such filing. If a Subsequent Shelf Registration is filed, the Company shall use reasonable efforts to cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an Automatic Shelf Registration Statement if the Company is a Well-Known Seasoned Issuer). Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on Form S-1.
(iii) The Shelf shall provide for the resale of Registrable Securities from time to time, and pursuant to any method or combination of methods legally available to, and requested by, the Stockholder. The Company shall use reasonable efforts to keep the Shelf continuously effective and usable until there are no longer any Registrable Securities and maintain the Shelf in accordance with the terms hereof, and shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements as may be necessary to keep such Shelf effective and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its reasonable best efforts to convert the Form S-1 Shelf (including any Subsequent Shelf Registration that is a Form S-1 Shelf) to a Form S-3 Shelf as soon as practicable after the Company is eligible to use Form S-3. At any time and from time to time after the Shelf has been declared effective by the SEC, the Stockholder may request to sell all or any portion of its Registrable Securities in an offering or sale that is registered pursuant to the Shelf (each, a “Shelf Takedown”).
(iv) Requests for Underwritten Shelf Takedowns. All requests for Shelf Takedowns that the Stockholder elects to take the form of an underwritten offering (each, an “Underwritten Shelf Takedown”) shall be made by giving written notice to the Company (the “Underwritten Shelf Takedown Notice”). Notwithstanding anything to the contrary in this Agreement, the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include either (x) securities with a total offering price (before deduction of underwriting discounts) reasonably expected to exceed $50,000,000 or (y) all remaining Registrable Securities. Each Underwritten Shelf Takedown Notice shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown and the expected price range (net of underwriting discounts and commissions) of such Underwritten Shelf Takedown. The Stockholder shall have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the Company’s prior approval which shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the delivery of any Underwritten Shelf Takedown Notice, all determinations as to whether to complete any Underwritten Shelf Takedown and as to the timing, manner, price and other terms of any Underwritten Shelf Takedown shall be at the discretion of the Stockholder.
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Notwithstanding the foregoing, the Stockholder shall be entitled to effectuate no more than two (2) Underwritten Shelf Takedowns pursuant to this Agreement.
(v) Requests for Non-Underwritten Shelf Takedowns. If the Stockholder desires to effect a Shelf Takedown that does not constitute an Underwritten Shelf Takedown (a “Non-Underwritten Shelf Takedown”), the Stockholder shall so indicate in a written request delivered to the Company no later than five (5) Business Days prior to the expected date of such Non-Underwritten Shelf Takedown (or such shorter period as the Company may agree), which request shall include (i) the aggregate number and class or classes of Registrable Securities expected to be offered and sold in such Non-Underwritten Shelf Takedown, (ii) the expected plan of distribution of such Non-Underwritten Shelf Takedown and (iii) the action or actions required (including the timing thereof) in connection with such Non-Underwritten Shelf Takedown, and, if necessary, the Company shall use its reasonable best efforts to file and effect an amendment or supplement to its Shelf for such purpose as soon as is reasonably practicable.
(b) Company Undertakings. Whenever Registrable Securities are registered or sold pursuant to this Agreement, the Company shall use its reasonable efforts to effect the registration and the sale of such Registrable Securities as soon as reasonably practicable in accordance with the intended method of disposition thereof and pursuant thereto the Company shall as expeditiously as possible:
(i) at least ten (10) days but no more than fifteen (15) days before filing a Registration Statement or Prospectus or any amendments or supplements thereto, at the Company’s expense, furnish to the Stockholder copies of all such documents, other than exhibits or documents that are incorporated by reference, proposed to be filed and such other documents reasonably requested by the Stockholder and provide a reasonable opportunity for review and comment on such documents by the Stockholder (with respect to information regarding the Stockholder or the intended plan of distribution);
(ii) use its commercially reasonable efforts to remain a Well-Known Seasoned Issuer (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act));
(iii) notify the Stockholder in writing of the effectiveness of each Registration Statement and prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective until the date on which all Registrable Securities have been sold under such Registration Statement or have otherwise ceased to be Registrable Securities, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;
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(iv) furnish to the Stockholder, and the managing underwriters, without charge, such number of copies of the applicable Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus, final Prospectus, and any other Prospectus (including any Prospectus filed under Rule 424, Rule 430A or Rule 430B promulgated under the Securities Act and any Free Writing Prospectus)), all exhibits and other documents filed therewith and such other documents as such seller or such managing underwriters may reasonably request including in order to facilitate the disposition of the Registrable Securities owned by such seller, and upon request, a copy of any and all transmittal letters or other correspondence to or received from, the SEC or any other Governmental Entity relating to such offer;
(v) use all reasonable efforts (x) to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as the Stockholder reasonably requests, (y) to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and (z) to do any and all other acts and things which may be reasonably necessary or advisable to enable the Stockholder to consummate the disposition in such jurisdictions of the Registrable Securities owned by it (provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction);
(vi) notify the Stockholder and its counsel and the managing underwriters on a timely basis: (x) at any time when a Prospectus relating to the applicable Registration Statement is required to be delivered under the Securities Act, (A) upon discovery that, or upon the happening of any event as a result of which, such Registration Statement, or the Prospectus or Free Writing Prospectus relating to such Registration Statement, or any document incorporated or deemed to be incorporated therein by reference contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements in the Registration Statement or the Prospectus or Free Writing Prospectus relating thereto not misleading or otherwise requires the making of any changes in such Registration Statement, Prospectus, Free Writing Prospectus or document, and, at the request of the Stockholder, the Company shall promptly prepare a supplement or amendment to such Prospectus or Free Writing Prospectus, furnish a reasonable number of copies of such supplement or amendment to the Stockholder, its counsel and the managing underwriters and file such supplement or amendment with the SEC so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus or Free Writing Prospectus as so amended or supplemented shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (B) as soon as the Company becomes aware of any comments or inquiries by the SEC or any requests by the SEC or any Federal or state Governmental Entity for amendments or supplements to a Registration Statement or related Prospectus or Free Writing Prospectus covering Registrable Securities or for additional information relating thereto, (C) as soon as the Company becomes aware of the issuance or threatened issuance by the SEC of any stop order suspending or threatening to suspend the effectiveness of a Registration Statement covering the Registrable Securities (and use its reasonable efforts to obtain the lifting of any such stop order as soon as
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reasonably practicable) or (D) promptly upon the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any Registrable Security for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; (y) when each Registration Statement or any amendment thereto has been filed with the SEC and when each Registration Statement or the related Prospectus or Free Writing Prospectus or any Prospectus supplement or any post-effective amendment thereto has become effective; and (z) if at any time the Company has reason to believe that the representations and warranties of the Company contained in any agreement contemplated by Section 1(b)(ix) below relating to any applicable offering cease to be true and correct;
(vii) use its reasonable best efforts to cause all such Registrable Securities to be listed on the Principal Stock Exchange;
(viii) provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities from and after the effective date of the applicable Registration Statement and deliver to such transfer agent and registrar such customary forms, legal opinions from its outside or in-house legal counsel, agreements and other documentation as such transfer agent and/or registrar so request;
(ix) enter into and perform under such customary agreements (including underwriting agreements in customary form, including customary representations and warranties and provisions with respect to indemnification and contribution) as the Stockholder or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (and, without limiting the foregoing, the Company shall as expeditiously as possible enter into an agreement with respect to indemnification and contribution in connection with an offering of the type contemplated by Section 1(h));
(x) upon reasonable notice and during normal business hours, make available for inspection and copying by the Stockholder and its counsel, any underwriter participating in any disposition pursuant to any Registration Statement or Shelf Takedown, and any other attorney, accountant or other agent retained by the Stockholder or underwriter, all financial and other records and pertinent corporate documents of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information and participate in any due diligence sessions reasonably requested by the Stockholder, underwriter, attorney, accountant or agent in connection with such Registration Statement or Shelf Takedown, as applicable; provided that recipients of such financial and other records and pertinent corporate documents agree in writing to keep the confidentiality thereof pursuant to a written agreement reasonably acceptable to the Company and the applicable underwriter (which shall contain customary exceptions thereto);
(xi) permit the Stockholder and its counsel, any underwriter participating in any disposition pursuant to a Registration Statement, and any other attorney, accountant or other agent retained by the Stockholder or underwriter, to participate (including, but not limited to, reviewing, commenting on and attending all meetings) in the preparation of such Registration Statement and any Prospectus supplements relating to a Shelf Takedown;
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(xii) in the event of the issuance or threatened issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any security included in such Registration Statement for sale in any jurisdiction, the Company shall use all reasonable efforts promptly to (x) prevent the issuance of any such stop order, and in the event of such issuance, to obtain the withdrawal of such order and (y) obtain the withdrawal of any order suspending or preventing the use of any related Prospectus or Free Writing Prospectus or suspending qualification of any Registrable Securities included in such Registration Statement for sale in any jurisdiction at the earliest practicable date;
(xiii) obtain and furnish to the Stockholder a signed counterpart of (w) a customary cold comfort and bring down letter from the Company’s independent public accountants, (x) a customary legal opinion of counsel to the Company addressed to the relevant underwriters and/or the Stockholder, in each case in customary form and covering such matters of the type customarily covered by such letters as the managing underwriters and/or the Stockholder reasonably request, (y) a negative assurances letter of counsel to the Company in customary form and covering such matters of the type customarily covered by such letters as the managing underwriters and/or the Stockholder, and (z) customary certificates executed by authorized officers of the Company as may be requested by the Stockholder or any underwriter of such Registrable Securities included in such Shelf Takedown;
(xiv) with respect to each Free Writing Prospectus or other materials to be included in the Disclosure Package, ensure that no Registrable Securities be sold “by means of” (as defined in Rule 159A(b) promulgated under the Securities Act) such Free Writing Prospectus or other materials without the prior written consent of the Stockholder, which Free Writing Prospectuses or other materials shall be subject to the review of its counsel;
(xv) provide or maintain a CUSIP number for the Registrable Securities prior to the effective date of the first Registration Statement including Registrable Securities;
(xvi) promptly notify in writing the Stockholder, the sales or placement agent, if any, therefor and the managing underwriters of the securities being sold, (x) when such Registration Statement or related Prospectus or Free Writing Prospectus or any Prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to any such Registration Statement or any post-effective amendment, when the same has become effective and (y) of any written comments by the SEC and by the blue sky or securities commissioner or regulator of any state with respect thereto;
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(xvii) prepare and file with the SEC such amendments and supplements to each Registration Statement as (A) reasonably requested by the Stockholder (to the extent such request related to information relating to it) or (B) may be necessary to comply with the provisions of the Securities Act, including post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period required hereunder, and if applicable, file any Registration Statements pursuant to Rule 462(b) promulgated under the Securities Act; (w) cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; (x) comply with the provisions of the Securities Act and the Exchange Act and any applicable securities exchange or other recognized trading market with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; (y) provide additional information related to each Registration Statement as requested by, and obtain any required approval necessary from, the SEC or any Federal or state Governmental Entity; and (z) respond promptly to any comments received from the SEC and request acceleration of effectiveness promptly after it learns that the SEC will not review the Registration Statement or after it has satisfied comments received from the SEC;
(xviii) cooperate with the Stockholder and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA, including using all reasonable efforts to obtain FINRA’s pre-clearance and pre-approval of the Registration Statement and applicable Prospectus upon filing with the SEC;
(xix) within the deadlines specified by the Securities Act, make all required filing fee payments in respect of any Registration Statement or Prospectus used under this Agreement (and any offering covered thereby);
(xx) if requested by the Stockholder or the managing underwriters, promptly include in a Prospectus supplement or amendment such information as the Stockholder or managing underwriters may reasonably request, including in order to permit the intended method of distribution of such securities, and make all required filings of such Prospectus supplement or such amendment as soon as reasonably practicable after the Company has received such request;
(xxi) in the case of certificated Registrable Securities, cooperate with the Stockholder and the managing underwriters to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from the Stockholder that the Registrable Securities represented by the certificates so delivered by the Stockholder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the Stockholder or managing underwriters may reasonably request at least two (2) Business Days prior to any sale of Registrable Securities; and
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(xxii) use its reasonable efforts to take all other actions necessary or customarily taken by issuers to effect the registration of, and its reasonable efforts to take all other actions necessary to effect the sale of, the Registrable Securities contemplated hereby.
(c) Registration Expenses. All Registration Expenses shall be borne by the Company. All Selling Expenses relating to Registrable Securities registered shall be borne by the Stockholder.
(d) Indemnification and Contribution.
(i) Indemnification by the Company. The Company agrees to indemnify and hold harmless the Stockholder and its Affiliates, directors, officers, employees, members, managers and agents and each Person who controls the Stockholder within the meaning of either the Securities Act or the Exchange Act, to the fullest extent permitted by applicable Law, from and against any losses, claims, expenses, damages and liabilities of whatever kind (including legal or other expenses reasonably incurred in connection with investigating, preparing or defending same and the cost of enforcing any right to indemnification hereunder) (collectively, “Losses”) to which they or any of them may become subject insofar as such Losses (or actions in respect thereof) arise out of or are based upon (x) any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement as originally filed or in any amendment thereof, or the Disclosure Package, or any preliminary, final or summary Prospectus or Free Writing Prospectus included in any such Registration Statement, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (y) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other federal Law, any state or foreign securities Law, or any rule or regulation promulgated under of the foregoing Laws, relating to the offer or sale of the Registrable Securities, and in any such case, the Company agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating, preparing or defending any such Loss, claim, damage, liability, action or investigation (whether or not the indemnified party is a party to any proceeding); provided, however, that the Company will not be liable in any case to the extent that any such Loss arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information relating to the Stockholder furnished to the Company by or on behalf of the Stockholder specifically for inclusion therein, including any notice and questionnaire. This indemnity agreement will be in addition to any liability which the Company may otherwise have.
(ii) Indemnification by the Stockholder. The Stockholder agrees to indemnify and hold harmless the Company and each of its Affiliates, directors, employees, members, managers and agents and each Person who controls the Company within the meaning of either the Securities Act or the Exchange Act, to the fullest extent permitted by applicable Law, from and against any and all Losses to which they or any of
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them may become subject insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement as originally filed or in any amendment thereof, or in the Disclosure Package or any Stockholder Free Writing Prospectus, preliminary, final or summary Prospectus included in any such Registration Statement, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that any such untrue statement or alleged untrue statement or omission or alleged omission is contained in any written information relating to the Stockholder furnished to the Company by or on behalf the Stockholder specifically for inclusion therein; provided, however, that the total amount to be indemnified by the Stockholder pursuant to this Section 1(d)(ii) shall be limited to the net proceeds (after deducting underwriters’ discounts and commissions) received by the Stockholder in the offering to which such Registration Statement or Prospectus relates; provided, further, that the Stockholder shall not be liable in any case to the extent that prior to the filing of any such Registration Statement or Disclosure Package, or any amendment thereof or supplement thereto, it has furnished in writing to the Company, information expressly for use in, and within a reasonable period of time prior to the effectiveness of such Registration Statement or Disclosure Package, or any amendment thereof or supplement thereto which corrected or made not misleading information previously provided to the Company. This indemnity agreement will be in addition to any liability which the Stockholder may otherwise have.
(iii) Notification. If any Person shall be entitled to indemnification under this Section 1(d) (each, an “Indemnified Party”), such Indemnified Party shall give prompt notice to the party required to provide indemnification (each, an “Indemnifying Party”) of any claim or of the commencement of any proceeding as to which indemnity is sought. The Indemnifying Party shall have the right, exercisable by giving written notice to the Indemnified Party as promptly as reasonably practicable after the receipt of written notice from such Indemnified Party of such claim or proceeding, to assume, at the Indemnifying Party’s expense, the defense of any such claim or litigation, with counsel reasonably satisfactory to the Indemnified Party and, after notice from the Indemnifying Party to such Indemnified Party of its election to assume the defense thereof, the Indemnifying Party will not (so long as it shall continue to have the right to defend, contest, litigate and settle the matter in question in accordance with this Section 1(d)(iii)) be liable to such Indemnified Party hereunder for any legal expenses and other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof; provided, however, that an Indemnified Party shall have the right to employ separate counsel in any such claim or litigation, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless the Indemnifying Party shall have failed within a reasonable period of time to assume such defense and the Indemnified Party is or would reasonably be expected to be materially prejudiced by such delay. The failure of any Indemnified Party to give notice as provided herein shall relieve an Indemnifying Party of its obligations under this Section 1(d) only to the extent that the failure to give such notice is materially prejudicial or harmful to such Indemnifying Party’s ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the prior written consent of each Indemnified Party (which
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consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. The indemnity agreements contained in this Section 1(d) shall not apply to amounts paid in settlement of any claim, loss, damage, liability or action if such settlement is effected without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. The indemnification set forth in this Section 1(d) shall be in addition to any other indemnification rights or agreements that an Indemnified Party may have. An Indemnifying Party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such Indemnifying Party with respect to such claim, unless in the reasonable judgment of any Indemnified Party a conflict of interest may exist between such Indemnified Party and any other Indemnified Parties with respect to such claim.
(iv) Contribution. If the indemnification provided for in this Section 1(d) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party, other than pursuant to its terms, with respect to any Losses or action referred to therein, then, subject to the limitations contained in this Section 1(d), the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and the Indemnified Party, on the other, in connection with the actions, statements or omissions that resulted in such Losses or action, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made (or omitted) by, or relates to information supplied by such Indemnifying Party or such Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission. The Company and the Stockholder agree that it would not be just and equitable if contribution pursuant to this Section 1(d)(iv) was determined solely upon pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding sentence of this Section 1(d)(iv). Notwithstanding the foregoing, the amount the Stockholder will be obligated to contribute pursuant to this Section 1(d)(iv) will be limited to an amount equal to the net proceeds received by the Stockholder in respect of the Registrable Securities sold pursuant to the registration statement which gives rise to such obligation to contribute. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
(e) Rule 144. With a view to making available to the Stockholder the benefits of Rule 144 promulgated under the Securities Act, the Company covenants that it will (x) make and keep available such information as is necessary to make Rule 144 available with respect to resales of the Registrable Securities under the Securities Act, at all times, (y) file with the
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Commission in a timely manner all reports and other documents required of the Company under the Exchange Act and (z) take such further action as the Stockholder may reasonably request, all to the extent required from time to time to enable it to sell Registrable Securities without registration under the Securities Act pursuant to the exemption provided by Rule 144 promulgated under the Securities Act, as such rule may be amended from time to time. Upon the reasonable request of the Stockholder, the Company will deliver to it a written statement as to whether it has complied with such requirements, and, if not, the specific reasons for non-compliance. The Company shall, in connection with any request by the Stockholder in connection with a sale, transfer or other disposition by the Stockholder of any Registrable Securities (whether pursuant to Rule 144 or in a registered offering) either currently or with unspecified timing, to promptly (and in no event longer than five (5) Business Days after such request) (i) cause the removal of any restrictive legend or similar restriction on the Registrable Securities, and, in the case of book-entry shares, make or cause to be made appropriate notifications on the books of the Company’s transfer agent for such number of shares and registered in such names as the Stockholder may reasonably request and (ii) provide a customary opinion of counsel and instruction letter required by the Company’s transfer agent.
(f) Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, the Stockholder shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration Statement at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Stockholder, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than 75 days, determined in good faith by the Board to be necessary for such purpose; provided that such right to delay or suspend shall be exercised by the Company not more than two times, which may be consecutive, in any 12-month period, but shall not be for more than 120 days in the aggregate in any 12-month period. In the event the Company exercises its rights under the preceding sentence, the Stockholder agrees to suspend, immediately upon their receipt of the notice referred to above, its use of the Prospectus relating to any sale or offer to sell Registrable Securities. The Company shall immediately notify the holders of Registrable Securities of the expiration of any period during which it exercised its rights under this Section 1(f).
(g) Restrictions on Transfer. In connection with any underwritten offering of equity securities of the Company (other than an offering pursuant to this Agreement), the Stockholder agrees that it shall not, and it shall cause its Affiliates not to, transfer any equity securities of the Company, or any rights or interests therein, without the prior written consent of the Company, during the seven days prior to and the 90-day period beginning on the date of pricing of such offering, except in the event the underwriter managing the offering otherwise agrees by written consent. The Stockholder agrees to execute a customary lock-up agreement in favor of the underwriters of such offering to such effect. The Stockholder’s obligations under the
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foregoing provisions of this Section 1(g) shall only apply for so long as the Stockholder (together with its Affiliates) holds at least 5% of the issued and outstanding shares of Common Stock (calculated on an as converted basis). The Stockholder shall not be required to enter into any restriction on transfer under this Section 1(g) unless the Company’s shareholders holding more than 5% of the Common Stock and its officers and directors agree to restrictions on transfer in connection with such offering that are at least as restrictive as those to be entered into by the Stockholder. In the event that the underwriter of such offering releases any other party from such restrictions on transfer prior to the expiration of such restrictions, any restrictions on transfer entered into by the Stockholder pursuant to this Section 1(g) shall automatically terminate.
(h) Broker-Assisted Offerings. Upon Stockholder’s request, any registered offering involving a broker or other banking or financial institution or intermediary shall be treated as an underwritten offering hereunder whether or not such broker or other financial institution or intermediary is acting as an underwriter in connection with such offering, in which case Stockholder shall have all the rights associated with underwritten offerings hereunder (and such broker or other banking or financial institution or intermediary shall be treated as an underwriter hereunder in connection with such offering (each, a “Broker-Assisted Offering”), whether or not it is acting as an underwriter) in connection with such Broker-Assisted Offering; provided, that, notwithstanding anything to the contrary in this Agreement, the Stockholder shall be permitted to conduct up to two (2) Broker-Assisted Offerings during the fiscal quarter that includes the Effective Date and up to one (1) Broker-Assisted Offering during each fiscal quarter thereafter; provided, further, that the Company shall not be required to provide the assistance in connection with a Broker-Assisted Offering contemplated by this Section 1(h) that is a Block Trade (as defined in the Stockholder Rights Agreement) unless it is executed outside of the Company’s then generally applicable blackout period with respect to sales of Company securities by the Company and its directors and officers. Upon request by the Stockholder, the Company shall use commercially reasonable efforts to prepare in advance of any Broker-Assisted Offering permitted hereunder and cooperate with the Stockholder and its broker or other banking or financial institution or intermediary so that offers and sales can commence promptly after notice of the intent to undertake such Broker-Assisted Offering is received from the Stockholder. For the avoidance of doubt, Section 1(g) shall not apply to any Broker-Assisted Offering requested by Stockholder.
(i) Termination. The right of Stockholder to request registration or inclusion of Registrable Securities in any registration pursuant to this Section 1 shall terminate upon a Change of Control.
Section 2. Definitions.
“Activist” means, as of any date of determination, any Person identified on the most recently available “SharkWatch 50” list (or, if “SharkWatch 50” is no longer available, then the prevailing comparable list as reasonably determined by the Company), or any Person who, to the knowledge of the Stockholder, after reasonable inquiry, is an Affiliate of such Person.
“Adverse Disclosure” means any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Board (i) would be required to
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be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the Company has a bona fide business purpose for not making such information public.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, directly or indirectly controlled by, or under direct or indirect common control with, such Person or a member of such Person’s immediate family; provided that, with respect to the Stockholder and its Affiliates, “Affiliate” shall not include Searchlight Capital Partners, L.P. or any portfolio company (other than Mitel Networks (International) Limited and its Subsidiaries (collectively, the “Mitel Entities”)) or investment fund, vehicle or similar entity affiliated with Searchlight Capital Partners, L.P., other than for purposes of Section 1(d) (Indemnification and Contribution), the third sentence of Section 1(g) (Restrictions on Transfer), Section 8 (Specific Performance; Remedies), Section 12 (Assignment), or the definition of “Registrable Securities”; provided, further, that the Stockholder and its Affiliates shall be deemed not to be an Affiliate of the Company or any of its Subsidiaries and the Company and its Subsidiaries shall not be deemed to be Affiliates of the Stockholder or any of its Affiliates. For purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning set forth in the preamble hereto.
“Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined in Rule 405 promulgated under the Securities Act.
“beneficially own” or “beneficial ownership” have the meanings specified in Rule 13d-3 promulgated under the Exchange Act, including the provision that any member of a “group” will be deemed to have beneficial ownership of all securities beneficially owned by other members of the group, and a Person’s beneficial ownership of securities will be calculated in accordance with the provisions of such Rule; provided, however, that a Person will be deemed to be the beneficial owner of any security which may be acquired by such Person whether within sixty (60) days or thereafter, upon the conversion, exchange or exercise of any rights, options, warrants or similar securities to subscribe for, purchase or otherwise acquire (x) capital stock of any Person or (y) securities directly or indirectly convertible into, or exercisable or exchangeable for, such capital stock of such Person.
“Board” means the board of directors of the Company.
“Business Day” means any day except a Saturday, a Sunday or other day on which the SEC or banking institutions in New York, New York or San Francisco, California are authorized or required by law, regulation or executive order to be closed.
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“Change of Control” means any transaction or series of related transactions involving (i) any direct or indirect purchase or other acquisition by any un-Affiliated Person or the equityholders of such Person, whether from the Company or any other Person(s), of securities representing more than 50% of the total outstanding voting power of the Company after giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any Person that, if consummated in accordance with its terms, would result in such Person beneficially owning more than 50% of the total outstanding voting power of the Company after giving effect to the consummation of such tender or exchange offer; (ii) any direct or indirect purchase or other acquisition by, or license or grant of other quasi-ownership or similar interest to, any Person or the equityholders of such Person of, in, or to more than 50% of (a) the consolidated assets or (b) consolidated revenues, in each case, of the Company and its Subsidiaries taken as a whole (measured by the fair market value thereof as of the date of such purchase or acquisition); or (iii) any merger, consolidation, business combination, recapitalization, reorganization, or other transaction involving the Company or any of its Subsidiaries pursuant to which any Person would hold securities representing more than 50% of the total outstanding voting power of the Company or of the surviving or resulting entity of such transaction after giving effect to the consummation of such transaction.
“Class A Common Stock” means the Company’s Class A Common Stock, par value $0.0001 per share.
“Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of the Company.
“Common Stock” means, collectively, the Class A Common Stock and the Class B Common Stock.
“Company” has the meaning set forth in the preamble hereto.
“Disclosure Package” means, with respect to any offering of securities, (i) the preliminary Prospectus, (ii) the price to the public and the number of securities included in the offering, (iii) each Free Writing Prospectus and (iv) all other information that is deemed, under Rule 159 promulgated under the Securities Act, to have been conveyed to purchasers of securities at the time of sale of such securities (including a contract of sale).
“Distressed Investor” means (a) any Person known by Stockholder, after reasonable inquiry, to be a loan to own fund, vulture fund, distressed debt fund or any other entity (including a business group within a bank or financial institution) which is established for the principal purpose of investing in, or which principally invests in, distressed debt and (b) any Person whose controlling Affiliate is known by Stockholder, after reasonable inquiry, to be a “Distressed Investor” under clause (a) of this sentence.
“Effective Date” has the meaning set forth in the preamble hereto.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“FINRA” means the Financial Industry Regulatory Authority.
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“Form S-1 Shelf” has the meaning set forth in Section 1(a)(i).
“Form S-3 Shelf” has the meaning set forth in Section 1(a)(i).
“Framework Agreement” has the meaning set forth in the preamble hereto.
“Free Writing Prospectus” means any “free writing prospectus” as defined in Rule 405 promulgated under the Securities Act.
“Indemnified Party” has the meaning set forth in Section 1(d)(iii).
“Indemnifying Party” has the meaning set forth in Section 1(d)(iii).
“Investment Agreement” has the meaning set forth in the recitals hereto.
“Joinder” has the meaning set forth in Section 12.
“Law” means any federal, national, state, county, municipal, provincial, local, foreign or multinational, treaty, statute, constitution, common law, ordinance, code, decree, order, judgment, rule, regulation, ruling, published policy or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity and any award, order or decision of an arbitrator or arbitration panel with jurisdiction over the parties and subject matter of the dispute.
“Losses” has the meaning set forth in Section 1(d)(i).
“Misstatement” means an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus, in the light of the circumstances under which they were made, not misleading.
“Mitel Entities” has the meaning set forth in the definition of “Affiliate”.
“Non-Underwritten Shelf Takedown” has the meaning set forth in Section 1(a)(v).
“NYSE” means the New York Stock Exchange.
“Permitted Transferee” has the meaning set forth in the Stockholder Rights Agreement.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or Governmental Entity or other entity.
“Principal Stock Exchange” means the NYSE or, if the NYSE is not the principal market for the Class A Common Stock, then the principal securities exchange or securities market on which the Class A Common Stock are then traded.
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“Prospectus” means the prospectus used in connection with a Registration Statement.
“Registrable Securities” means, at any time, (i) any shares of Class A Common Stock issuable or issued under the Framework Agreement or the Purchase and Sale Agreement held or beneficially owned by the Stockholder, its Affiliates or its transferees in accordance with the Stockholder Rights Agreement and (ii) any securities issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend, stock split, recapitalization or other distribution with respect to, or in exchange for, or in replacement of, the Registrable Securities described in clause (i) above; provided, however, that as to any Registrable Securities, such securities shall cease to constitute Registrable Securities upon the earliest to occur of: (i) the date on which such securities are disposed of pursuant to an effective registration statement under the Securities Act; and (ii) the date on which such securities cease to be outstanding; provided, further, that Registrable Securities shall not include securities that may be resold without restriction under Rule 144.
“Registration Expenses” means all expenses (other than underwriting discounts and commissions) arising from or incident to the registration of Registrable Securities in compliance with this Agreement, including:
(i) stock exchange, SEC, FINRA and other registration and filing fees,
(ii) all fees and expenses incurred in connection with complying with any securities or blue sky laws (including fees, charges and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses,
(iv) the fees, charges and disbursements of counsel to the Company and of its independent public accountants and any other accounting and legal fees, charges and expenses incurred by the Company (including any expenses arising from any special audits or “comfort letters” required in connection with or incident to any sale of Registrable Securities pursuant to a registration),
(v) the fees and expenses incurred in connection with the listing of the Registrable Securities on the Principal Stock Exchange,
(vi) the fees and expenses incurred in connection with any “road show” for underwritten offerings, including travel expenses, and
(vii) reasonable and documented out-of-pocket fees, charges and disbursements of one counsel to the Stockholder, including, for the avoidance of doubt, any expenses of counsel of the Stockholder in connection with the filing or amendment of any Registration Statement, Prospectus or Free Writing Prospectus hereunder (provided that in no event shall such fees, charges and disbursements of counsel exceed $50,000);
provided that in no instance shall Registration Expenses include Selling Expenses.
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“Registration Statement” means any registration statement filed hereunder.
“Relevant Matters” has the meaning set forth in Section 7(a).
“Rule 144” means Rule 144 promulgated under the Securities Act and any successor provision.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended from time to time.
“Selling Expenses” means the underwriting fees, discounts, selling commissions and stock transfer taxes applicable to all Registrable Securities registered by the Stockholder and legal expenses not included within the definition of Registration Expenses.
“Shelf” has the meaning set forth in Section 1(a)(i).
“Shelf Registration” means a registration of securities pursuant to a registration statement filed with the SEC in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).
“Shelf Takedown” has the meaning set forth in Section 1(a)(i).
“Stockholder” has the meaning set forth in the preamble hereto.
“Stockholder Rights Agreement” means that certain Stockholder Rights Agreement, dated as of the date hereof, by and between the Company and the Stockholder.
“Stockholder Free Writing Prospectus” means each Free Writing Prospectus prepared by or on behalf of the Stockholder or used or referred to by the Stockholder in connection with the offering of Registrable Securities.
“Subsequent Shelf Registration” has the meaning set forth in Section 1(a)(ii).
“Subsidiary” has the meaning set forth in the Investment Agreement.
“Transaction Documents” means this Agreement, the Stockholder Rights Agreement, the Framework Agreement and the Purchase and Sale Agreement.
“Transfer” means any sale, transfer, assignment, pledge, or other disposition of (whether with or without consideration and whether voluntary or involuntary or by operation of law).
“Underwritten Shelf Takedown” has the meaning set forth in Section 1(a)(iii).
“Underwritten Shelf Takedown Notice” has the meaning set forth in Section 1(a)(iii).
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“Well-Known Seasoned Issuer” means a “well-known seasoned issuer” as defined in Rule 405 promulgated under the Securities Act and which (i) is a “well-known seasoned issuer” under paragraph (1)(i)(A) of such definition or (ii) is a “well-known seasoned issuer” under paragraph (1)(i)(B) of such definition and is also eligible to register a primary offering of its securities relying on General Instruction I.B.1 of Form S-3 or Form F-3 under the Securities Act.
Section 3. Notices. All notices, requests, permissions, waivers or other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered by hand or sent by electronic mail, or sent, postage prepaid, by registered, certified or express mail or overnight courier service and shall be deemed given when so delivered by hand, by electronic mail (which is confirmed), or if mailed, three days after mailing (one (1) Business Day in the case of express mail or overnight courier service) to the parties at the following addresses (or at such other address or facsimile for a party as shall be specified by like notice).
| (a) | If to the Company: |
RingCentral, Inc.
20 Davis Drive
Belmont, CA 94002
Attn: John Marlow, Chief Administrative Officer, General Counsel and Senior Vice President of Corporate Development
Email: johnm@ringcentral.com
with a copy (which copy alone shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
United States
Attn: Jeffrey D. Saper
Email: jsaper@wsgr.com
and
Wilson Sonsini Goodrich & Rosati, P.C.
One Market Plaza
Spear Tower, Suite 3300
San Francisco, CA 94105
United States
Attn: Mark Baudler & Rich Mullen
Email: mbaudler@wsgr.com & rich.mullen@wsgr.com
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| (b) | If to the Stockholder: |
Mitel US Holdings, Inc.
1146 North Alma School Rd.
Mesa, AZ 85201
Attn: Greg Hiscock, EVP Legal, General Counsel & Corporate Secretary
Email: greg.hiscock@mitel.com
with a copy (which copy alone shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Steven A. Cohen
Victor Goldfeld
Email: SACohen@wlrk.com
VGoldfeld@wlrk.com
Section 4. Amendments, Waivers, etc. This Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed by the party against whom such amendment or waiver shall be enforced. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, shall not constitute a waiver by such party of its right to exercise any such other right, power or remedy or to demand such compliance.
Section 5. Counterparts and Facsimile. This Agreement may be executed in two or more identical counterparts (including by facsimile or electronic transmission), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered (by facsimile, electronic transmission or otherwise) to the other parties.
Section 6. Further Assurances. Each party hereto shall execute and deliver after the Effective Date such further certificates, agreements and other documents and take such other actions as any other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and to consummate or implement the transactions contemplated by this Agreement.
Section 7. Applicable Law; Arbitration; Jury Waiver.
(a) This Agreement, and all claims, causes of action (whether in contract, tort or statute) or other matter that may result from, arise out of, or be in connection with or relating to this Agreement, or the negotiation, administration, performance, or enforcement of this Agreement, including any claim or cause of action resulting from, arising out of, in connection with, or relating to any representation or warranty made in connection with this Agreement (the “Relevant Matters”), shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, including its statutes of limitations, regardless of the laws that might otherwise govern under any applicable principles of conflicts of laws that would result in the application of any such other law. For the avoidance of doubt, neither the U.N. Convention on Contracts for the International Sale of Goods nor any international treaties that would require the application of the laws of any jurisdiction other than the State of Delaware shall be applicable to any Relevant Matter.
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(b) Any dispute, claim, or cause of action (whether based on contract, tort, or otherwise) that may result from, arise out of, be in connection with or relating to any Relevant Matters shall be finally settled by binding arbitration in New York, New York and shall be administered by the Judicial Arbitration and Mediation Services, Inc. pursuant to its Comprehensive Arbitration Rules and Procedures then in effect by three arbitrators, with each of the Company and the Investor being entitled to appoint one arbitrator, and the third arbitrator to be nominated by such first two arbitrators (or, if such an agreement is not reached, with the third arbitrator (and any other arbitrator that a party fails to appoint) being appointed in accordance with such Rules). The language of the arbitration shall be English and all written materials in connection with such arbitration, including but not limited to all pleadings and evidence, shall be in the English language. The arbitrators shall apply the laws of the State of Delaware to the merits of any such dispute, claim, or cause of action (whether in contract, tort, or statute) in accordance with Section 7(a). The arbitrators shall have the power to decide all questions of arbitrability. The arbitrators shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding. At the request of either party, the arbitrators will enter an appropriate protective order to maintain the confidentiality of information produced or exchanged in the course of the arbitration proceedings. The award must be in writing and state the reasons on which it is based. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Notwithstanding anything to the contrary in this Section 7(b), any party hereto may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief without breach of this Section 7(b) and without any abridgment of the powers of the arbitrators in the event of acts or breaches of this Agreement that such party believes may cause irreparable harm or with respect to which such party believes monetary damages would not provide adequate compensation.
(c) EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS, OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT, OR ANY OTHER RELEVANT MATTER.
(d) The arbitrators may award to the prevailing party, if any, as determined by the arbitrators, its reasonable costs and fees incurred in connection with any arbitration or related judicial proceeding hereunder. Cost and fees awarded may include, without limitation, administrative fees, arbitrator fees, attorneys’ fees, expert fees, witness fees, court costs, travel expenses, and out-of-pocket expenses (including, without limitation, such expenses as copying, telephone, facsimile, postage, and courier fees).
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Section 8. Specific Performance; Remedies. The parties agree that, in the event of any breach or threatened breach by a party of this Agreement, (i) the other party shall be entitled, without proof of actual damages (and in addition to any other remedy that may be available to it), to a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other agreement and an injunction preventing or restraining such breach or threatened breach, and (ii) no party shall be required to provide or post any bond or other security or collateral in connection with any such decree, order or injunction or in connection with any related action or legal proceeding. Any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. Notwithstanding the foregoing, this Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are signatories hereto, and no former, current or future equityholders, controlling persons, directors, officers, employees, agents or Affiliates of any party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent or Affiliate of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities hereunder or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or any representations made or alleged to be made in connection herewith or any breach of or failure to comply with this Agreement, whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil, by or through a claim by or on behalf of the Company against the Stockholder or any Non-Recourse Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its equityholders, controlling persons, directors, officers, employees, agents or Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party in connection with this Agreement.
Section 9. Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. 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. The words “date hereof” shall refer to the date of this Agreement. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and shall not simply mean “if”. All references to “$” mean the lawful currency of the United States of America. 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. Except as specifically stated herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Except as otherwise specified herein, references to a
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Person are also to its successors and permitted assigns. Each of the parties hereto has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
Section 10. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced because of any Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 11. Third-Party Beneficiaries. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties any rights, remedies, obligations or liabilities under or by reason of this Agreement, and no Person that is not a party to this Agreement (including any partner, member, stockholder, director, officer, employee or other beneficial owner of any party, in its own capacity as such or in bringing a derivative action on behalf of a party) shall have any standing as third-party beneficiary with respect to this Agreement or the other Transaction Documents.
Section 12. Assignment. Except as otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by either of the parties without the prior written consent of the other party, except that the Stockholder may transfer or assign its rights under this Agreement, in whole or in part, to one or more of its Affiliates or other Permitted Transferees at any time in connection with any Transfer thereto permitted under this Agreement or the Stockholder Rights Agreement; provided, that such Affiliate or other Permitted Transferee has delivered to the Company a written joinder in the form set forth in Exhibit A executed by such Person (a “Joinder”). For the avoidance of doubt, in the event of an assignment of the right to receive Registrable Securities in accordance with Section 9.2 of the Framework Agreement, and otherwise in accordance with this Agreement, to a Permitted Transferee who signs a Joinder to this Agreement, such Permitted Transferee shall be permitted to exercise the registration rights provided hereunder with respect to such Registrable Securities.
Section 13. Entire Agreement. This Agreement, together with the other Transaction Documents, constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof and thereof. The Company represents and warrants that it has not entered into, and agrees that it will not enter into, any agreement with respect to its securities that violates or is otherwise inconsistent with the rights granted to the Stockholder under this Agreement.
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Section 14. Acknowledgment of Securities Laws. The Stockholder hereby acknowledges that it is aware, and that it will advise its Affiliates and Representatives who are provided material non-public information concerning the Company or its securities, that the United States securities Laws prohibit any Person who has received from an issuer material, non-public information from purchasing or selling securities of such issuer or from communication of such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities.
Section 15. Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement shall impair any such right, power, or remedy of such party, nor shall it be construed to be a waiver of or acquiescence to any breach or default, or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default. All remedies, either under this Agreement or by law or otherwise afforded to the Stockholder, shall be cumulative and not alternative.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
| Company: | ||
| RINGCENTRAL, INC. | ||
| By: | /s/ | |
| Name: | John Marlow | |
| Title: | Chief Administrative Officer | |
| Stockholder: | ||
| MITEL US HOLDINGS, INC. | ||
| By: | /s/ | |
| Name: | Graham Bevington | |
| Title: | Chairman & President | |
Exhibit A
Joinder
This Joinder to the Registration Rights Agreement (this “Joinder”) is made as of _________________, ______ by and between RingCentral, Inc., a Delaware corporation (the “Company”) and _____________________________________________ (the “Transferee”) pursuant to the terms of that certain Registration Rights Agreement, made and entered into as of November 8, 2021 and effective as of November 9, 2021, by and between the Company and Mitel US Holdings, Inc. (the “Stockholder”). Capitalized terms used and not otherwise defined in this Joinder shall have the respective meanings ascribed to them in the Registration Rights Agreement.
1. Effect of Execution. By execution of this Joinder, the Transferee hereby:
(a) acknowledges receipt and review of the Registration Rights Agreement;
(b) represents that he, she or it has, or has had an opportunity to, consult with legal counsel and other advisors before entering into the Registration Rights Agreement;
(c) adopts and agrees to become party to the Registration Rights Agreement and to be bound by all of the terms and conditions set forth in the Registration Rights Agreement as the “Stockholder” with the same force and effect as if the undersigned were originally the “Stockholder” party thereto; provided, that, for purposes of the definition of “Affiliate,” each reference to Searchlight Capital Partners, L.P. shall be deemed a reference to the Transferee; and
(d) further authorizes the Company and the Stockholder to attach this Joinder to the Registration Rights Agreement and take such other actions as necessary in order to make the undersigned a party to the Registration Rights Agreement.
2. Counterparts and Facsimile. This Joinder may be executed in two or more identical counterparts (including by facsimile or electronic transmission), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered (by facsimile, electronic transmission or otherwise) to the other parties.
3. Notice. Any notice required or permitted by the Registration Rights Agreement shall be given to the undersigned at the address listed beside the Transferee’s signature below.
4. Governing Law. This Joinder, and all rights, obligations, claims, causes of action (whether in contract, tort or statute) or other matter that may result from, arise out of, be in connection with or relating to this Joinder, or the negotiation, administration, performance, or enforcement of this Joinder, shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof, including its statutes of limitations.
[Signature page follows]
The parties hereto have executed this Joinder to the Registration Rights Agreement as of the date set forth in the first paragraph hereof.
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| RINGCENTRAL,INC. | ||
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| TRANSFEREE: | ||
| By: |
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| (if applicable) | ||
| Its: |
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| (if applicable) | ||
| By: |
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| (signature) | ||
| Name: |
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| Address: |
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Exhibit 99.1
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| Media Release | ||||
RingCentral and Mitel Announce Strategic Partnership to Enable Customers to Transition Seamlessly to Cloud-Based Unified Business Communications
RingCentral to become exclusive UCaaS partner to Mitel for its customer base of over 35 million users
RingCentral acquires differentiated CloudLink technology to enable a unique transition path from on-premises PBX to RingCentral’s Message Video Phone (MVP) cloud platform
Mitel investor group led by affiliates of Searchlight Capital Partners, L.P. (“Searchlight”) to invest $200 million in RingCentral
BELMONT, Calif. and OTTAWA, ON — November 09, 2021 — RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, video meetings, collaboration and contact center solutions, and Mitel, a global leader in business communications, announced a strategic partnership to provide Mitel’s global customer base with a seamless migration path to RingCentral’s Message Video Phone™ (MVP®) cloud communications platform.
Partnership highlights:
| • | RingCentral becomes the exclusive UCaaS partner for Mitel |
| • | Integration of RingCentral MVP with Mitel’s unique CloudLink technology will provide Mitel’s user base of over 35 million an easy migration path to RingCentral’s industry leading MVP cloud communications platform |
| • | Mitel continues to focus on delivering leading UC solutions and innovation for its global customers |
As part of this agreement, RingCentral becomes Mitel’s exclusive UCaaS partner, providing their customers with a next generation, mobile-first, cloud communications platform with high reliability and security, rich functionality, and broad enterprise app integrations. Mitel will continue to support customers on its MiCloud Connect platform and, working with RingCentral, provide a seamless path to RingCentral’s best-in-class cloud-based MVP for all its customers in a manner and pace that best fits each customer’s needs.
“We are excited to bring the market-leading UCaaS solution to our customers and channel partners with RingCentral as our exclusive UCaaS partner,” said Tarun Loomba, newly appointed president and chief executive officer at Mitel. “The unique depth of this partnership furthers our strategy of delivering world-class communications to our customers and providing them a clear and flexible path for the future.”
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| Media Release | ||||
CloudLink, an innovative cloud platform enabling customers to integrate their on-premises infrastructure with modern cloud applications, will enable Mitel customers to leverage their existing on-premises PBX capabilities via the RingCentral application. This use case provides a seamless, highly differentiated transition path to full cloud adoption.
“We are bringing together the best of Mitel and RingCentral to give customers the right communications and collaboration solutions for their needs,” said Vlad Shmunis, RingCentral’s founder, chairman and chief executive officer. “Given our maniacal customer-centric focus, we’re delighted to now be able to offer customers a flexible and differentiated digital transformation path.”
Financial Terms:
RingCentral will pay Mitel $650 million to acquire intellectual property rights and patents covering network and call management, security, and infrastructure. Demonstrating its commitment and excitement about the partnership, Mitel’s existing investor group led by affiliates of Searchlight will invest $200 million in equity in RingCentral as part of the transaction.
Wilson Sonsini Goodrich & Rosati, Professional Corporation served as legal advisor to RingCentral and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Searchlight and MLN TopCo Limited, the parent of Mitel.
Product and go-to-market
Product will continue to be branded RingCentral MVP, accelerating availability to Mitel’s entire customer base through RingCentral’s and Mitel’s combined channels. Additional product enhancements leveraging joint technologies beginning with Mitel phone and device support for RingCentral MVP is planned for the first half of 2022.
Investor Presentation Details:
An investor presentation providing additional information and analysis can be found at http://ir.ringcentral.com/.
Forward Looking Statements
This press release includes forward-looking statements within the meaning of the federal securities laws. These statements relate to, among other things, the anticipated opportunities and benefits of the strategic partnership between RingCentral and Mitel. These forward-looking statements are based on estimates and assumptions that RingCentral and Mitel believe are reasonable, but any of these estimates and assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors including those that are described in greater detail in RingCentral’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 and in other periodic reports filed by RingCentral with the Securities and Exchange Commission from time to time. All future written and oral forward-looking statements attributable to RingCentral or Mitel or persons acting on their behalf are expressly qualified in their entirety by the previous statements. RingCentral and Mitel undertake no obligation to update any forward-looking statements that may be made to reflect events or circumstances that occur, or that they become aware of, after the date of this press release.
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About RingCentral
RingCentral, Inc. (NYSE: RNG) is a leading provider of business cloud communications and contact center solutions based on its powerful Message Video Phone™ (MVP®) global platform. More flexible and cost effective than legacy on-premises PBX and video conferencing systems that it replaces, RingCentral empowers modern mobile and distributed workforces to communicate, collaborate, and connect via any mode, any device, and any location. RingCentral offers three key products in its portfolio including RingCentral MVP™, a Unified Communications as a Service (UCaaS) platform including team messaging, video meetings, and cloud phone system; RingCentral Video®, Šthe company’s video meetings solution with team messaging that enables Smart Video Meetings™; and RingCentral cloud Contact Center solutions. RingCentral’s open platform integrates with leading third-party business applications and enables customers to easily customize business workflows. RingCentral is headquartered in Belmont, California, and has offices around the world.
RingCentral Contacts:
Jyotsna Grover
Jyotsna.grover@ringcentral.com
Investor Relations Contact:
Ryan Goodman Ryan.
goodman@ringcentral.com
About Mitel
A global market leader in business communications powering more than two billion business connections, Mitel helps businesses and service providers connect, collaborate and provide innovative services to their customers. Our innovation and communications experts serve business users in more than 100 countries. For more information, go to www.mitel.com and follow us on LinkedIn and Twitter @Mitel.
For media inquiries, contact pr@mitel.com
© 2021 RingCentral, Inc. All rights reserved. RingCentral, Message Video Phone, MVP, RingCentral MVP, RingCentral Video, RingCentral Contact Center, Smart Video Meetings, and the RingCentral logo are trademarks of RingCentral, Inc.