Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-102)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Under the Securities Exchange Act of 1934

Cotiviti Holdings, Inc.

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(Name of Issuer)

Ramzi M. Musallam

c/o Veritas Capital Fund Management, L.L.C.

9 West 57th Street, 29th Floor,

New York, NY 10019

Copies to:

Skadden, Arps, Slate, Meagher & Flom, LLP

Four Times Square

New York, NY 10036

Attn: Kenneth M. Wolff, Esq.

June S. Dipchand, Esq.

212-735-3000

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(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

June 19, 2018

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(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ☐

 

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

SCHEDULE 13D

This statement on Schedule 13D (this “Statement”) is being filed as an original filing with the Securities and Exchange Commission (the “SEC”) by Verscend Technologies, Inc., a Delaware corporation (“Verscend”), Verscend Holding Corp., a Delaware corporation (“Verscend Holding”), Verscend Holding II Corp., a Delaware corporation (“Verscend II”), Verscend Intermediate Holding Corp., a Delaware corporation (“Verscend Intermediate”), Verscend Holdings LLC, a Delaware limited liability company (“Verscend LLC”), The Veritas Capital Fund V, L.P., a Delaware limited partnership (“Fund V”), Veritas Capital Partners V, L.L.C., a Delaware limited liability company (“Veritas Partners V”), and Ramzi M. Musallam, in connection with that certain Voting and Support Agreement, dated as of June 19, 2018 (the “Voting Agreement”), by and among Verscend and the stockholders party thereto (each a “Stockholder” and collectively, the “Stockholders”) of Cotiviti Holdings, Inc., a Delaware corporation (“Cotiviti”). The Voting Agreement was entered into in connection with the signing of an Agreement and Plan of Merger, dated as of June 19, 2018 (the “Merger Agreement”), by and among Cotiviti, Verscend and Rey Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Verscend (“Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into Cotiviti (the “Merger”), with Cotiviti continuing as the surviving corporation (the “Surviving Corporation”) and a wholly owned subsidiary of Verscend.

Item 1.  Security and Issuer.

 

This Statement relates to shares of common stock, par value $0.001 per share, of Cotiviti (the “Shares”). The name of the issuer is Cotiviti Holdings, Inc. The principal executive offices of Cotiviti are located at One Glenlake Parkway, Suite 1400, Atlanta, Georgia 30328.

Item 2.  Identity and Background.

(a) This Statement is being filed by Verscend, Verscend Holding, Verscend II, Verscend Intermediate, Verscend LLC, Fund V, Veritas Partners V and Ramzi M. Musallam.

Verscend, Verscend Holding, Verscend II, Verscend Intermediate, Verscend LLC, Fund V, Veritas Partners V and Ramzi M. Musallam are referred to herein collectively as the “Reporting Persons.” Information with respect to each of the Reporting Persons is given solely by such Reporting Person, and no Reporting Person assumes responsibility for the accuracy or completeness of information furnished by another Reporting Person. The Reporting Persons are filing this statement jointly, pursuant to the provisions of Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as separate persons and not as members of a group. See Exhibit 99.1 for the Reporting Persons’ Joint Filing Agreement.

(b) The address of the principal business and principal office of each of Verscend, Verscend Holding, Verscend II and Verscend Intermediate is c/o Verscend Technologies, Inc., 201 Jones Road, 4th Floor, Waltham, Massachusetts 02451.  The address of the principal business and principal office of each of Verscend LLC, Fund V, Veritas Partners V and Ramzi M. Musallam is c/o Veritas Capital Fund Management, L.L.C., 9 West 57th Street, 29th Floor, New York, New York 10019.

(c) Verscend is principally engaged in the business of providing payment accuracy, risk adjustment, performance analysis and network management services for payors, providers and employers in the healthcare industry.

Verscend is the sole stockholder of Merger Sub, which was formed for the purpose of consummating the Merger and has not, as of the date hereof, conducted any business other than in connection with matters related to the Merger Agreement and the transactions contemplated thereby (including the Merger).

Verscend Holding, which holds all of the outstanding equity interests of Verscend, is principally engaged in the business of serving as a holding company and the sole stockholder of Verscend.

Verscend II, which holds all of the outstanding equity interests of Verscend Holding, is principally engaged in the business of serving as a holding company and the sole stockholder of Verscend Holding.

Verscend Intermediate, which holds all of the outstanding equity interests of Verscend II, is principally engaged in the business of serving as a holding company and the sole stockholder of Verscend II.

Verscend LLC, which holds all of the outstanding equity interests of Verscend Intermediate, is principally engaged in the business of serving as a holding company and the sole stockholder of Verscend Intermediate.

Fund V, which holds a majority of the outstanding equity interests of Verscend LLC, is principally engaged in the operation of an investment fund.

Veritas Partners V, which is the general partner of Fund V, is principally engaged in the business of serving as the general partner of Fund V.

Ramzi M. Musallam is the Sole Managing Member of Veritas Partners V and his principal occupation is to serve as Chief Executive Officer and Managing Partner of Veritas Capital Fund Management, L.L.C.

(d) – (e) During the last five years, neither the Reporting Persons nor, to the best of the Reporting Persons’ knowledge, any of the persons listed on Schedule A hereto, has (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject, to federal or state securities laws or finding any violation with respect to such laws.

(f) Verscend is a corporation organized under the laws of the State of Delaware. Verscend Holding is a corporation organized under the laws of the State of Delaware. Verscend II is a corporation organized under the laws of the State of Delaware. Verscend Intermediate is a corporation organized under the laws of the State of Delaware. Verscend LLC is a limited liability company organized under the laws of the State of Delaware. Fund V is a limited partnership organized under the laws of the State of Delaware. Veritas Partners V is a limited liability company organized under the laws of the State of Delaware. Ramzi M. Musallam and each of the persons referred to in Schedule A is a United States citizen.

The name, business address, present principal occupation or employment and citizenship of each director, executive officer, managing member or general partner, as applicable, of the Reporting Persons are set forth on Schedule A hereto and are incorporated herein by reference.

Item 3.  Source and Amount of Funds of Other Consideration.

As described in response to Item 4 below, the Shares to which this Statement relates have not been purchased by the Reporting Persons as of the date of this filing, and thus no funds were used for this purpose.  As further noted in Item 4 below, as a condition and inducement to Verscend’s willingness to enter into the Merger Agreement, the Stockholders entered into the Voting Agreement with Verscend pursuant to which each Stockholder agreed to vote certain of its respective Shares in favor of the adoption of the Merger Agreement and the transactions (including the Merger) contemplated by the Merger Agreement. Other than the consideration to be paid by Verscend pursuant to the Merger Agreement, the Reporting Persons have paid no funds or other consideration in connection with the execution and delivery of the Voting Agreement and therefore no funds were used in connection with the transactions requiring the filing of this Statement. For a description of the Voting Agreement and the Merger Agreement, see Item 4 below, which description is incorporated by reference in response to this Item 3.

Item 4.  Purpose of the Transaction.

 

(a)-(b)

 

On June 19, 2018, Cotiviti entered into the Merger Agreement with Verscend and Merger Sub. The Merger Agreement provides that, upon the terms and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into Cotiviti (which is referred to as the “Merger”), with Cotiviti continuing as the Surviving Corporation and a wholly owned subsidiary of Verscend. The board of directors of Cotiviti (the “Cotiviti Board”) has unanimously approved the Merger Agreement and the transactions contemplated thereby (including the Merger) and directed that the Merger Agreement be submitted to the stockholders of Cotiviti for their adoption.

Pursuant to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”) and as a result of the Merger, each share of common stock of Cotiviti issued and outstanding immediately prior to the Effective Time (other than shares held by Verscend or any subsidiary of Verscend (or any of their respective subsidiaries), in the treasury of Cotiviti or by a stockholder who properly exercises and perfects appraisal of his, her or its shares under Delaware law) will be cancelled and extinguished and automatically converted into and thereafter represent the right to receive $44.75 in cash, without interest and less any required withholding taxes (the “Merger Consideration”). In addition, immediately prior to the Effective Time and as a result of the Merger, (a) each option to purchase shares of Cotiviti common stock that is outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, will vest in full and will be converted into the right to receive a cash payment equal to the product of the Merger Consideration, net of the exercise price (and subject to applicable tax withholding) and the aggregate number of shares subject to the option, and (b) each award of restricted stock and restricted stock units covering shares of Cotiviti common stock that is outstanding immediately prior to the Effective Time, whether vested or unvested, will vest in full and will be converted into the right to receive a cash payment equal to the product of the Merger Consideration and the aggregate number of shares subject to the award (and subject to applicable tax withholding). The consummation of the Merger is subject to customary closing conditions, including, among others, the following mutual conditions to the obligations of the parties: (i) the adoption of the Merger Agreement by the holders of a majority of Cotiviti’s outstanding common stock; (ii) any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 having expired or having been terminated; (iii) the Merger having not then been enjoined, made illegal or otherwise prohibited by any applicable law or any order, judgment, decree, injunction or ruling (whether temporary, preliminary or permanent) of any governmental authority (each, a “Governmental Order”) or by any proceeding then pending by a governmental authority seeking any Governmental Order; (iv) the truth and accuracy of the other party’s representations and warranties in the Merger Agreement, subject in certain cases to a de minimis,

materiality or material adverse effect (each as described in the Merger Agreement) standard; and (v) the compliance with or performance, in all material respects, of the other party’s covenants and obligations in the Merger Agreement required to be performed at or prior to the consummation of the Merger. In addition, the consummation of the Merger is subject to the following closing condition to the obligations of Verscend and Merger Sub: the absence of a “Company Material Adverse Effect” (as defined in the Merger Agreement) with respect to Cotiviti and its subsidiaries, taken as a whole.

Cotiviti has made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants (i) to conduct its business, in all material respects, in the ordinary course of business and in a manner consistent with past practice during the interim period between the execution of the Merger Agreement and the consummation of the Merger; (ii) not to engage in specified types of transactions or take specified actions during this period unless agreed to in writing by Verscend; (iii) to convene and hold a meeting of its stockholders for the purpose of the adoption of the Merger Agreement by Cotiviti’s stockholders; and (iv) subject to certain exceptions, not to withdraw, modify or qualify in a manner adverse to Verscend the recommendation of the Cotiviti Board in its proxy statement for the foregoing stockholders’ meeting that its stockholders vote for the adoption of the Merger Agreement.

Cotiviti has agreed, in each case subject to the fulfillment of certain fiduciary obligations of the Cotiviti Board, (i) to cease any existing, and not to solicit, initiate or knowingly facilitate any additional discussions or negotiations with or encouragement of third parties regarding other proposals to acquire Cotiviti or any alternative business combination transactions to the Merger, (ii) not to furnish non-public information to or participate or engage in negotiations with any third parties in connection with other proposals to acquire Cotiviti or any alternative business combination transactions to the Merger, and (iii) to certain other restrictions on its ability to respond to such proposals. However, subject to the satisfaction of certain conditions, Cotiviti and the Cotiviti Board, as applicable, are permitted to take certain actions which may, as more fully described in the Merger Agreement, include changing the recommendation of the Cotiviti Board following receipt of a “Superior Proposal” (as defined in the Merger Agreement) or after an “Intervening Event” (as defined in the Merger Agreement) if the Cotiviti Board has concluded in good faith after consultation with its financial and outside legal advisors that the failure to effect a change of recommendation would be inconsistent with the fiduciary duties owed by the Cotiviti Board to the stockholders of Cotiviti under applicable law.

The Merger Agreement contains certain termination rights for Cotiviti and Verscend, including the right of Cotiviti to terminate the Merger Agreement to accept a Superior Proposal after complying with certain requirements. In addition, either party may terminate the Merger Agreement if the Merger is not consummated on or before March 19, 2019. The Merger Agreement further provides that Cotiviti may be required to pay Verscend a termination fee of $100 million under certain specified circumstances. The Merger Agreement also provides that Verscend may be required to pay Cotiviti a termination fee of $217.5 million under certain specified circumstances.

Verscend has obtained financing commitments for the purpose of financing the transactions (including the Merger) contemplated by the Merger Agreement and paying related fees and expenses (the “Financing”). The Veritas Capital Fund VI, L.P. (an affiliate of Fund V, Veritas Partners V and Ramzi M. Musallam) has committed to directly or indirectly capitalize Verscend, immediately prior to the Effective Time, with an aggregate equity contribution of up to $790 million, subject to the terms and conditions set forth in an equity commitment letter. JPMorgan Chase Bank, N.A. (together with certain of its affiliates, the “Lenders”) has agreed to provide Verscend and Verscend Holding Corp. (Verscend’s immediate parent) with debt financing in an aggregate principal amount of up to $4,615 million on the terms set forth in a debt commitment letter. Additionally, Verscend and Verscend Holding Corp. have received a preferred equity commitment in an amount of up to $575 million on the terms set forth in a preferred

equity commitment letter. The obligations of the Lenders to provide debt financing under the debt commitment letter, and the obligations of the preferred Investors (as defined in the preferred equity commitment letter) to provide preferred equity financing under the preferred equity commitment letter, in each case, are subject to customary terms and conditions. The Merger Agreement provides that Verscend and Verscend Holding Corp will use reasonable best efforts to do all things necessary or advisable to arrange or obtain the Financing as promptly as practicable following the date of the Merger Agreement and to consummate the Financing on or prior to the Effective Time. The Merger is not conditioned on Verscend’s receipt of the Financing.

This summary of the principal terms of the Merger Agreement and the copy of the Merger Agreement filed as an exhibit to this Statement are intended to provide information regarding the terms of the Merger Agreement and are not intended to modify or supplement any factual disclosures about Cotiviti in its public reports filed with the SEC. In particular, the Merger Agreement and related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to Cotiviti, Verscend or Merger Sub or their respective affiliates.

The Merger Agreement includes customary representations, warranties and covenants of Cotiviti, Verscend and Merger Sub made only for the purposes of the Merger Agreement and solely for the benefit of the parties to the Merger Agreement, in accordance with and subject to the terms of the Merger Agreement. The assertions embodied in those representations and warranties were made for the principal purpose of establishing the circumstances in which the parties to the Merger Agreement may have the right not to consummate the transactions contemplated thereby (based on the closing conditions therein that relate to the accuracy of such representations and warranties), rather than establishing matters as facts, and the representations, warranties and covenants set forth in the Merger Agreement (i) may be subject to important qualifications and limitations agreed to by Cotiviti, Verscend and Merger Sub in connection with the negotiated terms thereof and (ii) are not intended to, and do not, confer upon any person other than the parties thereto any rights or remedies thereunder, including the right to rely upon the representations and warranties set forth therein. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to Cotiviti’s SEC filings or may have been used for purposes of allocating risk among Cotiviti, Verscend and Merger Sub rather than establishing matters as facts. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts of Cotiviti, Verscend and Merger Sub or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants do not purport to be accurate as of the date of filing of this Form 8-K and may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by Cotiviti. Accordingly, investors should read the representations and warranties in the Merger Agreement not in isolation but only in conjunction with the other information about Cotiviti, Verscend and Merger Sub and their respective subsidiaries, affiliates and businesses that the respective companies include in reports, statements and other filings they may make with the SEC.

 

Concurrently with the execution of the Merger Agreement, the Stockholders, representing ownership of approximately 44.6% of the outstanding Shares, entered into the Voting Agreement with Verscend pursuant to which, among other things and subject to the terms and conditions therein, the Stockholders agreed to vote their Shares in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, and against any alternative proposal. In addition, each Stockholder waived appraisal rights. The Voting Agreement terminates upon the earliest to occur of (i) mutual consent by the Stockholders and Verscend; (ii) the termination of the Merger

Agreement in accordance with its terms prior to the Effective Time; (iii) the Cotiviti Board changing its recommendation that Cotiviti’s stockholders adopt the Merger Agreement in accordance with the terms of and to the extent permitted by the Merger Agreement; (iv) the Effective Time; and (v) in the event the Merger Agreement is amended without the prior written consent of the Stockholders and such amendment, among other things, decreases the amount or changes the form of Merger Consideration or otherwise is materially adverse to the Stockholders relative to the other stockholders of Cotiviti.

(c) Not applicable.

(d) Pursuant to the terms of the Merger Agreement, from and after the Effective Time, (i) the officers of Cotiviti immediately prior to the Effective Time shall be the officers of the Surviving Corporation and (ii) unless otherwise determined by Verscend prior to the Effective Time, the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, in each case, to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their death, resignation or removal or until their respective successors are duly elected and qualified in accordance with the certificate of incorporation and bylaws of the Surviving Corporation, as the case may be.

(e)  Not applicable.

(f)  Not applicable.

(g) Pursuant to the terms of the Merger Agreement, at the Effective Time, (i) the certificate of incorporation of the Surviving Corporation shall by virtue of the Merger and without further action be amended and restated in its entirety to be identical to the certificate of incorporation of Merger Sub in effect immediately prior to the Effective Time, except that the name of the corporation set forth therein shall be changed to the name of Cotiviti, and (ii) the bylaws of the Surviving Corporation shall be amended and restated in their entirety to be identical to the bylaws of Merger Sub in effect immediately prior to the Effective Time, except that the name of the corporation set forth therein shall be changed to the name of Cotiviti, in each case, until thereafter amended in accordance with the Delaware General Corporation Law and as provided in such certificate of incorporation or bylaws.

(h) – (i)  The Shares are traded on the New York Stock Exchange (“NYSE”) under the trading symbol “COTV.”  Upon consummation of the Merger, the Shares will cease to be quoted on the NYSE and will become eligible for termination of registration pursuant to Section 12(g) of the Exchange Act.  Verscend intends to cause the Surviving Corporation to terminate the registration of the Shares under the Exchange Act as soon as the requirements for termination are met.

(j)  Not applicable.

The references to, and descriptions of, the Merger Agreement and the Voting Agreement in this Item 4 are not intended to be complete and are qualified in their entirety by reference to the Merger Agreement and the Voting Agreement, copies of which are filed as Exhibits hereto and which are incorporated herein by reference.

Subject to the terms and conditions of the Merger Agreement, the Voting Agreement and the other ancillary documents referenced in this Item 4, the Reporting Persons may, from time to time, engage in discussions and take such actions, whether initiated by the Reporting Persons or another party, concerning proposals for transactions or other arrangements that may relate to or, if consummated, result in an event described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. Any such discussions or actions may consider various factors, including, without limitation, Cotiviti’s business prospects and other

developments concerning Cotiviti, alternative investment opportunities, general economic conditions, financial and stock market conditions and any other facts and circumstances that may become known to the Reporting Persons regarding or related to the matters described in this Statement.

Item 5.  Interest in Securities of the Issuer.

(a) – (b) Prior to June 19, 2018, none of the Reporting Persons was a beneficial owner for purposes of Rule 13d-3 under the Exchange Act (“Rule 13d-3”), of any Shares or any other securities exchangeable or convertible into Shares.  However, under the definition of “beneficial ownership” as set forth in Rule 13d-3, as a result of entering into the Voting Agreement, the Reporting Persons may be deemed to possess shared voting power and shared dispositive power over, and therefore beneficially own for purposes of Rule 13d-3, the Shares that are beneficially held by the Stockholders, which were comprised of 41,433,699 Shares, or approximately 44.6% of outstanding Shares, as of March 31, 2018.

The cover page of this Schedule 13D refers to 41,433,699 Shares beneficially owned by each Reporting Person with shared voting power and shared dispositive power, based on 92,941,484 Shares outstanding as of March 31, 2018 as reported in Cotiviti’s Quarterly Report on Form 10-Q filed with the SEC on May 2, 2018.  However, such number of Shares may change depending on the total number of outstanding Shares at the time of the applicable vote to adopt the Merger Agreement. The Reporting Persons disclaim any beneficial ownership of such shares, and nothing herein shall be deemed to be an admission by the Reporting Persons as to the beneficial ownership of such shares.

To the Reporting Persons’ knowledge, no Shares are beneficially owned by any of the persons identified in Schedule A.

Notwithstanding the foregoing, however, the Reporting Persons (i) are not entitled to any rights as a Stockholder of Cotiviti with respect to any Shares and (ii) have no power to vote, direct the voting of, dispose of, or direct the disposal of, any Shares other than the power provided pursuant to the Voting Agreement. Neither the filing of this Statement nor any of its contents shall be deemed to constitute an admission that any Reporting Person is the beneficial owner of any securities of Cotiviti (including, without limitation, the shares owned by the Stockholders) for purposes of Section 13(d) or 16 of the Exchange Act or for any other purpose and such beneficial ownership is expressly disclaimed.

(c) Except as described herein, there have been no transactions in Shares by the Reporting Persons, or, to the knowledge of the Reporting Persons, by any of the persons listed on Schedule A hereto, during the past sixty (60) days.

(d) To the knowledge of the Reporting Persons, no persons other than the Stockholders have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares subject to the Voting Agreement.

(e) Not applicable.

As stated above, the references to, and descriptions of, the Merger Agreement and Voting Agreement in this Item 5 are not intended to be complete and are qualified in their entirety by reference to the Merger Agreement and the Voting Agreement, copies of which are filed as Exhibits hereto and are incorporated herein by reference.

Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

The information set forth, or incorporated by reference, in Items 3 through 5 above of this Statement is hereby incorporated by reference into this Item 6.  Except as otherwise described in this Statement, to the knowledge of the Reporting Persons, there are no other contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 above or listed on Schedule A hereto, and between such persons and any person, with respect to any securities of Cotiviti, including but not limited to transfer or voting of any of the securities of Cotiviti, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees or profits, division of profits or loss, or the giving or withholding of proxies.

Item 7.  Material to be Filed as Exhibits.

(1) Incorporated by reference to Exhibit 2.1 to Form 8-K of Cotiviti Holdings, Inc. (filed on June 22, 2018) (File No. 001-37787)

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

The name, business address and present principal occupation of each director, executive officer, managing member or general partner, as applicable, of the Reporting Persons are set forth below. All executive officers, directors, managing members and general partners listed in this Schedule A are U.S. citizens.

 

 

 

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, the undersigned hereby agree to the joint filing of a Statement on Schedule 13D (including any and all amendments thereto) with respect to the common stock, par value $0.001, of Cotiviti Holdings, Inc. and further agree that this Joint Filing Agreement be included as an exhibit thereto.

 

Dated as of June 29, 2018

 

  

VOTING AND SUPPORT AGREEMENT

This VOTING AND SUPPORT AGREEMENT, dated as of June 19, 2018 (this “Agreement”), is made and entered into by and between Verscend Technologies, Inc., a Delaware corporation (“Parent”), and the undersigned stockholders (the “Stockholders”) of the Company.  Parent and the Stockholders are referred to individually as a “Party” and collectively as the “Parties.”

W I T N E S S E T H

WHEREAS, concurrently with the execution of this Agreement, Parent, Cotiviti Holdings, Inc., a Delaware corporation (the “Company”), and Rey Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), are entering into an Agreement and Plan of Merger, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), pursuant to which, subject to the terms and conditions thereof, among other things, Merger Sub will merge with and into the Company (the “Merger”) and each of the Company’s issued and outstanding shares of common stock, par value $0.001 per share (“Company Common Stock”), but excluding any Cancelled Shares and any Dissenting Shares, will, subject to the terms of the Merger Agreement, be converted into the right to receive the Merger Consideration;

WHEREAS, as of the date hereof, each Stockholder Beneficially Owns (as defined below) and/or owns of record the number of shares of Company Common Stock set forth opposite such Stockholder’s name on Schedule I hereto (the “Existing Shares”); and

WHEREAS, as a condition and inducement to Parent’s willingness to enter into the Merger Agreement, each Stockholder has agreed to enter into this Agreement.

NOW THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the Parties agree as follows:

Section 1.1       Defined Terms.  The following terms, as used in this Agreement, shall have the meanings specified in this Section 1.1.  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Merger Agreement.

“Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act (without giving effect to the limiting phrase “within sixty days” set forth in Rule 13d-3(d)(1)(i)).  The terms “Beneficially Own,” “Beneficially Owned” and “Beneficial Ownership” shall have a correlative meaning.

“Covered Company Shares” means, with respect to each Stockholder, (1) such Stockholder’s Existing Shares and (2) any shares of Company Common Stock or other voting

capital stock of the Company and any securities convertible into or exercisable or exchangeable for shares of Company Common Stock or other voting capital stock of the Company, in each case that such Stockholder has Beneficial Ownership of on or after the date hereof; it being understood that if such Stockholder acquires securities (or rights with respect thereto) described in clause (2) above (to the extent such securities are not timely reported, or required to be reported, in a filing by such Stockholder with the SEC), such Stockholder shall promptly notify Parent in writing, indicating the number of such securities so acquired.

“Permitted Transfer” means a Transfer of Covered Company Shares by a Stockholder to any Affiliate of such Stockholder; provided, however, that any such Transfer shall only be a Permitted Transfer if and to the extent that the transferee of such Covered Company Shares evidences in a writing in form and substance reasonably satisfactory to Parent such transferee’s agreement to be bound by and subject to the terms and provisions hereof to the same effect as the transferring Stockholder, and upon such transfer to be deemed a Stockholder hereunder.

“Transfer” means any direct or indirect sale, assignment, encumbrance, pledge, hypothecation, exchange, disposition (including by merger, consolidation, testamentary disposition or otherwise ) or other transfer (by operation of law or otherwise), either voluntary or involuntary, or entry into any contract, option or other arrangement or understanding with respect to any sale, assignment, encumbrance, pledge, hypothecation, exchange, disposition (including by merger, consolidation, testamentary disposition or otherwise ) or other transfer (by operation of law or otherwise), of any capital stock or interest (including voting or economic interest) in any capital stock (including any Covered Company Shares).

ARTICLE II

VOTING AGREEMENT

Section 2.1        Agreement to Vote.

(a)         During the Voting Period, each Stockholder hereby irrevocably and unconditionally agrees that at the Company Stockholder Meeting and at any other meeting of the stockholders of the Company, however called, including any adjournment or postponement thereof, and in connection with any written consent of the stockholders of the Company, such Stockholder shall, in each case to the extent that the Covered Company Shares are entitled to vote thereon or consent thereto:

(i)          appear at each such meeting or otherwise cause all of such Stockholder’s Covered Company Shares to be counted as present thereat for purposes of calculating a quorum; and

(ii)          vote (or cause to be voted), in person or by proxy, or if applicable deliver (or cause to be delivered) a written consent covering, all of such Stockholder’s Covered Company Shares:

(1)          in favor of the adoption of the Merger Agreement and approval of the Merger and the other Transactions and any other

action necessary, desirable or reasonably requested by Parent in furtherance thereof;

(2)          in favor of any proposal to adjourn a meeting of the stockholders of the Company to solicit additional proxies in favor of the adoption of the Merger Agreement and approval of the Merger and the other Transactions;

(3)          against any Acquisition Proposal, without regard to the terms of any such Acquisition Proposal, or any other transaction, proposal, agreement or action made in opposition to adoption of the Merger Agreement or in competition or inconsistent with the Merger and the other Transactions;

(4)          against any other action, agreement or transaction that is intended to impede, interfere with, delay, postpone, discourage, frustrate the purposes of or adversely affect the Merger or the other Transactions (including the consummation in each case thereof) or this Agreement or the performance by the Company of its obligations under the Merger Agreement or by such Stockholder of its obligations under this Agreement, including (A) any action, agreement or transaction that would result in any condition to the consummation of the Merger set forth in the Merger Agreement not being satisfied, or that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the Merger Agreement, or of such Stockholder contained in this Agreement, (B) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Acquired Companies, (C) a sale, lease or transfer of a material amount of assets of any of the Acquired Companies (other than the Merger) or a reorganization, recapitalization or liquidation of any of the Acquired Companies, (D) an election of new members to the board of directors of the Company, other than nominees to the board of directors of the Company who are serving as directors of the Company on the date of this Agreement or as otherwise provided in the Merger Agreement, (E) any material change in the present capitalization or dividend policy of the Company or any amendment or other change to the Company’s certificate of incorporation or bylaws, except if approved in writing by Parent or (F) any other material change in the Company’s corporate structure or business, except if approved in writing by the Company.

(b)         Any vote required to be cast or consent required to be executed pursuant to this Section 2.1 shall be cast or executed in accordance with the applicable procedures relating thereto so as to ensure that it is duly counted for purposes of determining that a quorum is present (if applicable) and for purposes of recording the results of that vote or consent.  Nothing contained in this Agreement shall require any Stockholder (or shall entitle any proxy of any Stockholder) to convert, exercise or exchange any option, warrants or convertible securities in order to obtain any underlying shares of Company Common Stock.

Section 2.2       No Inconsistent Agreements.  Each Stockholder represents, covenants and agrees that, except for this Agreement, such Stockholder (a) has not entered into, nor shall enter into at any time while this Agreement remains in effect, any voting agreement, voting trust or similar arrangement or understanding with respect to any Covered Company Shares, (b) has not granted, nor shall grant at any time while this Agreement remains in effect, a proxy (except in accordance with Section 2.3), consent or power of attorney with respect to any Covered Company Shares and (c) has not taken, nor shall take at any time while this Agreement remains in effect, any action that would (1) make any representation or warranty of such Stockholder contained herein untrue or incorrect, (2) violate or conflict with such Stockholder’s covenants and obligations under this Agreement or (3) otherwise have the effect of restricting, preventing or disabling such Stockholder from performing any of its obligations under this Agreement.

Section 2.3       Proxies.  Other than (i) the granting of proxies to vote Covered Company Shares to an Affiliate of such Stockholder as a Permitted Transfer and (ii) the granting of proxies to vote Covered Company Shares with respect to the election of directors, ratification of the appointment of the Company’s auditors at the Company’s annual meeting or special meeting of stockholders, and other routine matters at the Company’s annual meeting or any special meeting, in either case, to the extent such matters are not (x) inconsistent with the obligations contemplated by the Merger Agreement or this Agreement or (y) related to the transactions contemplated by the Merger Agreement or this Agreement, no Stockholder shall, directly or indirectly, grant any Person any proxy (revocable or irrevocable), power of attorney or other authorization with respect to the voting of any of such Stockholder’s Covered Company Shares.

ARTICLE III

OTHER COVENANTS

Section 3.1        Restrictions on Transfers.  Each Stockholder hereby agrees that, during the Voting Period, (i) such Stockholder shall not, directly or indirectly, Transfer or consent to a Transfer of any Covered Company Shares or any Beneficial Ownership interest or any other interest therein, unless such Transfer is a Permitted Transfer and (ii) any Transfer in violation of this provision shall be void.

Section 3.2       No Solicitation.  During the Voting Period, (i) each Stockholder shall, and shall cause each of its controlled Affiliates (excluding its portfolio companies) and its and their respective Representatives to, immediately cease and cause to be terminated any existing solicitation, encouragement, discussion or negotiation with any Third Party with respect to an Acquisition Proposal, (ii) such Stockholder shall not, and shall cause each of its controlled Affiliates (excluding its portfolio companies) and its and their respective Representatives not to, directly or indirectly (A) solicit, initiate, seek or knowingly facilitate or encourage any inquiry, discussion, offer or request relating to, or that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal, (B) enter into continue or otherwise participate in any discussions or negotiations with, or furnish any non-public information relating to the Acquired Companies to, or afford access to the properties, books or records or employees of the Acquired Companies to, any Third Party with respect to or that could reasonably be expected to lead to any Acquisition Proposal, (C) approve, endorse, recommend or enter into, or publicly propose to approve, endorse, recommend or enter into any letter of intent, memorandum of understanding,

agreement in principle, acquisition agreement, merger agreement or other definitive agreement with respect to any Acquisition Proposal or (D) agree, propose or resolve to take, or take, any of the actions prohibited by the foregoing clause (A) through clause (C) and (iii) such Stockholder shall, and shall cause each of its controlled Affiliates (excluding its portfolio companies) and its and their respective Representatives to, within twenty-four (24) hours of the entry into this Agreement, promptly deliver a written notice to each such Third Party requesting the prompt return or destruction of all confidential and non-public information relating to any Acquired Company previously furnished to such Person by or on behalf of such Stockholder or any of its Representatives.  Each Stockholder shall not cause any of its portfolio companies and their respective Representatives to fail to comply with the provisions set forth in the immediately preceding sentence. Notwithstanding anything to the contrary herein, this Agreement shall not restrict the ability of such Stockholder to review any Acquisition Proposal and, solely to the extent the Company Board has made the determinations set forth in Section 6.02(b)(ii) of the Merger Agreement, to discuss and confirm to the Company the willingness of such Stockholder to support and sign a voting and support agreement in the event of any termination of the Merger Agreement or Adverse Recommendation Change.

Section 3.3        Waiver of Appraisal Rights; Litigation.  Each Stockholder hereby irrevocably and unconditionally waives, and agrees not to exercise, assert or perfect (or attempt to exercise, assert or perfect) any rights of appraisal or rights to dissent from the Merger that it may at any time have under Applicable Law.  Each Stockholder agrees not to commence, join in, facilitate, assist or encourage any claim, derivative or otherwise, against Parent, Merger Sub, the Company or any of their respective successors or Representatives (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement, (b) alleging a breach of any fiduciary duty of any Person in connection with the evaluation, negotiation or entry into the Merger Agreement or (c) otherwise relating to the Merger Agreement, this Agreement or the Merger or other transactions contemplated by the Merger Agreement or this Agreement; provided, however, that the foregoing shall not restrict such Stockholder from enforcing any of its rights under the Merger Agreement or this Agreement.

Section 3.4        Stock Dividends, Distributions, Etc.  In the event of a stock split, reverse stock split, stock dividend or distribution, or any change in the Company Common Stock by reason of any recapitalization, combination, reclassification, exchange of shares or similar transaction, the terms “Existing Shares” and “Covered Company Shares” shall be deemed to refer to and include all such stock dividends and distributions and any securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction.

Section 4.1        Representations and Warranties of Each Stockholder.  Each Stockholder hereby jointly and severally represents and warrants to Parent as follows:

(a)         Organization.  Such Stockholder is duly organized and validly existing under the Laws of the jurisdiction of its incorporation, formation or organization, as applicable.

(b)         Authority; Execution and Delivery; Enforceability.  Such Stockholder has all necessary corporate or other entity power and authority to execute, deliver and perform its obligations under this Agreement and the execution, delivery and performance by such Stockholder of this Agreement and the compliance by such Stockholder with each of its obligations herein have been duly and validly authorized by all necessary corporate or other entity action on the part of such Stockholder.  Such Stockholder has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by of the other Parties to this Agreement, this Agreement constitutes such Stockholder’s legal, valid and binding obligation, enforceable against such Stockholder in accordance with its terms, except that (A) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors’ rights and remedies generally and (B) the 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.

(c)         Ownership of Shares.  As of the date hereof, except as described in a Schedule 13D or Schedule 13G filed by or on behalf of the Stockholders with the SEC prior to the date of this Agreement (the “Beneficial Ownership Disclosure”), such Stockholder is the sole Beneficial Owner of the Existing Shares set forth opposite such Stockholder’s name on Schedule I hereto, free and clear of any Liens and free of any limitation or restriction on the right to vote, sell, transfer or otherwise dispose of such Existing Shares (other than (i) this Agreement, (ii) any shareholders or similar agreement of the Company or (iii) any limitations or restrictions imposed under Applicable Laws), and such Existing Shares constitute all of the shares of Company Common Stock Beneficially Owned or owned of record by such Stockholder.  Except as set forth on Schedule I hereto or described in the Beneficial Ownership Disclosure, such Stockholder has and will have at all times through the Voting Period (except to the extent such Existing Shares are transferred after the date hereof pursuant to a Permitted Transfer) sole voting power (including the right to control such vote as contemplated herein), sole power of disposition, sole power to issue instructions with respect to the matters set forth in Section 2.1, and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of such Stockholder’s Existing Shares.

(d)         No Conflicts.  Neither the execution and delivery of this Agreement by such Stockholder nor compliance by it with any of the terms or provisions hereof will (i) violate any provision of the certificate of incorporation, bylaws, or other organizational or governing documents of such Stockholder, (ii) conflict with or violate any Law applicable to such Stockholder or by which any of such Stockholder’s properties or assets are bound or affected, (iii) violate, conflict with, result in any breach of any provision of, or loss of any benefit under, constitute a default (with or without notice or lapse of time, or both) under, give rise to any right of termination under, or require the consent of, notice to, or filing with any third party pursuant to any terms or provisions of any material Contract to which such Stockholder is a party or by which any of the Covered Company Shares are bound, or result in the creation of any Lien (other than any Permitted Lien) upon any of the Covered Company Shares, except, in the case of the foregoing clauses (ii) or (iii), for such violations as, individually or in the aggregate, would not reasonably be expected to impair such Stockholder’s ability to perform its obligations under this Agreement on a timely basis.

(e)         Consents and Approvals.  The execution, delivery and performance by such Stockholder of this Agreement do not and will not require any consent of, or filing with, any Governmental Authority (excluding filings with the SEC under applicable securities Laws and applicable Antitrust Laws).

(f)          Legal Proceedings.  As of the date of this Agreement, there are no Proceedings pending, or to the knowledge of such Stockholder, threatened against such Stockholder or any of such Stockholder’s assets or properties that would reasonably be expected to impair such Stockholder’s ability to perform such Stockholder’s obligations under this Agreement on a timely basis.  Such Stockholder is not, and none of such Stockholder’s properties or assets is or are, subject to any Governmental Order that would reasonably be expected to impair such Stockholder’s ability to perform its obligations under this Agreement on a timely basis.

(g)         Acknowledgement. Each Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon such Stockholder’s execution, delivery and performance of this Agreement.

(h)         No Other Representations.  Such Stockholder acknowledges and agrees that other than the representations expressly set forth in this Agreement, Parent has not made, and is not making, any representations or warranties to such Stockholder with respect to Parent, the Merger Agreement or any other matter.  Such Stockholder hereby specifically disclaims reliance upon any representations or warranties (other than the representations expressly set forth in this Agreement).

Section 4.2        Representations and Warranties of Parent.  Parent hereby represents and warrants to each Stockholder as follows:

(a)         Organization.  Parent is duly organized and validly existing under the Laws of Delaware.

(b)         Authority; Execution and Delivery; Enforceability.  Parent has all necessary corporate power and authority to execute, deliver and perform its obligations under this Agreement.  The execution, delivery and performance by Parent of this Agreement and the compliance by Parent with each of its obligations herein have been duly and validly authorized by all necessary corporate action on the part of Parent.  Parent has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by of the other Parties to this Agreement, this Agreement constitutes Parent’s legal, valid and binding obligation, enforceable against it in accordance with its terms, except that (A) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors’ rights and remedies generally and (B) the 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.

(c)         No Conflicts.  Neither the execution and delivery of this Agreement by Parent nor compliance by Parent with any of the terms or provisions hereof will (i) violate any

provision of the certificate of incorporation, bylaws, or other organizational or governing documents of Parent, (ii) conflict with or violate any Law applicable to Parent or by which any of Parent’s properties or assets are bound or affected, (iii) violate, conflict with or result in any breach of any provision of, or result in the loss of any benefit under, or constitute a default (with or without notice or lapse of time, or both) under, give rise to any right of termination, acceleration or cancellation of or require the consent of, notice to or filing with any third party pursuant to any of the terms or provisions of any material Contract to which Parent is a party or by which any property or asset of Parent is bound, or result in the creation of any Lien (other than any Permitted Lien) upon any of the properties or assets of Parent, except, in the case of the foregoing clauses (ii) or (iii), for such violations as, individually or in the aggregate, would not reasonably be expected to impair Parent’s ability to perform its obligations under this Agreement on a timely basis.

(d)         No Other Representations.  Parent acknowledges and agrees that other than the representations expressly set forth in this Agreement, no Stockholder has made, or is making, any representations or warranties to Parent with respect to the Company, such Stockholder’s ownership of Company Common Stock, the Merger Agreement or any other matter.  Parent hereby specifically disclaims reliance upon any representations or warranties (other than the representations expressly set forth in this Agreement).

ARTICLE V

TERMINATION

Section 5.1        Termination.  This Agreement shall terminate upon the earliest to occur of:

(a)         the termination of this Agreement by the mutual written consent of Parent and each Stockholder;

(b)         the termination of the Merger Agreement in accordance with its terms prior to the Effective Time;

(c)         an Adverse Recommendation Change to the extent permitted by, and subject to the applicable terms and conditions of, Section 6.02 of the Merger Agreement;

(d)         the Effective Time; and

(e)         any amendment to the Merger Agreement without the prior written consent of the Stockholders that (I) decreases the amount or changes the form of the Merger Consideration, (II) imposes any additional material restrictions on or additional conditions on the payment of the Merger Consideration to stockholders of the Company, (III) imposes any additional material restrictions or obligations on the Stockholders or (IV) otherwise amends the Merger Agreement in a manner materially adverse to the Stockholders relative to the other stockholders of the Company (excluding, in all cases, any amendments affecting directors, officers or employees of the Company or any Subsidiary of the Company in their capacities as such who are stockholders of the Company).

In the event of the termination of this Agreement in accordance with this Section 5.1, this Agreement shall forthwith become void and have no effect, and there shall not be any liability or obligation on the part of any Party hereto, other than Section 3.3, this Section 5.1 and Article VI, which provisions shall survive such termination; provided, however, that nothing in this Section 5.1 shall relieve any Party from liability for any material and intentional breach of any representation, warranty, covenant or other agreement contained in this Agreement, in which case the aggrieved Party shall be entitled to all rights and remedies available at law or in equity. For purposes of this Agreement, “material and intentional breach” shall mean an action or omission taken or omitted to be taken that the breaching Party intentionally takes (or fails to take) and knows would, or knows would reasonably be expected to, cause a material breach of this Agreement.

ARTICLE VI

MISCELLANEOUS

Section 6.1       Publication.  Each Stockholder (i) hereby consents to and authorizes the publication and disclosure by Parent and the Company in any press release or the Proxy Statement (including all documents and schedules filed with the SEC) or other disclosure document required under Applicable Law in connection with the Merger Agreement or the transactions contemplated thereby, its identity and ownership of shares of Company Common Stock, the nature of its commitments, arrangements and understandings pursuant to this Agreement and such other information reasonably required under Applicable Law in connection with such publication or disclosure (“Stockholder Information”), and (ii) hereby agrees to cooperate with Parent and the Company in connection with such filings, including providing Stockholder Information requested by Parent or the Company.  As promptly as practicable, each Stockholder shall notify Parent of any required corrections with respect to any Stockholder Information supplied by such Stockholder, if and to the extent such Stockholder becomes aware that any such Stockholder Information shall have become false or misleading in any material respect. Parent hereby consents to and authorizes the publication and disclosure by each Stockholder and its Affiliates of this Agreement and any Stockholder Information in any disclosure required by Applicable Law (including any Schedule 13D or other filing with the SEC).

Section 6.2       No Ownership Interest.  Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership of or with respect to any Covered Company Shares.  All rights, ownership and economic benefits of and relating to the Covered Company Shares shall remain vested in and belong to each Stockholder, and Parent shall have no authority to direct such Stockholder in the voting or disposition of any of the Covered Company Shares, except as otherwise provided herein.

Section 6.3       Further Assurances.  Each of the Parties agrees that, upon the reasonable request of any other Party, it shall use reasonable best efforts to take, or cause to be taken, such further actions as may be reasonably necessary, proper or advisable to comply with its obligations hereunder, including by executing and delivering additional documents.

Section 6.4       Amendment and Modification; Waiver.  This Agreement may not be amended, modified or supplemented, except by an instrument in writing signed on behalf of each of the Parties hereto.  Any agreement on the part of a Party to any waiver of any obligation of the other Parties shall be valid only if set forth in an instrument in writing signed on behalf of such waiving Party.  The failure or delay of any Party to assert any of its rights, powers or privileges under this Agreement or otherwise shall not constitute a waiver of such rights, nor shall any single or partial exercise by any Party of any of its rights under this Agreement preclude any other or further exercise of such rights or any other rights under this Agreement.

Section 6.5        Notices.  All notices, consents and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by hand delivery, by prepaid overnight courier (providing written proof of delivery) or by confirmed facsimile transmission or electronic mail, addressed as follows:

(a)       if to Parent, to:

Verscend Technologies, Inc.

201 Jones Road

4th Floor

Waltham, MA 02451

Attention: Brett Magun

Email: brett.magun@verscend.com

Facsimile: (781) 478-0217

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Attention:

Kenneth M. Wolff

June S. Dipchand

Email:

Kenneth.Wolff@skadden.com

June.Dipchand@skadden.com

Facsimile:

(212) 777-3000

(b)      if to a Stockholder, as set forth on Schedule II hereto.

Section 6.6       Counterparts.  This Agreement may be executed in multiple counterparts, all of which shall together be considered one and the same agreement.  Delivery of an executed signature page to this Agreement by electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

Section 6.7        Entire Agreement; Third Party Beneficiaries.  This Agreement (including the Schedules hereto and, to the extent referred to in this Agreement, the Merger Agreement, together with the several agreements and other documents and instruments referred to herein or therein or annexed hereto or thereto) (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the

subject matter hereof and thereof and (b) is not intended to and shall not confer any rights, benefits, remedies, obligations or liabilities upon any Person other than the Parties hereto and their respective permitted successors and assigns.

Section 6.8        Severability.  If any term or other provision of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, illegal or incapable of being enforced by any rule of 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.  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 to the end that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible.

Section 6.9        Binding Effect; Benefit; Assignment.

(a)         This Agreement shall be binding upon, inure solely to the benefit of and be enforceable by each Party hereto and their respective permitted successors and assigns. Nothing in this Agreement, express or implied is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

(b)         Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto by operation of Law or otherwise without the prior written consent of the other Parties, except that Parent shall have the right, without the prior written consent of the other Parties, to assign all or any portion of its rights, interests and obligations hereunder to one or more of its Subsidiaries.  Any purported assignment in violation of this Section 6.9(b) shall be null and void.

Section 6.10     Headings; Interpretation(a)          .

(a)         The Parties hereto have participated collectively in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted collectively by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

(b)         The words “hereof,” “herein,” “hereby,” “hereunder” and “herewith” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  References to articles, sections, paragraphs and schedules are to the articles, sections and paragraphs of, and schedules to, this Agreement, unless otherwise specified, and the headings 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 phrase “without limitation.”  Words describing the singular number shall be deemed to include the plural and vice versa, words denoting any gender shall be deemed to include all genders,

words denoting natural persons shall be deemed to include business entities and vice versa and references to a Person are also to its permitted successors and assigns.  The term “or” is not exclusive.  The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”  The phrases “the date of this Agreement” and “the date hereof” and terms or phrases of similar import shall be deemed to refer to the date first set forth above, unless the context requires otherwise.  Terms defined in the text of this Agreement have such meaning throughout this Agreement, unless otherwise indicated in this Agreement, and all terms defined in this Agreement shall have the meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. Any Law defined or referred to herein or in any agreement or instrument that is referred to herein means such Law as from time to time amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor Laws (provided that for purposes of any representations and warranties contained in this Agreement that are made as of a specific date or dates, references to any statute shall be deemed to refer to such statute, as amended, and to any rules or regulations promulgated thereunder, in each case, as of such date).  All references to “dollars” or “$” refer to currency of the United States.

Section 6.11     Governing Law.  This Agreement and all Proceedings (whether based on contract, tort or otherwise) arising out of, or related to this Agreement, the transactions contemplated by this Agreement, or the actions of Parent or the Stockholders in the negotiation, administration, performance and enforcement thereof, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.

Section 6.12     Specific Performance.  The Parties hereto agree that irreparable damage would occur, and that the Parties would not have any adequate remedy at law, in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached (including failing to take such actions as are required of it hereunder to consummate the transactions contemplated by this Agreement).  It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement and to specifically enforce the terms and provisions of this Agreement, without proof of actual damages or otherwise, in addition to any other remedy to which any Party is entitled at law or in equity.  Each Party agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that any other Party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity.  Any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with any such order or injunction. The Parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy.

Section 6.13     Consent to Jurisdiction.  Each of the Parties hereto hereby expressly, irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware or, if such court shall not have jurisdiction, any Federal court of the United States of America sitting in Delaware, and any appellate court

from any appeal thereof, in any Proceeding arising out of or relating to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the Parties hereby irrevocably and unconditionally (i) agrees not to commence any such Proceeding except in such courts, (ii) agrees that any claim in respect of any such Proceeding may be heard and determined in the Court of Chancery of the State of Delaware or, to the extent permitted by Applicable Law, in such Federal court, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Court of Chancery of the State of Delaware or such Federal court and (iv) waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such Proceeding in the Court of Chancery of the State of Delaware or such Federal court.  Each of the Parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law; provided, however, that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, such final trial court judgment.  Each Party to this Agreement irrevocably consents to service of process outside the territorial jurisdiction of the courts referred to in this Section 6.13 in any such Proceeding by mailing copies thereof by registered or certified U.S. mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 6.5.  However, nothing in this Agreement will affect the right of any Party to serve process on any other Party in any other manner permitted by law.

Section 6.14      WAIVER OF JURY TRIAL.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.14.

Section 6.15     Capacity as a Stockholder.  Each Stockholder makes its agreements and understandings herein solely in its capacity as record holder and Beneficial Owner of the Covered Company Shares and, notwithstanding anything to the contrary herein, nothing herein shall limit or affect any actions taken by any Representative of such Stockholder solely in his or her capacity as a director or officer of the Company.

Section 6.16     Expenses.  All expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the Party incurring such expenses, whether or not the Merger or the other transactions contemplated by the Merger Agreement are consummated.

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

SCHEDULE I
EXISTING SHARES

SCHEDULE II
STOCKHOLDER NOTICES