EX-2.1 2 tm2113351d1_ex2-1.htm EXHIBIT 2.1

 

EXHIBIT 2.1

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

ROMAN DBDR TECH ACQUISITION CORP.,

 

ROMAN PARENT MERGER SUB, LLC,

 

COMPOSECURE HOLDINGS, L.L.C.

 

and

 

LLR Equity Partners IV, L.P.

 

April 19, 2021

 

 

 

 

Table of Contents

 

    Page
ARTICLE I. CERTAIN DEFINITIONS 2
Section 1.1 Certain Definitions 2
Section 1.2 Interpretation. 20
ARTICLE II. THE MERGER 21
Section 2.1 The Merger 21
Section 2.2 Certificate of Merger 21
Section 2.3 Organizational Documents; Name of Surviving Entity 21
Section 2.4 Officers of Surviving Entity 21
Section 2.5 Manager of Surviving Entity 22
Section 2.6 Effect of the Merger 22
Section 2.7 Merger Consideration; Letters of Transmittal. 24
Section 2.8 Parent Closing Statement Certificate 24
Section 2.9 Earnout 25
Section 2.10 Options 26
Section 2.11 Withholding Rights 28
Section 2.12 Adjustments 28
Section 2.13 Taking of Necessary Action; Further Action 29
ARTICLE III. CLOSING 29
Section 3.1 Closing 29
Section 3.2 Company Transaction Expenses 29
Section 3.3 Deliveries and Proceedings at Closing 29
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 31
Section 4.1 Organization and Qualification; Subsidiaries 31
Section 4.2 Authority; Board Approval. 31
Section 4.3 No Conflict 32
Section 4.4 Capitalization. 33
Section 4.5 Financial Statements 33
Section 4.6 Undisclosed Liabilities 34
Section 4.7 Absence of Certain Changes or Events 34
Section 4.8 Title; Real Property. 34
Section 4.9 Condition and Sufficiency of Assets 35
Section 4.10 Intellectual Property. 35
Section 4.11 Privacy and Data Security. 38
Section 4.12 Systems and IT. 39
Section 4.13 Contracts 40
Section 4.14 Litigation 41
Section 4.15 Compliance with Laws; Permits. 42
Section 4.16 Environmental Matters 42
Section 4.17 Employee Benefit Matters. 43
Section 4.18 Taxes 46

 

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Table of Contents

(continued)

Page

Section 4.19 Employee Relations 48
Section 4.20 Insurance 51
Section 4.21 Transactions with Related Parties 51
Section 4.22 Brokers 51
Section 4.23 Exchange Act 51
Section 4.24 Parent Common Stock 51
Section 4.25 Information Supplied 51
Section 4.26 Disclaimer of Other Warranties. 52
Section 4.27 No Other Representations or Warranties 53
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 53
Section 5.1 Organization 53
Section 5.2 Authorization 53
Section 5.3 No Conflict 54
Section 5.4 Consents 54
Section 5.5 Brokers 54
Section 5.6 SEC Filings. 54
Section 5.7 Capitalization. 56
Section 5.8 Litigation 57
Section 5.9 Compliance with Laws 57
Section 5.10 Stock Exchange Listing 57
Section 5.11 Capitalization of Parent Post-Closing 57
Section 5.12 Transactions with Related Parties 58
Section 5.13 Board Approval; Stockholder Vote 58
Section 5.14 Trust Account 58
Section 5.15 Taxes 58
Section 5.16 Information Supplied 60
Section 5.17 Organization and Operations of Parent and Merger Sub 60
Section 5.18 Independent Investigation 61
Section 5.19 Disclaimer of Other Warranties 62
Section 5.20 No Other Representations or Warranties 62
ARTICLE VI. COVENANTS AND AGREEMENTS 63
Section 6.1 Access to, and Information of, the Company; Financial Statements of the Company 63
Section 6.2 Conduct of Business by the Company Entities 63
Section 6.3 Further Assurances. 66
Section 6.4 Public Announcements 67
Section 6.5 Member Consent 68
Section 6.6 Forms of Consents and Waivers 68
Section 6.7 Director & Officer Indemnification. 68
Section 6.8 Proxy Statement; Parent Stockholders’ Meeting. 70

 

-ii-

 

 

Table of Contents

(continued)

Page

Section 6.9 Form 8-K Filings 72
Section 6.10 Concurrent Execution of Agreements 72
Section 6.11 Exclusivity. 72
Section 6.12 Trust Account 74
Section 6.13 Tax Matters. 74
Section 6.14 Resignations; Parent D&O Tail Policy 78
Section 6.15 Update of Financial Statements 78
Section 6.16 Closing Conditions 78
Section 6.17 Section 16 Matters 78
Section 6.18 Access to, and Information of, Parent 78
Section 6.19 Conduct of Business by Parent 79
Section 6.20 No Control of the Other Party’s Business 80
Section 6.21 Post-Closing Directors and Officers of Parent 80
Section 6.22 Subscription Agreements 80
Section 6.23 Company Debt Financing 81
Section 6.24 Employee Benefit Matters. 82
ARTICLE VII. CONDITIONS TO CLOSING AND THE MERGER 83
Section 7.1 Mutual Conditions 83
Section 7.2 Conditions to the Obligations of Parent and Merger Sub 83
Section 7.3 Conditions to the Obligations of the Company 84
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER 85
Section 8.1 Termination 85
Section 8.2 Manner of Exercise 87
Section 8.3 Effect of Termination 87
Section 8.4 Waiver 87
ARTICLE IX. MISCELLANEOUS 87
Section 9.1 Survival 87
Section 9.2 Notices 87
Section 9.3 Annexes, Exhibits and Schedules 88
Section 9.4 Computation of Time 89
Section 9.5 Expenses 89
Section 9.6 Governing Law 89
Section 9.7 Assignment; Successors and Assigns; No Third Party Rights 90
Section 9.8 Counterparts 90
Section 9.9 Titles and Headings 90
Section 9.10 Entire Agreement 90
Section 9.11 Severability 90
Section 9.12 Specific Performance 91
Section 9.13 Waiver of Jury Trial 91

 

-iii-

 

 

Table of Contents

(continued)

Page

Section 9.14 Failure or Indulgence not Waiver 91
Section 9.15 Company Privilege 92
Section 9.16 Member Representative 92
Section 9.17 Amendments 94
Section 9.18 Trust Account Waiver 95

 

-iv-

 

 

Annexes

 

Annex A Form of Registration Rights Agreement
Annex B Form of Tax Receivable Agreement
Annex C Form of Stockholders Agreement
Annex D Voting Agreement
Annex E-1 Form of Parent Equity Compensation Plan
Annex E-2 Form of Parent Employee Stock Purchase Plan
Annex F Form of Exchange Agreement
Annex G Expense Cap and Waiver Agreement
Annex H-1 Common Subscription Agreement
Annex H-2 Exchangeable Subscription Agreement
Annex I Form of Certificate of Merger
Annex J Form of CompoSecure Holdings, L.L.C. Second Amended and Restated Limited Liability Company Agreement
Annex K Form of Parent Second Amended and Restated Certificate of Incorporation
Annex L Form of Parent Amended and Restated Bylaws
Annex M Form of Letter of Transmittal

 

Schedules

 

Schedule 1.1(a) Specified Stockholders  
Schedule 1.1(b) Supporting Holders
Schedule 1.1(c) Company Knowledge Parties
Schedule 1.1(d) Parent Knowledge Parties
Schedule 2.6 Merger Consideration Schedule
Schedule 6.2 Conduct of the Business by the Company Entities
Schedule 6.14 Parent D&O Resignations
Schedule 6.19 Conduct of Business by Parent
Schedule 6.24 Key Employees
Schedule 7.2(g) Certain Consents

 

-v-

 

 

AGREEMENT AND PLAN OF MERGER

 

This Agreement and Plan of Merger (this “Agreement”) is dated as of April 19, 2021, among Roman DBDR Tech Acquisition Corp., a Delaware corporation (“Parent”), Roman Parent Merger Sub, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Parent (“Merger Sub”), CompoSecure Holdings, L.L.C., a Delaware limited liability company (the “Company”), and LLR Equity Partners IV, L.P., a Delaware limited partnership (the “Member Representative”).

 

WHEREAS, the Company is engaged in the design, manufacture and sale of premium credit cards and other proprietary products in the financial card services industry and is an emergent provider of cryptocurrency and digital asset storage and security solutions;

 

WHEREAS, the parties intend to effect the merger of Merger Sub with and into the Company, with the Company continuing as the surviving entity following such merger (the “Merger”);

 

WHEREAS, the respective boards of directors or managers, as applicable, of Parent, Merger Sub and the Company have approved and adopted the form, terms, execution and delivery of this Agreement, the Merger and the consummation of the transactions contemplated hereby, upon the terms of and subject to the conditions set forth herein;

 

WHEREAS, the board of directors of Parent has (i) determined that this Agreement and the transactions contemplated hereby (including the Merger) are advisable, fair to, and in the best interests of, Parent and its stockholders, (ii) resolved to submit this Agreement and the transactions contemplated hereby (including the issuance of Class B Parent Common Stock as Merger Consideration and the Parent Second Amended and Restated Certificate of Incorporation) to the stockholders of Parent for their approval and adoption and (iii) resolved to recommend approval of this Agreement and the transactions contemplated hereby (including the issuance of Class B Parent Common Stock as Merger Consideration and the adoption of the Parent Second Amended and Restated Certificate of Incorporation) by the stockholders of Parent;

 

WHEREAS, the board of managers of Merger Sub has unanimously (i) determined that this Agreement and the transactions contemplated hereby (including the Merger) are advisable, fair to, and in the best interests of, Merger Sub and Parent, and (ii) directed that this Agreement be submitted to Parent for its approval and adoption in its capacity as the sole member of Merger Sub;

 

WHEREAS, the Company Board has unanimously determined that this Agreement and the transactions contemplated hereby (including the Merger) are advisable, fair to, and in the best interests of, the Company and the Holders;

 

WHEREAS, the Company Board shall seek to obtain, in accordance with the Act, a written consent of the Company’s members approving this Agreement, the Merger and the transactions contemplated hereby in accordance with the Act;

 

1

 

 

WHEREAS, the following agreements will be entered into at Closing: (a) a Registration Rights Agreement (the “Registration Rights Agreement”) substantially in the form attached hereto as Annex A, (b) a Tax Receivable Agreement (the “Tax Receivable Agreement”), substantially in the form attached hereto as Annex B, (c) a Stockholders Agreement (the “Stockholders Agreement”) substantially in the form attached hereto as Annex C, and (d) an Exchange Agreement (the “Exchange Agreement”) substantially in the form attached hereto as Annex F;

 

WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, the Company, the Specified Stockholders of Parent listed on Schedule 1.1(a) attached hereto and the Supporting Holders of the Company listed on Schedule 1.1(b) have entered into and delivered the Voting Agreement attached hereto as Annex D;

 

WHEREAS, as a condition to and inducement to the Company’s willingness to enter into this Agreement, concurrently with the execution and delivery of this Agreement, Parent, certain Specified Stockholders of Parent and certain other Persons have entered into and delivered an Expense Cap and Waiver Agreement (the “Expense Cap and Waiver Agreement”) attached hereto as Annex G; and

 

WHEREAS, concurrently with the execution and delivery of this Agreement, Parent has obtained commitments in an aggregate amount equal to $175,000,000 from certain investors (the “PIPE Investors”) for a private placement of (i) shares of Class A Parent Common Stock (the “Common PIPE Investment”) pursuant to the terms of the subscription agreement attached hereto as Annex H-1 (the “Common Subscription Agreement”), and (ii) 7.00% exchangeable senior notes (the “Exchangeable Notes”) to be issued by the Company (the “Note PIPE Investment”, together with the Common PIPE Investment, the “PIPE Investment”) pursuant to the terms of the subscription agreement attached hereto as Annex H-2 (the “Note Subscription Agreement”, together with the Common Subscription Agreement, the “Subscription Agreements”).

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and intending to be legally bound, the parties hereto agree as follows:

 

ARTICLE I.
CERTAIN DEFINITIONS

 

Section 1.1         Certain Definitions. As used in this Agreement, the following terms have the respective meanings set forth below.

 

Accounting Firm” means a nationally-recognized accounting firm mutually acceptable to each of Parent and the Member Representative.

 

Act” means the Limited Liability Company Act of the State of Delaware, as amended from time to time.

 

Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person; provided, however, that for purposes of this Agreement, Parent and Merger Sub, on the one hand, and the Company and its Subsidiaries, on the other hand, shall not be considered Affiliates of one another. The term “control” (including the terms “controlled by” and “under common control with”) means 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.

 

2

 

 

Agreement” means this Agreement and Plan of Merger, as it may be amended, modified or supplemented from time to time.

 

Allocation Statement” has the meaning set forth in Section 6.13(b).

 

AML Laws” means all anti-money laundering Laws and similar Laws, such as the Money Laundering Control Act of 1986, USA PATRIOT Act, the Bank Secrecy Act, and regulations, rules, guidelines, requirements, limitations and prohibitions of the Financial Crimes Enforcement Network and the U.S. Department of the Treasury and its Office of Foreign Assets Control (“OFAC”), including any sanctions administered by OFAC or the U.S. Department of State.

 

Ancillary Agreements” means the Registration Rights Agreement, the Tax Receivable Agreement, the Stockholders Agreement, the Voting Agreement, the Exchange Agreement, the Expense Cap and Waiver Agreement, the Subscription Agreements, and all other agreements, certificates and instruments executed and delivered by Parent, Merger Sub, the Company or Member Representative in connection with the Transactions and specifically contemplated by this Agreement.

 

Available Cash” means, as of the Closing, (i) all cash in the Trust Account (net of (a) the Parent Common Stockholder Redemption Amount and (b) the Parent Transaction Expenses) plus (ii) the amount of the PIPE Investment.

 

Balance Sheet” has the meaning set forth in Section 4.5.

 

Balance Sheet Date” has the meaning set forth in Section 4.5.

 

BBA Audit Rules” has the meaning set forth in Section 4.18(q).

 

Benefit Plan” means each (i) “employee benefit plan,” as defined in Section 3(3) of ERISA whether or not subject to ERISA and (ii) all other pension, retirement, supplemental retirement, deferred compensation, severance, change in control, employment, excess benefit, profit sharing, bonus, incentive, stock purchase, stock ownership, stock option, stock appreciation right, health, life, disability, group insurance, vacation, holiday and material fringe benefit plan, program, contract, agreement or arrangement (whether written or unwritten) sponsored, maintained, contributed to, required to be contributed to, by a Company Entity or any ERISA Affiliate for the benefit of any current or former employee, manager, officer or independent contractor (or their dependents or beneficiaries) of such Company Entity or any ERISA Affiliate or under which such Company Entity or any ERISA Affiliate has any liability.

 

Business” means the business of the Company Entities collectively as of the date hereof, and references to “business of the Company”, “Company’s business” or phrases of similar import shall be deemed to refer to the business of the Company Entities collectively as of the date hereof.

 

Business Day” means any day that is not a Saturday or Sunday, or other day on which commercial banks in the City of New York, New York are required or authorized by Law to be closed.

 

3

 

 

Calculation Time” means 12:01 a.m. Eastern time on the Closing Date.

 

Card Network Rules” means the rules and standards that apply to debit card or credit card network participants and specify the requirements and limitations for participants of a debit card or credit card network system, including the American Express Business and Operational Policies, Visa Core Rules and Visa Product and Service Rules, and MasterCard Rules and MasterCard Transaction Processing Rules.

 

CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act of 2020, as may be amended or modified from time to time, including any rules or regulations promulgated thereunder, any executive order or executive memo (including the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, dated August 8, 2020) intended to address the consequences of COVID-19, and any analogous or similar provisions under applicable law.

 

Cash” means, with respect to the Company Entities, all cash and cash equivalents (including marketable securities, checks and bank deposits, but excluding restricted cash determined in accordance with GAAP).

 

Cash Merger Consideration” means (i) Available Cash, minus (ii) the Member Representative Holdback Amount, minus (iii) the Closing Reimbursable Transaction Expenses.

 

Cashout Optionholder” has the meaning set forth in Section 2.10(a).

 

Cashout Options” means those Options outstanding immediately prior to the Merger Effective Time that are, as of the Merger Effective Time, to be cancelled pursuant to Section 2.10(a) and entitle the holders thereof to receive the Per Unit Option Cash Consideration as set forth on the Merger Consideration Schedule.

 

Certificate of Merger” has the meaning set forth in Section 2.2.

 

Change of Control” means any transaction or series of related transactions the result of which is (a) the acquisition by any Person or “group” (as defined in the Exchange Act and the rules thereunder) of Persons of direct or indirect beneficial ownership of securities representing 50% or more of the combined voting power of the then-outstanding securities of the Surviving Entity or (b) a merger, consolidation, reorganization or other business combination, however effected, resulting in any Person or “group” (as defined in the Exchange Act and the rules thereunder) acquiring at least 50% of the combined voting power of the then-outstanding shares of Parent Common Stock or the surviving Person outstanding immediately after such combination.

 

Claims” has the meaning set forth in Section 9.18.

 

4

 

 

Class A Parent Common Stock” means the Class A common stock, par value $0.0001 per share, of Parent.

 

Class B Common Stock Merger Consideration” means a number of shares of Class B Parent Common Stock equal to (i) (A) the Equity Value minus (B) the Cash Merger Consideration divided by (ii) $10.00.

 

Class B Common Unit Merger Consideration” means a number of Class B Common Units of the Company equal to (A) (i) the Equity Value minus (ii) the Cash Merger Consideration divided by (B) $10.00. For the avoidance of doubt, the aggregate number of Class B Parent Common Stock issued as Class B Common Stock Merger Consideration shall equal the aggregate number of Class B Common Units issued as Class B Common Unit Merger Consideration.

 

Class B Parent Common Stock” means the Class B common stock, par value $0.0001 per share, of Parent.

 

Closing” has the meaning set forth in Section 3.1.

 

Closing Cash” means Cash of the Company as of the Calculation Time.

 

Closing Date” has the meaning set forth in Section 3.1.

 

Closing Net Indebtedness” means the outstanding Company Net Indebtedness as of the Calculation Time.

 

Closing Reimbursable Transaction Expenses” means the sum of all Reimbursable Transaction Expenses as of the Calculation Time that have not been otherwise satisfied or paid.

 

Code” means the Internal Revenue Code of 1986, as amended.

 

Common PIPE Investment” has the meaning set forth in the recitals.

 

Common Subscription Agreement” has the meaning set forth in the recitals.

 

Company Acquisition Proposal” has the meaning set forth in Section 6.11(a)(ii).

 

Company Board” means the board of managers of the Company.

 

Company Board Recommendation” has the meaning set forth in Section 4.2(b).

 

Company Debt Financing” means the debt financing provided for pursuant to that certain Second Amended and Restated Credit Agreement, dated as of November 3, 2020, by and among the Company, OpCo, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, or one or a series of debt financings which may serve to replace such arrangement after the date hereof and on or prior to the Merger Effective Time.

 

Company Disclosure Schedules” means the confidential Company Disclosure Schedules delivered by the Company in connection with, and constituting a part of, this Agreement.

 

5

 

 

Company Entities” means, collectively, the Company and its Subsidiary.

 

Company Fundamental Representations” means the representations and warranties set forth in Section 4.1 (Organization and Qualification; Subsidiaries), Section 4.2 (Authority; Board Approval), Section 4.4 (Capitalization), and Section 4.22 (Brokers).

 

Company Group Employee” has the meaning set forth in Section 6.24(b).

 

Company Indemnified Persons” has the meaning set forth in Section 6.7(a).

 

Company Intellectual Property” means all Intellectual Property that is owned, used or held for use by any Company Entity.

 

Company IP Agreements” means any Contract granting to a Company Entity any license or other right in, any right to use or otherwise practice or exploit, or any covenant not to sue for infringement or misappropriation of, any Intellectual Property (“Inbound License Agreement”) and any Contract under which a Company Entity grants any license or other right in, any right to use or otherwise practice or exploit, or any covenant not to sue for infringement or misappropriation of, any Intellectual Property (“Outbound License Agreement”).

 

Company IP Registrations” means all Company Owned Intellectual Property that is subject to any issuance registration, application or other filing by, to or with any Governmental Authority in any jurisdiction, including registered Marks, Copyrights, issued and reissued Patents and pending applications for any of the foregoing.

 

Company’s Knowledge” means the actual knowledge of the individuals set forth in Schedule 1.1(c), assuming due inquiry and investigation of his or her direct reports.

 

Company Member Vote” has the meaning set forth in Section 4.2(a).

 

Company Net Indebtedness” means, with respect to all Company Entities in the aggregate, Indebtedness minus Cash, but excluding from Indebtedness up to $300,000 in letters of credit.

 

Company Organizational Documents” has the meaning set forth in Section 4.3.

 

Company Owned Intellectual Property” means all Intellectual Property that is owned by any Company Entity.

 

Company Product” means each product (including Software and databases) or service developed, under development, made, marketed, distributed, imported, licensed or sold by or on behalf of the Company, at any time since its inception.

 

Company Transaction Expenses” means all reasonable costs, fees, expenses, commissions or other amounts, incurred, paid or otherwise payable to third parties by or on behalf of the Company Entities on or before Closing (whether or not billed or accrued for) in connection with the review, negotiation, execution, performance and consummation of this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby, including the cost of the D&O Tail Policy, the fees and expenses of legal counsel, accountants, bankers and other representatives and consultants and due diligence costs, fees and expenses.

 

6

 

 

Confidentiality Agreement” has the meaning set forth in Section 6.1(a).

 

Contingent Workers” has the meaning set forth in Section 4.19(b).

 

Contract” means, with respect to any Person, any agreement, indenture, debt instrument, contract, guarantee, loan, note, mortgage, license, lease, purchase order, delivery order, commitment or other arrangement, understanding or undertaking, whether written or oral, including all amendments, modifications and options thereunder or relating thereto, to which such Person is a party, by which it is bound, or to which any of its assets or properties is subject.

 

Converted Option” has the meaning set forth in Section 2.10(b).

 

Converted Optionholder” has the meaning set forth in Section 2.10(b).

 

COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof or related or associated epidemics, pandemic or disease outbreaks.

 

Current LLC Agreement” has the meaning set forth in Section 2.6(a)(i).

 

D&O Tail Policy” has the meaning set forth in Section 6.7(b).

 

Deferred Underwriting Fees” means the amount of deferred underwriting fees in connection with Parent’s initial public offering payable to the underwriters upon consummation of a business combination.

 

DGCL” means the Delaware General Corporation Law, as amended.

 

Earnout Consideration” means the Phase 1 Earnout Consideration and Phase 2 Earnout Consideration.

 

Earnout Recipients” means all Persons entitled to receive Earnout Consideration, as set forth on the Merger Consideration Schedule.

 

Employment Agreements” has the meaning set forth in Section 6.24(e).

 

Encumbrances” means any charge, community property interest, pledge, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal or any other adverse restriction of any kind, including any adverse restriction on use of property or assets or exercise of any other attribute of ownership; provided, however, that any restrictions pursuant to applicable securities law shall not be considered Encumbrances.

 

Environmental Laws” mean any Laws relating to the protection of the environment, natural resources, pollution, or the treatment, storage, recycling, transportation, disposal, arrangement for treatment, storage, recycling, transportation, or disposal, handling or Release of or exposure to any Hazardous Substances (and including worker health or safety Laws as they relate to occupational exposure to Hazardous Substances).

 

7

 

 

Environmental Permits” means any Permits required by applicable Environmental Laws.

 

Equity Award Exchange Ratio” means, with respect to each Converted Option, the quotient obtained by dividing (a) the Per Unit Option Equity Consideration (assuming that each share of Class B Parent Common Stock Merger Consideration is valued at $10.00 per share and each Class B Common Unit of the Company is ascribed no value), by (b) Ten Dollars ($10.00).

 

Equity Compensation Plan” means the Company’s Amended and Restated Equity Compensation Plan.

 

Equity Merger Consideration” means the Class B Common Stock Merger Consideration and the Class B Common Unit Merger Consideration.

 

Equity Value” means (i) $852,991,200, plus (ii) the amount of Reimbursable Transaction Expenses paid by the Company Entities prior to Closing, minus, (iii) the Overage Amount.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

ERISA Affiliate” means any entity that is considered a single employer with any Company Entity under Section 414(b), (c), (m) or (o) of the Code.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

Exchange Agreement” has the meaning set forth in the recitals.

 

Exchangeable Note” has the meaning set forth in the recitals.

 

Expense Cap and Waiver Agreement” has the meaning set forth in the recitals.

 

Financial Statements” has the meaning set forth in Section 4.5.

 

Firm” has the meaning set forth in Section 9.15.

 

Fraud” means a claim for Delaware common law fraud with a specific intent to deceive brought against a party hereto based on a representation of such party contained in this Agreement. For the avoidance of doubt, “Fraud” does not include any claim for equitable fraud, promissory fraud, unfair dealings fraud, or any torts based on negligence or recklessness.

 

GAAP” means generally accepted accounting principles as in effect in the United States.

 

General Enforceability Exceptions” has the meaning set forth in Section 4.13.

 

Governmental Authority” means any national, federal, state, provincial, county, municipal or local government, foreign or domestic, or the government of any political subdivision of any of the foregoing, or any entity, authority, agency, ministry or other similar body exercising executive, legislative, judicial (including any court or arbitrator (public or private)), regulatory or administrative authority or functions of or pertaining to government, including any authority or other quasi-governmental entity established to perform any of such functions.

 

8

 

 

Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

Hazardous Substances” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, a pollutant, a contaminant or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, heavy metals, urea formaldehyde foam insulation, per- or polyfluoroalkyl substances, and polychlorinated biphenyls.

 

Holder” means any Person holding Units in the Company prior to the Merger Effective Time.

 

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act on 1976, as amended.

 

Indebtedness” means, without duplication and with respect to the Company Entities, the outstanding principal amount of, accrued and unpaid interest on, fees and expenses arising under or in respect of (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services; (c) long or short-term obligations evidenced by notes, bonds, debentures, other debt securities, or other similar instruments; (d) obligations under any derivative, interest rate, currency swap, foreign exchange or other hedging agreement or arrangement; (e) capital lease obligations in accordance with GAAP; (f) reimbursement and other obligations under any letter of credit, bank guarantees, banker’s acceptance or similar credit transactions (in each case to the extent drawn); (g) guarantees made by any Company Entity on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f); and (h) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (g); provided, that Indebtedness shall not include accounts payable to trade creditors or any amounts with respect to Reimbursable Transaction Expenses.

 

Indemnified Persons” has the meaning set forth in Section 6.7(a).

 

Insurance Policies” has the meaning set forth in Section 4.20.

 

Intellectual Property” means all of the following intellectual property rights, pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing (collectively, “Marks”); (b) copyrightable works of authorship, expressions, designs and design registrations, including copyrights, author, performer and moral rights, and all registrations, applications for registration and renewals of such copyrights (collectively, “Copyrights”); (c) inventions, discoveries, trade secrets and know-how, database rights, confidential and proprietary information and all rights therein; (d) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models) (collectively, “Patents”); (e) rights in or to Software or other technology; and (f) any other intellectual or proprietary rights protectable, arising under or associated with any of the foregoing, including those protected by any Law anywhere in the world.

 

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Investment Company Act” means the Investment Company Act of 1940, as amended.

 

JOBS Act” means the U.S. Jumpstart Our Business Startups Act of 2012, as amended.

 

Key Employees” has the meaning set forth in Section 6.24.

 

Law” means any law, statute, directive, ordinance, regulation, rule, writ, judgment, Order, decree or other requirement of any Governmental Authority.

 

Leased Real Property” means all of the right, title and interest of the Company Entities under all leases, subleases, licenses, concessions and other agreements, pursuant to which any Company Entity holds a leasehold or sub-leasehold estate in, or is granted the right to use or occupy, any land, buildings, improvements, fixtures or other interest in real property.

 

Legal Proceeding” means any claim, action, cause of action, demand, lawsuit, arbitration, notice of violation, proceeding, litigation, citation, summons, or criminal, administrative, civil or governmental audit, subpoena, or investigation.

 

Letter of Transmittal” has the meaning set forth in Section 2.7(b).

 

Liabilities” has the meaning set forth in Section 4.6.

 

Material Adverse Effect” means any event, occurrence, fact, condition or change that (a) has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, results of operations, financial condition or assets of the Company Entities or (b) does or would reasonably be expected to, individually or in the aggregate, prevent the ability of the Company to consummate the Merger; provided, however, “Material Adverse Effect” shall not include, either alone or in combination, any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions or conditions generally affecting the capital, credit or financial markets; (ii) conditions generally affecting the industries in which the Company Entities operate; (iii) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (iv) acts of God, including any earthquakes, hurricanes, tornadoes, floods, tsunami, pandemics (including COVID-19) or other natural disasters; (v) any failure of the Company Entities to meet their financial projections, budgets or estimates (provided that the underlying causes of such failures, subject to the other provisions of this definition, shall not be excluded), (vi) any action required or permitted by this Agreement, or any action taken (or not taken) with the written consent of or at the request of Parent or Merger Sub; (vii) any changes in applicable Laws or accounting rules or principles, including GAAP, or any interpretations thereof; or (viii) the announcement or execution of this Agreement, pendency or completion of the Transactions; provided, however, that any effect resulting from a matter described in any of the foregoing clauses (i) through (iv) or (vii) may be taken into account in determining whether a Company Material Adverse Effect has occurred or is reasonably likely to occur to the extent such effect has a disproportionate adverse effect on the Company, taken as a whole, relative to other participants operating in the industries or markets in which the Company Entities operate.

 

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Material Contracts” has the meaning set forth in Section 4.13.

 

Member Representative” has the meaning set forth in the preamble.

 

Member Representative Holdback Amount” means an amount equal to one hundred fifty thousand dollars ($150,000.00).

 

Merger” has the meaning set forth in the Recitals.

 

Merger Consideration” means, collectively, the Cash Merger Consideration, the Equity Merger Consideration, the Tax Receivable Amount and the Earnout Consideration.

 

Merger Consideration Schedule” has the meaning set forth in Section 2.6(c).

 

Merger Effective Time” has the meaning set forth in Section 2.2.

 

Merger Sub” has the meaning set forth in the preamble.

 

Minimum Cash” means, as of Closing, (i) all cash in the Trust Account (net of the Parent Common Stockholder Redemption Amount), plus (ii) the amount of the PIPE Investment, minus (iii) an aggregate amount of $50,000,000 of Parent Transaction Expenses and Company Transaction Expenses.

 

Multiemployer Plan” has the meaning set forth in Section 3(37) of ERISA.

 

Note PIPE Investment” has the meaning set forth in the recitals.

 

Note Subscription Agreement” has the meaning set forth in the recitals.

 

OFAC” has the meaning set forth in this Section 1.1.

 

Off-the-Shelf Software” means any Software that is made generally and widely available to the public on a commercial basis and is licensed to any of the Company Entities on a non-exclusive basis under standard terms and conditions for a one-time license fee of less than $100,000 per license or an ongoing licensee fee of less than $50,000 per year.

 

OpCo” means CompoSecure, L.L.C., a Delaware limited liability company and a direct wholly owned subsidiary of the Company.

 

11

 

 

Open Source Software” means any Software that contains, includes, incorporates, or has instantiated therein, or is derived in any manner (in whole or in part) from, any Software that is distributed as free software, open source software or similar licensing or distribution models, including under any terms or conditions that impose any requirement that any Software using, linked with, incorporating, distributed with or derived from such Open Source Software (a) be made available or distributed in source code form; (b) be licensed for purposes of making derivative works; or (c) be redistributable at no, or a nominal, charge.

 

Option” means each option to purchase Units that is outstanding under the Equity Compensation Plan.

 

Optionholder” means a holder of Options.

 

Ordinary Coursemeans, with respect to an action taken by any Person, that (a) such action is in the ordinary course of business and consistent with the past practices of such Person or (b) such action is taken in response to a pandemic (including the SARS-CoV-2 virus and COVID-19 disease), provided that such action is commercially reasonable and materially consistent with the actions taken by other companies in such industries in response to such pandemic.

 

Other Filings” has the meaning set forth in Section 6.8(a).

 

Outside Date” has the meaning set forth in Section 8.1(b)(i).

 

Overage Amount” means the amount, if any, by which the Company Transaction Expenses exceed the Reimbursable Transaction Expenses.

 

Parent” has the meaning set forth in the preamble.

 

Parent Acquisition Proposal” has the meaning set forth in Section 6.11(b)(i).

 

Parent Amended and Restated Bylaws” has the meaning set forth in Section 2.3.

 

Parent Board” has the meaning set forth in Section 6.21(a).

 

Parent Charter and Bylaws Amendment” has the meaning set forth in Section 6.8(b).

 

Parent Closing Statement” has the meaning set forth in Section 2.8.

 

Parent Common Stock” means the Class A Parent Common Stock and Class B Parent Common Stock.

 

Parent Common Stockholder Redemption Amount” means, as of the date of determination, the aggregate amount of cash necessary to satisfy all Parent Common Stockholder Redemption Elections to the extent not otherwise satisfied as of such date.

 

Parent Common Stockholder Redemption Election” means the election of a holder of shares of Class A Parent Common Stock issued in Parent’s initial public offering to redeem such holder’s shares of Class A Parent Common Stock held by such holder in exchange for cash, in each case, in accordance with Parent’s amended and restated certificate of incorporation.

 

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Parent D&O Tail Policy” has the meaning set forth in Section 6.14.

 

Parent Disclosure Schedules” means the confidential Parent Disclosure Schedules delivered by Parent in connection with, and constituting a part of, this Agreement.

 

Parent Employee Stock Purchase Plan” has the meaning set forth in Section 6.8(b).

 

Parent Equity Compensation Plan” has the meaning set forth in Section 6.8(b).

 

Parent Financial Statements” has the meaning set forth in Section 5.6(b).

 

Parent Fundamental Representations” means the representations and warranties set forth in Section 5.1 (Organization), Section 5.2 (Authorization), Section 5.5 (Brokers) and Section 5.7 (Capitalization).

 

Parent Indemnified Persons” has the meaning set forth in Section 6.7(a).

 

Parent Material Adverse Effect” means any event, occurrence, fact, condition or change that (a) has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on (a) the business, results of operations, financial condition or assets of Parent, or (b) the ability of Parent to consummate the Transactions; provided, however, “Parent Material Adverse Effect” shall not include, either alone or in combination, any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions or conditions generally affecting the capital, credit or financial markets; (ii) conditions generally affecting the industries or markets in which Parent operates; (iii) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (iv) acts of God, including any earthquakes, hurricanes, tornadoes, floods, tsunami, pandemic (including COVID-19) or other natural disasters; (v) any action required or permitted by this Agreement, or any action taken (or not taken) with the written consent of or at the request of the Company; (vi) any changes in applicable Laws or accounting rules or principles, including GAAP, or any interpretations thereof; or (vii) the announcement or execution of this Agreement, pendency or completion of the Transactions; provided, however, that any effect resulting from a matter described in any of the foregoing clauses (i) through (iv) or (vi) may be taken into account in determining whether a Parent Material Adverse Effect has occurred or is reasonably likely to occur to the extent such effect has a disproportionate adverse effect on Parent, taken as a whole, relative to other “SPACs” operating in the industries in which Parent operates.

 

Parent Material Contract” means a material contract, as such term is defined in Regulation S-K of the SEC, to which Parent is party.

 

Parent Preferred Stock” means the preferred stock par value $0.0001 per share, of Parent.

 

Parent SEC Documents” has the meaning set forth in Section 5.6.

 

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Parent Second Amended and Restated Certificate of Incorporation” has the meaning set forth in Section 2.3.

 

Parent Stockholder Approval” has the meaning set forth in Section 6.8(b).

 

Parent Stockholders” means the holders of Parent Common Stock.

 

Parent Stockholders’ Meeting” has the meaning set forth in Section 6.8(a).

 

Parent Transaction Expenses” means the aggregate amount of all reasonable costs, fees, expenses, commissions or other amounts, incurred, paid or otherwise payable to third parties by or on behalf of Parent in connection with the review, negotiation, execution, performance and consummation of this Agreement, the Ancillary Agreements, the PIPE Investment and the transactions contemplated hereby and thereby, and the preparation, filing, printing and distribution of the Proxy Statement, including the Deferred Underwriting Fees, the Parent D&O Tail Policy, the fees incurred in connection with any filings under the HSR Act or other antitrust filings, blue sky filing fees and fees associated with any SEC, Stock Exchange or FINRA filings, and the fees and expenses of legal counsel, accountants, financial advisors, proxy solicitors, and other representatives and consultants and due diligence and “road show” investor presentation (including travel-related) costs, fees and expenses, not to exceed in the aggregate $35,000,000.

 

Parent’s Knowledge” means the actual knowledge of the individuals set forth in Schedule 1.1(d), assuming due inquiry and investigation of his or her direct reports.

 

Partnership Tax Return” has the meaning set forth in Section 6.13(c)(iii).

 

PCI-DSS” means the Payment Card Industry Data Security Standard, which is administered by the PCI Security Standards Council.

 

Per Unit Option Cash Consideration” has the meaning set forth in Section 2.10(a).

 

Per Unit Option Equity Consideration” means the value of the Equity Merger Consideration (excluding the Tax Receivable Amount), expressed in dollars, allocable in respect of a Unit underlying a Converted Option.

 

Permits” means any consent, franchise, approval, permit, filing, authorization, license, order, registration, certificate, exemption, variance and other similar permit or rights obtained from any Governmental Authority necessary for the operations of the Business and all pending applications therefor.

 

Permitted Encumbrances” means (a) easements, rights-of-way, restrictions and other similar defects or imperfections of title, charges and encumbrances of record not in the aggregate detracting materially from the use or value of the assets subject thereto, (b) Encumbrances for Taxes not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (c) cashiers’, landlords’, mechanics’, materialmen’s, carriers’, workmen’s, repairmen’s, contractors’ and warehousemen’s Encumbrances arising or incurred in the Ordinary Course and for amounts which are not delinquent or are being contested in good faith, (d) any statutory lien arising in the Ordinary Course by operation of applicable Laws with respect to a liability that is not yet due or delinquent or that is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (e) purchase money Encumbrances securing rental payments under capital lease arrangements, (f) leases for Leased Real Property to which a Company Entity is a party, (g) zoning, building codes or other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such real property or the operation of the business that do not, individually or in the aggregate, materially interfere with the current use of the Leased Real Property, (h) Encumbrances granted or to be granted under the Company Debt Financing, (i) non-exclusive licenses to Intellectual Property granted to third parties in the Ordinary Course, and (j) Encumbrances securing surety bonds incurred in the Ordinary Course.

 

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Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other organization, whether or not a legal entity, or a Governmental Authority.

 

Personal Information” means information about an identified or identifiable individual and/or information that can be used to contact, locate or identify a natural person or device.

 

Phase 1 Earnout Consideration” means the following amounts as further set forth on the Merger Consideration Schedule:

 

1.three million seven hundred fifty thousand (3,750,000) shares of Parent Common Stock in the aggregate (as subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the date of this Agreement, including to account for any equity securities into which such shares are exchanged or converted), which such Phase 1 Earnout Consideration shall be:

 

a.in respect of Cashout Options, in the form of Class A Parent Common Stock, and

 

b.in respect of Units, in the form of Class B Parent Common Stock, and

 

2.in respect of Units, an additional number of Class B Common Units of the Surviving Entity equal to the number of shares of Class B Parent Common Stock issued under prong 1.b. above.

 

Phase 1 Share Price Target” has the meaning set forth in Section 2.9(b).

 

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Phase 2 Earnout Consideration” means the following amounts as further set forth on the Merger Consideration Schedule:

 

1.three million seven hundred fifty thousand (3,750,000) shares of Parent Common Stock in the aggregate (as subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the date of this Agreement, including to account for any equity securities into which such shares are exchanged or converted), which such Phase 2 Earnout Consideration shall be:

 

a.in respect of Cashout Options, in the form of Class A Parent Common Stock, and

 

b.in respect of Units, in the form of Class B Parent Common Stock, and

 

2.in respect of Units, an additional number of Class B Common Units of the Surviving Entity equal to the number of shares of Class B Parent Common Stock issued under prong 1.b. above.

 

Phase 2 Share Price Target” has the meaning set forth in Section 2.9(c).

 

PIPE Investment” has the meaning set forth in the recitals.

 

PIPE Investors” has the meaning set forth in the recitals.

 

Pre-Closing Engagement” has the meaning set forth in Section 9.15.

 

Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion through the end of the Closing Date for any Straddle Period.

 

Press Release” has the meaning set forth in Section 6.9.

 

Privacy and Security Policies” has the meaning set forth in Section 4.11(a).

 

Privacy and Security Requirements” has the meaning set forth in Section 4.11(b).

 

Privacy Lawsmeans any laws, statutes, rules, regulations, ordinances, orders, judgements, decisions, rulings or other applicable requirement that govern the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security, disposal, destruction, disclosure or transfer of Personal Information and any such legal requirement governing privacy, data security, data or security breach notification, any penalties and compliance with any order, including, without limitation, in each case, to the extent applicable, the Gramm-Leach-Bliley Act, California Online Privacy Protection Act, the California Consumer Privacy Act, the Children’s Online Privacy Protection Act, the Massachusetts Data Security Regulations set forth at 201 CMR 17.00 and the New York Department of Financial Services (DFS)’s Cybersecurity Regulation set forth at 23 NYCRR 500, and other United States state laws concerning privacy data protection and/or data security, the CAN-SPAM Act, the Telephone Consumer Protection Act (“TCPA”) and the UK Data Protection Act 2018, Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation or “GDPR”), EU Directive 2002/58/EC and any laws or regulations implementing either or both of the GDPR and EU Directive 2002/58/EC (each as amended from time to time) and any analogous legislation in any jurisdiction in which the Company carries on its business and/or from which Company collects Personal Information.

 

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Privileged Communications” has the meaning set forth in Section 9.15.

 

Processing” has the meaning set forth in Section 4.11(a).

 

Prospectus” means Parent’s final prospectus dated November 5, 2020.

 

Proxy Statement” has the meaning set forth in Section 6.8(a).

 

Registration Rights Agreement” has the meaning set forth in the recitals.

 

Reimbursable Transaction Expenses” means the aggregate amount of all Company Transaction Expenses, not to exceed the sum of (i) $15,000,000 plus (ii) the Underage Amount.

 

Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

 

Representative” has the meaning set forth in Section 9.18.

 

SEC” means the Securities and Exchange Commission.

 

Securities Act” means the Securities Act of 1933, as amended.

 

Securityholders” means all of the Holders and Optionholders.

 

Software” shall mean any and all (a) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code; (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise; (c) descriptions, flowcharts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons; and (d) all documentation, including user manuals and other training documentation, related to any of the foregoing.

 

Specified Stockholders of Parent” means each of the Persons set forth in Schedule 1.1(a).

 

Spyware” has the meaning set forth in Section 4.11(h).

 

Stock Exchange” means the Nasdaq Stock Market LLC.

 

Stockholders Agreement” has the meaning set forth in the recitals.

 

Straddle Period” has the meaning set forth in Section 6.13(d)(ii).

 

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Subscription Agreements” has the meaning set forth in the recitals.

 

Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gains or losses or shall be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity.

 

Supplier” means any person that supplies inventory or other materials or personal property, components, or other goods or services (including, design, development and manufacturing services) that comprise or are utilized in, including in connection with the design, development, manufacture or sale of, the Company Products.

 

Supporting Holders” means each of the Holders set forth in Schedule Section 1.1(b).

 

Surviving Company Plans” has the meaning set forth in Section 6.24(b).

 

Surviving Entity” has the meaning set forth in Section 2.1.

 

Systems” means software, servers, sites, circuits, networks, interfaces, platforms, computers, hardware, databases, cable, networking, call centers, equipment and all other technology or infrastructure assets or services.

 

Tax Authority” means any Governmental Authority responsible for the imposition or collection of any Tax.

 

Tax Proceeding” means any proceeding, judicial or administrative, involving Taxes or any audit, examination, deficiency asserted or assessment made by the Internal Revenue Service or any other taxing authority with respect to a Pre-Closing Tax Period.

 

Tax Receivable Agreement” has the meaning set forth in the recitals.

 

Tax Receivable Amount” means the aggregate amount of all payments to be made to the Holders pursuant to the Tax Receivables Agreement.

 

Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

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Taxes” means all U.S. federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, escheat or unclaimed property, windfall profits, customs, duties or other taxes of any kind whatsoever, whether disputed or not, together with any interest, additions to tax or penalties with respect thereto.

 

Trading Daymeans any day on which Class A Parent Common Stock is actually traded on the principal securities exchange or securities market on which Class A Parent Common Stock is then traded.

 

Transaction Form 8-K” has the meaning set forth in Section 6.9.

 

Transaction Tax Deductions” means, to the extent “more likely than not” deductible by a Company Entity in a Pre-Closing Tax Period, all applicable deductions of the Company Entities attributable to the Company Transaction Expenses (whether paid at or before Closing), the payment of consulting fees, severance obligations, bonus obligations, “success fees,” bonuses payable to employees, the payment of the Per Unit Option Cash Consideration and deferred unamortized financing fees, in each case to the extent economically borne by the Holders; provided, that the safe harbor election of Rev. Proc. 2011-29 shall be made (which election shall be made on applicable Tax Returns) to deduct 70% of any success based investment banking and other fees.

 

Transactions” means the transactions contemplated by this Agreement, the Ancillary Agreements and the other agreements, instruments, and documents contemplated hereby or thereby.

 

Transfer Taxes” means any real property transfer, transfer gains, documentary, sales, use, stamp, registration or similar Taxes, fees or charges (including any penalties and interest) which become payable in connection with the Merger pursuant to this Agreement.

 

Treasury Regulations” means the treasury regulations promulgated under the Code, including any temporary regulations.

 

Trust Account” has the meaning set forth in Section 5.14.

 

Trust Agreement” has the meaning set forth in Section 5.14.

 

Trustee” has the meaning set forth in Section 5.14.

 

UCE Laws” has the meaning set forth in Section 4.11(h).

 

Underage Amount” means the amount, if any, by which Parent Transaction Expenses is less than $35,000,000.

 

Union” has the meaning set forth in Section 4.19(i).

 

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Units” means those certain Units as defined in the Current LLC Agreement.

 

Voting Agreement” means that certain Voting Agreement, dated as of the date hereof and attached hereto as Annex D, by and among Parent, the Company, the Specified Stockholders of Parent and the Supporting Holders of the Company.

 

Voting Matters” has the meaning set forth in Section 6.8(b).

 

VWAP” means the daily per share volume-weighted average price of Class A Parent Common Stock on the principal U.S. securities exchange, “over-the-counter” market or automated or electronic quotation system on which Class A Parent Common Stock trades, as displayed under the heading Bloomberg VWAP on the Bloomberg page designated for Class A Parent Common Stock (or its equivalent successor if such page is not available) in respect of the period from the open of trading on such day until the close of trading on such day (or if such volume-weighted average price is unavailable, the per share volume-weighted average price of such Class A Parent Common Stock on such day (determined without regard to afterhours trading or any other trading outside the regular trading session or trading hours)).

 

WARN Act” has the meaning set forth in Section 4.19(m).

 

Written Consent” has the meaning set forth in Section 6.5.

 

Written Consent Deadline” has the meaning set forth in Section 6.5.

 

Section 1.2           Interpretation.

 

(a)           References to Articles and Sections are to Articles and Sections of this Agreement unless otherwise specified.

 

(b)          A “month” or a “quarter” means a calendar month or quarter (as the case may be).

 

(c)           References to “$” or “dollars” refer to lawful currency of the United States.

 

(d)          Writing includes typewriting, printing, lithography, photography, email and other modes of representing or reproducing words in a legible and non-transitory form.

 

(e)           The terms “include” and “including” and words of similar import are to be construed as non-exclusive (so that, by way of example, “including” mean “including without limitation”).

 

(f)           Unless the context of this Agreement otherwise requires (i) words using a singular or plural number also include the plural or singular number, respectively, (ii) the terms “hereof,” “herein,” “hereby” and any derivative thereof or similar words refer to this entire Agreement, (iii) the masculine gender includes the feminine and neuter genders, (iv) any reference to a Law, an agreement or a document will be deemed also to refer to any amendment, supplement or replacement thereof, and (v) whenever this Agreement refers to a number of days, such number refers to calendar days unless such reference specifies Business Days.

 

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(g)          Terms defined in this Agreement by reference to any other agreement, document or instrument have the meanings assigned to them in such agreement, document or instrument whether or not such agreement, document or instrument is then in effect.

 

(h)          The term “foreign” means non-United States.

 

ARTICLE II.
THE MERGER

 

Section 2.1          The Merger. Upon the terms and subject to the conditions of this Agreement, at the Merger Effective Time, pursuant to the provisions of the Act, Merger Sub shall be merged with and into the Company, and the separate corporate existence of Merger Sub shall thereupon cease in accordance with the provisions of the Act. The Company shall be the surviving entity in the Merger (the “Surviving Entity”). The Merger shall have the effects specified in the Act. Without limiting the generality of the foregoing, and subject thereto, at the Merger Effective Time, except as otherwise agreed to pursuant to the terms of this Agreement, all of the property, rights, privileges, powers and franchises of Merger Sub and the Company shall vest in the Surviving Entity, and all debts, liabilities and duties of Merger Sub and the Company shall become the debts, liabilities and duties of the Surviving Entity.

 

Section 2.2           Certificate of Merger. On the Closing Date, and upon the terms and subject to the conditions of this Agreement, the Company shall cause a certificate of merger substantially in the form attached hereto as Annex I (the “Certificate of Merger”) to be properly executed and filed with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the Act, and shall make or cause to be made all other filings or recordings required under the Act. The Merger shall be effective at such time and on such date as shall be set forth in the Certificate of Merger filed with respect thereto in accordance with the Act (the “Merger Effective Time”).

 

Section 2.3           Organizational Documents; Name of Surviving Entity. The current certificate of formation of the Company, and limited liability company agreement of the Company in the form attached hereto as Annex J, as amended pursuant to the Certificate of Merger, shall be the certificate of formation and limited liability company agreement of the Surviving Entity from and after the Merger Effective Time and shall continue in full force and effect until further amended in the manner prescribed therein or by the provisions of the Act. Parent shall take all actions required by the DGCL to (i) amend and restate its certificate of incorporation in the form attached hereto as Annex K (the “Parent Second Amended and Restated Certificate of Incorporation”) and (ii) amend and restate its bylaws in the form attached hereto as Annex L (the “Parent Amended and Restated Bylaws”), in each case effective immediately prior to the Merger Effective Time.

 

Section 2.4           Officers of Surviving Entity. The officers of the Company immediately prior to the Merger Effective Time shall be the officers of the Surviving Entity and will hold office in accordance with the limited liability company agreement of the Surviving Entity until the earlier of their death, resignation or removal or until their respective successors are duly elected and qualified in the manner provided in the limited liability company agreement of the Surviving Entity and otherwise in accordance with applicable Law.

 

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Section 2.5           Manager of Surviving Entity. From and after the Merger Effective Time, Parent shall be the sole managing member of the Surviving Entity in accordance with the limited liability company agreement of the Surviving Entity and otherwise in accordance with applicable Law.

 

Section 2.6           Effect of the Merger. Without any action on the part of Parent, Merger Sub, the Surviving Entity or the Holders:

 

(a)          At the Merger Effective Time:

 

(i)            all of the Units issued and outstanding immediately prior to the Merger Effective Time, shall, by virtue of the Merger and upon the terms and subject to the conditions set forth in this Section 2.6, be cancelled or converted, as the case may be, and automatically deemed for all purposes to represent the right to receive the applicable portion of the Merger Consideration (including the Earnout Consideration, if any) attributable to such Units as required by the Company’s Amended and Restated Limited Liability Company Agreement, dated as of June 11, 2020 (as amended, the “Current LLC Agreement”) and as provided on the Merger Consideration Schedule (as may be amended from time to time, and at any time, by the Member Representative acting in good faith);

 

(ii)          the membership interests of Merger Sub issued and outstanding immediately prior to the Merger Effective Time shall, by virtue of the Merger and without any action on the part of Parent, Merger Sub or the Company, be converted into and become an amount of newly issued, fully paid and non-assessable Class A Common Units of the Surviving Entity equal to the number of shares of Class A Parent Common Stock issued and outstanding immediately following the Merger Effective Time (after giving effect to the transactions contemplated under this Agreement and the Ancillary Agreements, including the PIPE Investment and the cancellations under the Expense Cap and Waiver Agreement); and

 

(iii)          consistent with the terms of this Agreement and the provisions set forth in the Second Amended and Restated Limited Liability Company Agreement of the Surviving Entity:

 

(1)           the number of Class A Common Units of the Surviving Entity issued and outstanding shall equal the number of shares of Class A Parent Common Stock then issued and outstanding; and

 

(2)           the number of Class B Common Units of the Surviving Entity issued and outstanding shall equal the Class B Common Unit Merger Consideration.

 

(b)          No certificates or scrip representing fractional shares of Class B Parent Common Stock will be issued to a Holder in connection with payment of the Equity Merger Consideration, and to the extent a fractional share of Class B Parent Common Stock is issuable as part of the Equity Merger Consideration, such fraction shall be rounded up to a whole share of Class B Parent Common Stock.

 

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(c)          Merger Consideration Schedule. The Company has previously prepared and delivered to Parent prior to the date hereof in preliminary form attached hereto as Schedule 2.6(c), and not later than three (3) Business Days prior to the Closing Date shall prepare and deliver to Parent in final form, a statement (when delivered in its final form) setting forth the Company’s calculation of the following, together with appropriate supporting calculations and schedules, and other documentation reasonably requested by Parent, as of the Merger Effective Time (or the Calculation Time, as applicable) (the “Merger Consideration Schedule”):

 

(i)            the amount of (A) the Cash Merger Consideration and (B) Equity Merger Consideration to be payable to each Holder pursuant to and in accordance with this Agreement, the Current LLC Agreement and applicable Laws;

 

(ii)           the estimated amount of Earnout Consideration to be payable to each Earnout Recipient pursuant to and in accordance with this Agreement, the Current LLC Agreement and applicable Laws;

 

(iii)         the amount of Per Unit Option Cash Consideration to be payable to each Cashout Optionholder pursuant to and in accordance with this Agreement, the Current LLC Agreement, the Equity Compensation Plan and the individual award agreements thereunder, and applicable Laws;

 

(iv)          a current schedule of the record holders of all issued Units, vested Options and unvested Options, in the respective classes and amounts set forth opposite their names on such schedule;

 

(v)           the name of each Converted Optionholder and the Converted Options attributable to each Converted Optionholder;

 

(vi)          the Member Representative Holdback Amount; and

 

(vii)         the Company Transaction Expenses, including the recipients of such payments and invoices.

 

(d)          The Merger Consideration Schedule delivered at the Closing shall be deemed the definitive allocation of the Merger Consideration among the Securityholders in accordance with the Merger and this Agreement and the disbursements thereof, including with respect to the Earnout Consideration and shall be binding on the Company and the Securityholders. Without limiting the foregoing, Parent may rely upon the Merger Consideration Schedule, and in no event will Parent have any liability to the Company, any Securityholder or other Person on account of payments made in accordance with the terms of this Agreement as set forth on the Merger Consideration Schedule.

 

(e)          Parent shall be entitled to review and make reasonable comments to the matters and amounts set forth in the Merger Consideration Schedule (and the components thereof), and in connection therewith, the Company shall provide Parent and its representatives with reasonable access during normal business hours to the relevant books, records and finance personnel of the Company. The Company shall consider in good faith Parent’s comments to the Merger Consideration Schedule in good faith prior to the Closing Date, provided that, in the event Parent and the Company are unable to agree on any component of the Merger Consideration Schedule prior to the Closing Date, the Merger Consideration Schedule as prepared by the Company (as may have been updated by any mutual agreement of the Company and Parent and including any disputed components thereof in such amounts as included in the Company’s initial Merger Consideration Schedule) shall control for purposes of the Closing.

 

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Section 2.7           Merger Consideration; Letters of Transmittal.

 

(a)          At the Closing, Parent shall pay and issue (as applicable) the Merger Consideration in accordance with the terms and conditions of this Agreement and the Merger Consideration Schedule, including by causing the transfer agent of Parent to deliver the Class B Common Stock Merger Consideration to the Holders in book-entry form. The parties agree that payment by or on behalf of Parent pursuant to this Section 2.7(a) and Section 3.3(b)(i) of an amount equal to the Cash Merger Consideration shall constitute a good discharge of Parent’s obligation to make payment to the Securityholders of the Cash Merger Consideration payable pursuant to Section 2.6(a)(i) and Section 2.10(a).

 

(b)          As promptly as reasonably practicable following the Company Member Vote, the Company shall cause to be mailed to each Holder a letter of transmittal in the form attached hereto as Annex M (the “Letter of Transmittal”) together with instructions thereto, for such Holders’ receipt of the Merger Consideration. Upon delivery of the Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto and such other documents as may reasonably be required pursuant to such instructions, the Holder of the Letter of Transmittal shall be entitled to receive in exchange therefor the Merger Consideration in accordance with the provisions of Section 2.6(a)(i) and Sections 3.3(b)(i) and 3.3(b)(iii).

 

(c)          Notwithstanding anything in this Agreement to the contrary, for all purposes the proceeds of the Exchangeable Notes shall be used exclusively for distribution of the Cash Merger Consideration to the Holders, and not for satisfaction of Transaction Expenses or proceeds to the Cashout Optionholders.

 

Section 2.8           Parent Closing Statement Certificate. Not more than seven (7) Business Days prior to the Closing, an authorized officer of Parent shall deliver to the Member Representative a written notice (the “Parent Closing Statement”), certifying as to (a) the aggregate amount of cash proceeds that will be required to satisfy the Parent Common Stockholder Redemption Amount, (b) the estimated amount of Parent Transaction Expenses as of the Closing, (c) the number of shares of Class A Parent Common Stock outstanding as of the Closing after giving effect to Parent Common Stockholder Redemption Elections, the cancellation of any shares of Parent Common Stock pursuant to the terms of the Expense Cap and Waiver Agreement, and the issuance of shares of Class A Parent Common Stock pursuant to the Common Subscription Agreements and the Common PIPE Investment, and (d) the principal amount and cash proceeds of the Exchangeable Notes and the number of shares of Class A Parent Common Stock issuable upon exchange thereof. The Member Representative shall be entitled to review and make reasonable comments to the matters and amounts set forth in the Parent Closing Statement (and the components thereof), and in connection therewith, Parent shall provide the Member Representative and its representatives with reasonable access during normal business hours to the relevant books, records and finance personnel of Parent. Parent shall consider in good faith the Member Representative’s comments to the Parent Closing Statement in good faith prior to the Closing Date, provided that, in the event the Member Representative and Parent are unable to agree on any component of the Parent Closing Statement prior to the Closing Date, the Parent Closing Statement as prepared by Parent (as may have been updated by any mutual agreement of Parent and the Member Representative and including any disputed components thereof in such amounts as included in Parent’s initial Parent Closing Statement) shall control for purposes of the Closing.

 

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Section 2.9           Earnout.

 

(a)          After the Closing, subject to the terms and conditions set forth herein, the Earnout Recipients shall have the contingent right to receive additional consideration based on the performance of the Company Entities to the extent the requirements set forth in this Section 2.9 are met.

 

(b)          In the event that the VWAP of Class A Parent Common Stock on the Stock Exchange or the principal securities exchange or securities market on which the Class A Parent Common Stock is then traded equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) (the “Phase 1 Share Price Target”) for any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period ending on or prior to the three (3) year anniversary of the Closing, then, subject to the terms and conditions of this Agreement, the Earnout Recipients shall be entitled to receive, as additional consideration for the transactions contemplated hereby, the Phase 1 Earnout Consideration, and Parent shall cause its transfer agent and the Surviving Entity, as applicable to issue such Phase 1 Earnout Consideration to the Earnout Recipients in accordance with the Merger Consideration Schedule within five (5) Business Days following the final day of the applicable thirty (30) Trading Day period.

 

(c)          In the event that the VWAP of Class A Parent Common Stock on the Stock Exchange or the principal securities exchange or securities market on which the Class A Parent Common Stock is then traded equals or exceeds $20.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) (the “Phase 2 Share Price Target”) for any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period ending on or prior to the four (4) year anniversary of the Closing, then, subject to the terms and conditions of this Agreement, the Earnout Recipients shall be entitled to receive, as additional consideration for the transactions contemplated hereby, the Phase 2 Earnout Consideration, and Parent shall cause its transfer agent and the Surviving Entity, as applicable to issue such Phase 2 Earnout Consideration to the Earnout Recipients in accordance with the Merger Consideration Schedule within five (5) Business Days following the final day of the applicable thirty (30) Trading Day period.

 

(d)          Notwithstanding the foregoing: (i) in the event that (A) a Change of Control is consummated prior to the three (3) year anniversary of the Closing and (B) the implied consideration per share of the Class A Parent Common Stock in such Change of Control transaction equals or exceeds the Phase 1 Share Price Target or the Phase 2 Share Price Target, as applicable (or the equivalent fair market value thereof, as determined by the Surviving Entity in good faith, in the event of any non-cash consideration), then, as additional consideration for the Transactions and to the extent not already issued pursuant to this Section 2.9, Parent shall issue or cause to be issued the Phase 1 Earnout Consideration and/or the Phase 2 Earnout Consideration to the Earnout Recipients in accordance with the Merger Consideration Schedule immediately prior to the consummation of such Change of Control transaction, and (ii) in the event that (A) a Change of Control is consummated on or after the three (3) year anniversary of the Closing and prior to the four (4) year anniversary of Closing and (B) the implied consideration per share of the Class A Parent Common Stock in such Change of Control transaction equals or exceeds the Phase 2 Share Price Target (or the equivalent fair market value thereof, as determined by the Surviving Entity in good faith, in the event of any non-cash consideration), then, as additional consideration for the Transactions and to the extent not already issued pursuant to this Section 2.9, Parent shall issue or cause to be issued the Phase 2 Earnout Consideration to the Earnout Recipients in accordance with the Merger Consideration Schedule immediately prior to the consummation of such Change of Control transaction.

 

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(e)          Parent shall use commercially reasonable efforts to remain a listed company on, and for the Class A Parent Common Stock issuable in respect of Earnout Consideration to be tradable over, the Stock Exchange or another U.S. securities exchange. Parent, as of the Merger Effective Time, will reserve for issuance the maximum number of shares of Parent Common Stock that could be earned pursuant to this Section 2.9 (including such number of Class A Parent Common Stock issuable upon the exchange of Class B Parent Common Stock) and shall continue to ensure that there is a sufficient amount of Parent Common Stock reserved for issuance following the Merger Effective Time to satisfy the maximum number of shares of Parent Common Stock (including such number of Class A Parent Common Stock issuable upon the exchange of Class B Parent Common Stock) that could be earned pursuant to this Section 2.9 at any given time.

 

(f)           Notwithstanding anything to the contrary herein, (i) the Earnout Recipients shall not be entitled to receive the same Earnout Consideration on more than one occasion, and (ii) the number of shares of Parent Common Stock or Units of the Surviving Entity, as applicable, to be issued to any Earnout Recipient in connection with any issuance of Earnout Consideration shall be rounded down to the nearest whole number, and such Earnout Recipients shall receive in lieu of such fractional shares an amount in cash equal to the value of such fractional shares based on the VWAP of Class A Parent Common Stock on the Stock Exchange or the principal securities exchange or securities market on which the Class A Parent Common Stock is then traded over the twenty (20) day trading-period immediately preceding the date on which the payment of the Earnout Consideration is triggered.

 

Section 2.10         Options.

 

(a)           Cashout Options. Upon the Merger Effective Time, each Cashout Option, whether vested or unvested, shall, automatically and without any required action on the part of any Optionholder or beneficiary thereof, be terminated by virtue of the Merger and the holder of such Cashout Option (each, a “Cashout Optionholder”) shall cease to have any rights with respect thereto, other than the right to receive: (i) a cash payment equal to the difference between (A) the Cash Merger Consideration (excluding the Tax Receivable Amount) allocable in respect of a Unit underlying such Cashout Option and (B) the per Unit exercise price of the Cashout Option (without interest and subject to the deduction and withholding of such amounts as is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law) (the “Per Unit Option Cash Consideration”) and (ii) the amount of Earnout Consideration allocable in respect of the Cashout Options as set forth on the Merger Consideration Schedule. Following the Merger Effective Time and as a prerequisite to receiving their Per Unit Option Cash Consideration and Earnout Consideration, each such Cashout Optionholder shall deliver to the Surviving Entity an executed customary cancellation acknowledgement and release in respect of such Cashout Optionholder’s Cashout Options. The applicable Per Unit Option Cash Consideration shall be paid to each Cashout Optionholder holding a Cashout Option in accordance with the terms hereof in accordance with the Merger Consideration Schedule by the Surviving Entity without any interest thereon. Any amounts withheld and paid over to any appropriate tax authority will be treated for all purposes of this Agreement as having been paid to the Cashout Optionholder holding a Cashout Option in respect of whom such deduction and withholding was made.

 

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(b)          Conversion of Options. Upon the Merger Effective Time, all of the Options, whether vested or unvested, outstanding immediately prior to the Merger Effective Time that are not Cashout Options shall, automatically and without any required action on the part of any Optionholder or beneficiary thereof, be assumed by Parent and each such Option shall be converted into, and represent only, an option to purchase shares of Class A Parent Common Stock (each, a “Converted Option” and the holder of such Converted Option, a “Converted Optionholder”). Each Converted Option shall continue to have and be subject to substantially the same material terms and conditions as were applicable to such Converted Option immediately before the Merger Effective Time (including expiration date, vesting schedule and exercise provisions), in all cases subject to restrictions related to the issuance of shares under applicable Law, except that (i) each Converted Option shall be exercisable for, and represent the right to acquire, that number of shares of Class A Parent Common Stock equal to the product (rounded down to the nearest whole number) of (A) the number of Units subject to the Converted Option immediately before the Merger Effective Time multiplied by (B) the Equity Award Exchange Ratio; and (ii) the per share exercise price for each share of Class A Parent Common Stock issuable upon exercise of the Converted Option shall be equal to the quotient of (X) the exercise price per Unit of such Converted Option immediately before the Merger Effective Time divided by (Y) the Equity Award Exchange Ratio (rounding the resulting exercise price up to the nearest whole cent); provided, however, that the exercise price and the number of shares of Class A Parent Common Stock purchasable under each Converted Option shall be determined in a manner consistent with the requirements of Section 409A of the Code and the applicable regulations promulgated thereunder.

 

(c)          Notices. Prior to the Merger Effective Time, the Company shall deliver to each Optionholder a notice, in a form reasonably acceptable to Parent, setting forth the effect of the Merger on such Optionholder’s Options and describing the treatment of such Options in accordance with this Section 2.10.

 

(d)          Assumption of Plan. Upon the Merger Effective Time, Parent shall assume the Equity Compensation Plan, provided that all references to “Company” in the Equity Compensation Plan and the documents governing the Converted Options after the Merger Effective Time will be deemed references to Parent and the number of shares of Class A Parent Common Stock available for awards under the Equity Compensation Plan shall be determined by multiplying the number of Units available for awards under the Equity Compensation Plan immediately before the Merger Effective Time by the Equity Award Exchange Ratio; provided that no further awards shall be granted under the Equity Compensation Plan following the Merger Effective Time.

 

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(e)          Reservation of Shares. Parent will (i) reserve for issuance the number of shares of Class A Parent Common Stock that will become subject to the Converted Options and (ii) issue or cause to be issued the appropriate number of shares of Class A Parent Common Stock, upon the exercise of the Converted Options. As soon as practicable after the Merger Effective Time, Parent will prepare and file with the SEC a registration statement on Form S-8 (or other appropriate form) registering a number of shares of Class A Parent Common Stock (i) necessary to fulfill Parent’s obligations under this Section 2.10 and (ii) available for issuance under the Parent Equity Compensation Plan other than shares of Class A Parent Common Stock that may be issued upon exercise of Converted Options. Such registration statement will be kept effective (and the current status of the prospectus required thereby will be maintained) for at least as long as any Converted Options remain outstanding.

 

Section 2.11        Withholding Rights. Each of Parent or Merger Sub or anyone acting on their behalf shall be entitled to deduct and withhold from the payment of any Merger Consideration (including the Earnout Consideration, if any) payable pursuant to this Agreement to any Person such amounts as are required to be deducted and withheld with respect to the making of any such payment under any applicable tax Law, provided that, other than with respect to payments treated as compensation under the Code, there shall be no withholding on account of U.S. federal income Tax on a payment of Merger Consideration with respect to a payment to or on account of a Holder provided that such Holder provides in its Letter of Transmittal a certification of non-foreign status, in form and substance consistent with Treasury Regulations Section 1.1445-2(b) and Treasury Regulations Section 1.446(f)-2(b)(2), and an IRS Form W-9 claiming a complete exemption from backup withholding. Any sum that is withheld as permitted by this Section 2.11 shall be remitted to the appropriate Governmental Authority and Parent shall provide the Member Representative with all appropriate or required reports showing such withholding. Upon becoming aware of any such withholding obligation, Parent shall use commercially reasonable efforts to give reasonable advance notice of such withholding to the Member Representative (other than where such deduction or withholding is in respect of amounts treated as compensation under the Code or is due to a failure of a Holder to provide the applicable tax forms referenced in the proviso of the preceding sentence) and shall reasonably cooperate with the Member Representative, to eliminate or reduce any such required deduction or withholding. To the extent that amounts are so withheld and paid to the proper Governmental Authority pursuant to any applicable tax Law, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Person in respect of which such deduction and withholding was made.

 

Section 2.12        Adjustments. Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and the Merger Effective Time, any change in the outstanding shares of capital stock of Parent shall occur, including by reason of any reclassification, recapitalization, stock split (including reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend or distribution paid in stock, the number of shares of Class B Parent Common Stock to be issued as Equity Merger Consideration, the amount of Earnout Consideration and the Equity Award Exchange Ratio shall be appropriately adjusted to reflect such change.

 

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Section 2.13         Taking of Necessary Action; Further Action. If at any time after the Merger Effective Time any further action is reasonably necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Entity with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company or Merger Sub, the officers and managers of the Surviving Entity will be fully authorized in the name of the Company or Merger Sub, as the case may be, to take and shall take any and all such lawful and necessary action.

 

ARTICLE III.
CLOSING

 

Section 3.1           Closing. The closing of the transactions contemplated hereby (the “Closing”) shall take place remotely via the exchange of electronic signatures on such date mutually agreed upon by Parent and the Company falling within three (3) days following the satisfaction or waiver of all of the conditions set forth in ARTICLE VII (other than those conditions that by their terms cannot be satisfied until the Closing, but subject to the satisfaction or waiver thereof), or on such other date and time as Parent and the Company shall mutually agree in writing. The date of the Closing is herein called the “Closing Date.” For financial accounting and non-income Tax purposes, to the extent permitted by Law, the Closing shall be deemed to have become effective as of the Calculation Time, and for income Tax purposes the Closing shall be deemed to occur at the end of the Closing Date.

 

Section 3.2           Company Transaction Expenses. At the Closing, concurrently with the Merger Effective Time, Parent shall pay or cause to be paid all of the unpaid Company Transaction Expenses as set forth on the Merger Consideration Schedule to be delivered to the Company not less than three (3) Business Days prior to the Closing Date, which shall include the respective amounts and wire transfer instructions for the payment thereof.

 

Section 3.3           Deliveries and Proceedings at Closing. Subject to the terms and conditions of this Agreement, at the Closing:

 

(a)           the Company shall deliver or cause to be delivered the following:

 

(i)            the Registration Rights Agreement, duly executed by the Company, the Member Representative and the Holders party thereto;

 

(ii)           the Tax Receivable Agreement, duly executed by the Company and the Holders party thereto;

 

(iii)          the Stockholders Agreement, duly executed by the Company, the Member Representative and the Holders party thereto;

 

(iv)          the Exchange Agreement, duly executed by the Company and the Holders party thereto;

 

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(v)           the Second Amended and Restated Limited Liability Company Agreement of the Company, duly executed by the applicable parties thereto; and

 

(vi)          the certificates and other documents required to be delivered pursuant to Section 7.2.

 

(b)          Parent and Merger Sub shall deliver or cause to be delivered the following:

 

(i)            an amount equal to the Cash Merger Consideration payable to the Securityholders, by wire transfer of immediately available funds, to the Member Representative or its designees in accordance with the terms of this Agreement and the Merger Consideration Schedule;

 

(ii)           the Member Representative Holdback Amount to the Member Representative by wire transfer of immediately available funds to the account(s) designated by the Member Representative;

 

(iii)          the Equity Merger Consideration to the Holders electronically through book entry delivery in accordance with the terms of this Agreement and the Merger Consideration Schedule;

 

(iv)         evidence of the consummation of the PIPE Investment pursuant to and in accordance with the terms of the applicable Subscription Agreements;

 

(v)           the Registration Rights Agreement, duly executed by Parent;

 

(vi)          the Tax Receivable Agreement, duly executed by Parent;

 

(vii)         the Stockholders Agreement, duly executed by Parent;

 

(viii)        the Exchange Agreement, duly executed by Parent;

 

(ix)           the Parent Second Amended and Restated Certificate of Incorporation, duly executed by Parent;

 

(x)            the Parent Amended and Restated Bylaws;

 

(xi)          the aggregate amount of the Company Transaction Expenses (to the extent not previously paid by Parent or the Company Entities) to the payees thereof in accordance with Section 3.2; and

 

(xii)         the certificates and other documents required to be delivered pursuant to Section 7.3(c).

 

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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except with respect to matters set forth in the Company Disclosure Schedules (it being agreed that any matter disclosed in the Company Disclosure Schedules with respect to any section of this Agreement shall be deemed to have been disclosed with respect to any other section to the extent the applicability thereto is reasonably apparent from the face of such disclosure), the Company hereby represents and warrants to Parent and Merger Sub as of the date of this Agreement as follows:

 

Section 4.1           Organization and Qualification; Subsidiaries. Each Company Entity is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware, and has all requisite limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as currently conducted. Section 4.1 of the Company Disclosure Schedules sets forth each jurisdiction in which each Company Entity is licensed or qualified to do business, and each Company Entity is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except such licenses or qualifications the absence of which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company does not own or have any ownership interest in any other Person other than its 100% ownership of OpCo. OpCo does not own or have any ownership interest in any other Person. True and complete copies of the certificate of formation, operating agreement or other organizational documents of each Company Entity, as amended to the date of this Agreement, have been made available to Parent. None of the Company Entities is in violation of any of the material provisions of its certificate of formation, operating agreement or other organizational documents.

 

Section 4.2           Authority; Board Approval.

 

(a)          The Company has all requisite limited liability company power and authority to enter into and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party and, subject to, in the case of the consummation of the Transactions, including the Merger, adoption of this Agreement and the Ancillary Agreements, by the affirmative vote or consent of the Company’s voting members to the extent required by the Company Organizational Documents (“Company Member Vote”), to consummate the Transactions, including the Merger. The execution, delivery and performance by the Company of this Agreement and any Ancillary Agreement to which it is a party and the consummation by the Company of the Transactions have been duly authorized by all requisite limited liability company action on the part of the Company and no other limited liability company proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this Agreement, any Ancillary Agreement to which it is a party or to consummate the Transactions, subject only, in the case of consummation of the Merger, to the receipt of the Company Member Vote. The Company Member Vote is the only vote or consent of the holders of any class or series of the Company’s units of membership interest required to approve and adopt this Agreement and the Ancillary Agreements, approve the Merger and consummate the Transactions, including the Merger. This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by each other party hereto) this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as the enforceability hereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally and as limited by the availability of specific performance and other equitable remedies or applicable equitable principles (whether considered in a proceeding at law or in equity). When each Ancillary Agreement to which the Company is or will be a party has been duly executed and delivered by the Company (assuming due authorization, execution and delivery by each other party thereto, if applicable), such Ancillary Agreement will constitute a legal and binding obligation of the Company enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally and as limited by the availability of specific performance and other equitable remedies or applicable equitable principles (whether considered in a proceeding at law or in equity).

 

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(b)          The Company Board, by written resolutions adopted by unanimous vote and not subsequently rescinded or modified in any way, has, as of the date hereof (i) determined that this Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, the Company and the Company’s members, (ii) approved and declared advisable the “agreement of merger” (as such term is used in Section 209 of the Act) contained in this Agreement and the Transactions, including the Merger, in accordance with the Act, (iii) directed that the “agreement of merger” contained in this Agreement be submitted to the Company’s members for adoption, and (iv) resolved to recommend that the Company’s members adopt the “agreement of merger” set forth in this Agreement (collectively, the “Company Board Recommendation”).

 

Section 4.3           No Conflict.

 

(a)          The execution, delivery and performance by the Company of this Agreement and the Ancillary Agreements to which it is a party, and the consummation of the transactions contemplated hereby and thereby, including the Merger, do not and will not: (i) subject to, in the case of the Merger, obtaining the Company Member Vote, conflict with or result in a violation or breach of, or default under, any provision of the certificate of formation, operating agreement or other organizational documents of the Company (“Company Organizational Documents”); (ii) subject to, in the case of the Merger, obtaining the Company Member Vote and the receipt of approval under the HSR Act, conflict with or result in a violation or breach of any provision of any applicable Law or Governmental Order applicable to the Company Entities; or (iii) except as set forth in Section 4.3 of the Company Disclosure Schedules, require the consent or notice by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Material Contract or any Permit affecting the properties, assets or Business of the Company Entities; except with respect to the foregoing clauses (ii) and (iii) as would not reasonably be expected to have a Material Adverse Effect.

 

(b)          No material consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to any Company Entity in connection with the execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby, except for the filing of the Certificate of Merger with the Secretary of State of Delaware and such filings as may be required under the HSR Act or any other antitrust law.

 

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Section 4.4           Capitalization.

 

(a)          The Company’s authorized and outstanding Units, including all Options, are set forth on Section 4.4(a) of the Company Disclosure Schedules. All of the outstanding Units have been, or upon issuance will be, duly authorized, validly issued and are fully paid and non-assessable.

 

(b)          Except as disclosed on Section 4.4(b) of the Company Disclosure Schedules, (i) no subscription, warrant, option, convertible or exchangeable security, or other rights, agreements, arrangements or commitments to purchase or otherwise acquire any equity securities of the Company or any of its Subsidiaries is authorized or outstanding, and (ii) there is no commitment by the Company or its Subsidiaries to issue Units or equity interests, subscriptions, warrants, options, convertible or exchangeable securities, or other similar equity rights or to distribute to holders of any of their respective equity securities any evidence of indebtedness or asset, to repurchase or redeem any securities of the Company or its Subsidiaries or to grant, extend, accelerate the vesting of, change the price of, or otherwise amend any warrant, option, convertible or exchangeable security. There are no declared or accrued unpaid dividends with respect to any Units.

 

(c)          All issued and outstanding Units are (i) not subject to any preemptive rights created by statute, Company Organizational Documents or any agreement to which the Company is a party; and (ii) free of any Encumbrances other than Permitted Encumbrances. All Units were issued in compliance with all applicable securities Laws and other applicable Law.

 

(d)          There are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any equity securities of the Company or any of its Subsidiaries or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any person other than a Subsidiary of the Company. All distributions, dividends, repurchases and redemptions in respect of the Units (or other equity interests) of the Company were undertaken in compliance with the Company Organizational Documents then in effect, any agreement to which the Company then was a party and in compliance with applicable Law.

 

Section 4.5           Financial Statements. Section 4.5 of the Company Disclosure Schedules sets forth the audited consolidated financial statements of the Company and its Subsidiaries consisting of consolidated statements of financial position as of December 31 in each of the years 2018, 2019 and 2020 and the related consolidated statements of operations and comprehensive income and cash flows for the years then ended (the “Financial Statements”). The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved. The Financial Statements are based on the books and records of the Company, and fairly present in all material respects the financial condition of the Company and its Subsidiaries as of the respective dates they were prepared and the results of the operations of the Company and its Subsidiaries for the periods indicated. The consolidated statement of financial position of the Company and its Subsidiaries as of December 31, 2020 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date.”

 

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Section 4.6           Undisclosed Liabilities. Except as set forth in Section 4.6 of the Company Disclosure Schedules, the Company Entities have no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured (“Liabilities”) or Indebtedness that would be required to be set forth on a balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP, consistently applied, except (a) those which are reflected or reserved against in the Financial Statements, (b) those which have been incurred in the Ordinary Course since the Balance Sheet Date (none of which results from or arises out of any material breach of or material default under any Contract, tort or noncompliance with Law), (c) obligations of future performance under Contracts, and (d) those which would not be material to the Company Entities, taken as a whole. Since January 1, 2018, the Company has not received any complaint, allegation, assertion or claim, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or its internal accounting controls, including any compliant, allegation, assertion or claim that the Company has engaged in questionable accounting or auditing practices.

 

Section 4.7           Absence of Certain Changes or Events. During the period beginning on January 1, 2021 and ending on the date of this Agreement, except as set forth in Section 4.7 of the Company Disclosure Schedules (a) each Company Entity has conducted the Business in the Ordinary Course in all material respects, (b) no Company Material Adverse Effect has occurred, and (c) none of the Company Entities has taken any action that, if taken after the date of this Agreement, would constitute a material breach of any of the covenants set forth in Section 6.2.

 

Section 4.8           Title; Real Property.

 

(a)           No Company Entity owns any real property.

 

(b)          The Company Entities have good and valid title to, or a valid leasehold interest, as applicable, in, all Leased Real Property and material tangible personal property and other material assets reflected in the Balance Sheet, other than properties and assets sold or otherwise disposed of in the Ordinary Course since the Balance Sheet Date. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for Permitted Encumbrances. Except as set forth in Section 4.8(b) of the Company Disclosure Schedules, all such properties and assets (including leasehold interests) are in the possession of or under the control of a Company Entity. Except as set forth in Section 4.8(b) of the Company Disclosure Schedule, (i) there are no leases, subleases, sublicenses, concessions or other contracts granting to any person other than a Company Entity the right to use or occupy all or any portion of the Leased Real Property, (ii) all such leases are in full force and effect, are valid and enforceable in accordance with their respective terms, subject to the General Enforceability Exceptions, and there is not, under any of such leases, any existing default or event of default (or event which, with notice or lapse of time, or both, would constitute a default) by the Company or any Company Subsidiary or, to the Company’s Knowledge, by the other party to such leases, except as would not have a Company Material Adverse Effect, and (iii) to the Company’s Knowledge, there are no material disputes with respect to any such leases.

 

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(c)          Section 4.8(c) of the Company Disclosure Schedules lists with respect to each Leased Real Property (i) the street address; (ii) the landlord under the lease, the rental amount currently being paid, and the expiration of the term of such lease; and (iii) the current use of such property. With respect to the Leased Real Property, the Company has delivered or made available to Parent true, complete and correct copies of the lease agreement associated with each Leased Real Property location.

 

Section 4.9           Condition and Sufficiency of Assets. Except as set forth in Section 4.9 of the Company Disclosure Schedules, as of the date hereof, the buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company Entities are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, except for ordinary and routine maintenance and repairs. Each of the Company Entities has legal and valid title to, or in the case of leases and licenses, a valid leasehold interest or license in, all of its properties and assets, tangible and intangible, real, personal and mixed, used or held for use in its business, free and clear of all Encumbrances other than Permitted Encumbrances, except as would not reasonably be expected to have a Material Adverse Effect.

 

Section 4.10         Intellectual Property.

 

(a)          Section 4.10(a) of the Company Disclosure Schedules lists all (i) Company IP Registrations, indicating as to each item as applicable: (A) the owner; (B) the jurisdictions in which such item is issued or registered or in which any application for issuance or registration has been filed, (C) the respective issuance, registration, or application number of the item, and (D) the dates of application, issuance or registration of the item (as applicable); (ii) material unregistered Marks; (iii) material unregistered Copyrights; and (iv) internet domain names, in the case of (ii), (iii), and (iv) that are Company Owned Intellectual Property.

 

(b)          Section 4.10(b) of the Company Disclosure Schedules lists all Inbound License Agreements (other than (i) licenses to Off-the-Shelf Software, (ii) licenses to Open Source Software, (iii) non-disclosure agreements; and (iv) Contracts with employees, individual consultants or individual contractors, in each case, that do not materially differ from the Company Entities’ form therefor that has been made available to Parent) and Outbound License Agreements (other than licenses to use the Company Intellectual Property granted to customers in connection with the use of Company products or services in the Ordinary Course). No Company Entity nor, to the Company’s Knowledge, any other party thereto is in default under, or has provided or received any written notice of material breach or default of any Company IP Agreement.

 

(c)          As of the date of this Agreement, all necessary fees and filings finally due with respect to any material Company IP Registrations have been timely submitted to the relevant intellectual property office or Governmental Authority and internet domain name registrars to maintain such material Company IP Registrations in full force and effect. As of the date of this Agreement, no issuance or registration obtained and no application filed by the Company Entity for any Intellectual Property has been cancelled, abandoned, allowed to lapse or not renewed, except where such Company Entity has, in its reasonable business judgment, decided to cancel, abandon, allow to lapse or not renew such issuance, registration or application.

 

(d)          Except as set forth in Section 4.10(d) of the Company Disclosure Schedules, a Company Entity is the legal and record owner of all right, title and interest in and to the Company IP Registrations, and has the right to use all other Intellectual Property used in the conduct of the Business, in each case, free and clear of Encumbrances other than Permitted Encumbrances. No Company Entity has (i) assigned, transferred ownership of, or granted any exclusive license with respect to, any Company Owned Intellectual Property to any customer pursuant to any Contract with any such Company Entities’ customer or other Person or (ii) granted any customer the right to use any material Company Product on anything other than a non-exclusive basis. The Company Intellectual Property, including without limitation any Intellectual Property licensed to a Company Entity pursuant to an Inbound License Agreement, constitutes all Intellectual Property that are used in or necessary to the conduct of the business of the Company as currently conducted.

 

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(e)          Without limiting the generality of the foregoing, a Company Entity has entered into written agreements with every current and former employee that has contributed Company Owned Intellectual Property to the Business, and with every current and former independent contractor that has contributed Company Owned Intellectual Property to the Business, whereby such employees and independent contractors: (i) agree to assign to a Company Entity any ownership interest and right they may have in the Company Owned Intellectual Property; and (ii) as between the relevant Company Entity and such employee or independent contractor, acknowledge the Company Entity’s exclusive ownership of all Company Owned Intellectual Property.

 

(f)           Each Company Entity’s rights in the Company IP Registrations are subsisting and, to the Company’s Knowledge, valid and enforceable.

 

(g)          In the past three (3) years the conduct of the Business as currently and formerly conducted, and the products, processes and services of the Company Entities, have not materially infringed or misappropriated the Intellectual Property of any Person. To the Company’s Knowledge, in the past three (3) years no Person has infringed, misappropriated or diluted, or is currently infringing, misappropriating or diluting, any Company Intellectual Property.

 

(h)          There are no Legal Proceedings (including any oppositions, interferences or re-examinations) settled, pending or, to the Company’s Knowledge, threatened in writing: (i) alleging any infringement, misappropriation, dilution or violation of the Intellectual Property of any Person by the Company Entities; (ii) challenging the validity, enforceability, registrability or ownership of any Company Owned Intellectual Property or the Company Entities’ rights with respect to any Company Owned Intellectual Property; or (iii) by the Company Entities alleging any infringement, misappropriation, dilution or violation by any Person of the Company Owned Intellectual Property; in each case other than as reasonably expected during the ordinary course of prosecution of such Intellectual Property. No Company Entity is subject to any Governmental Order that does or would restrict or impair the use of any Company Owned Intellectual Property.

 

(i)           Each Company Entity has taken commercially reasonable steps to safeguard and maintain the secrecy of any trade secrets, know-how and other confidential information owned by each Company Entity. Without limiting the foregoing, each Company Entity has not disclosed any material trade secrets, know-how or confidential information to any other Person unless such disclosure was under an appropriate written non-disclosure agreement containing appropriate limitations on use, reproduction and disclosure. To the Company’s Knowledge, there has been no violation or unauthorized access to or disclosure of any material trade secrets, know-how or confidential information of or in the possession each Company Entity, or of any written obligations with respect to such.

 

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(j)           None of the Company Owned Intellectual Property and, to the Company’s Knowledge, none of the Company IP Agreements are subject to any outstanding Governmental Order that restricts in any manner the use, sale, transfer, licensing or exploitation thereof by the Company Entities or affects the validity, use or enforceability of any such Company Owned Intellectual Property.

 

(k)          To the Company’s Knowledge, each Company Entity has obtained, possesses and is in material compliance with valid licenses to use all of the Software present on the computers and other Software-enabled electronic devices that it owns or leases or that is otherwise used by such Company Entity and/or its employees in connection with the Company Entities’ business. No Company Entity has disclosed or delivered to any escrow agent or any other Person, other than employees or contractors who are subject to confidentiality obligations, any of the source code that is Company Owned Intellectual Property, and no other Person has the right, contingent or otherwise, to obtain access to or use any such source code. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time or both) will, or would reasonably be expected to, result in the delivery, license or disclosure of any material source code that is owned by a Company Entity or otherwise constitutes Company Owned Intellectual Property to any Person who is not, as of the date the event occurs or circumstance or condition comes into existence, a current employee or contractor of a Company Entity subject to confidentiality obligations with respect thereto.

 

(l)           Except as set forth on Section 4.10(l) of the Company Disclosure Schedules, no Company Entity has accessed, used, modified, linked to, created derivative works from or incorporated into any proprietary Software that constitutes a product or service offered by a Company Entity or is otherwise considered Company Owned Intellectual Property and that is distributed outside of the Company Entities, or is otherwise used in a manner that may trigger or subject such Company Entity to any obligations set forth in the license for such Open Source Software, any Open Source Software, in whole or in part, in each case in a manner that (i) requires any Company Intellectual Property to be licensed, sold, disclosed, distributed, hosted or otherwise made available, including in source code form and/or for the purpose of making derivative works, for any reason, (ii) grants, or requires any Company Entity to grant, the right to decompile, disassemble, reverse engineer or otherwise derive the source code or underlying structure of any Company Owned Intellectual Property, (iii) limits in any manner the ability to charge license fees or otherwise seek compensation in connection with marketing, licensing or distribution of any Company Owned Intellectual Property or (iv) otherwise imposes any limitation, restriction or condition on the right or ability of any Group Entities to use, hold for use, license, host, distribute or otherwise dispose of any Company Intellectual Owned Property, other than compliance with notice and attribution requirements.

 

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Section 4.11         Privacy and Data Security.

 

(a)           The Company Entities have a privacy policy and security policies regarding the collection, use, disclosure protection and processing (“Processing”) of Personal Information in connection with the operation of the Business that is in any Company Entity’s possession (the “Privacy and Security Policies”), custody or control, or otherwise held or processed on its behalf and each Company Entity is and has been in compliance with such Privacy and Security Policies.

 

(b)           Except as set forth in Section 4.11(b) of the Company Disclosure Schedules, each Company Entity has complied at all times in all material respects with all applicable Privacy Laws, all Privacy and Security Policies and all industry standards binding upon the Company, including, without limitation, the Payment Card Industry Data Security Standard (collectively, the “Privacy and Security Requirements”).

 

(c)           Each Company Entity is and has at all times been in material compliance with the terms of all Contracts to which such Company Entity is a party, if any, relating to data privacy, security or breach notification (including provisions that impose conditions or restrictions on the collection, use, disclosure, transmission, destruction, maintenance, storage or safeguarding of personal information).

 

(d)           The Company Entities have established and implemented programs and procedures that are commercially reasonable, in material compliance with applicable industry practices and appropriate, including administrative, technical and physical safeguards to protect the confidentiality, integrity and security of personal information in its possession, custody or control against unauthorized access, use, modification, disclosure or other misuse. The Company Entities have: (i) conducted vulnerability testing, risk assessments, and external audits of, and tracks security incidents related to the Systems (collectively, “Information Security Reviews”); (ii) begun the process of correcting any material exceptions or vulnerabilities identified in such Information Security Reviews; (iii) made available to Parent true and accurate copies of all Information Security Reviews; and (iv) begun the process of installing software security patches and other fixes to identified technical information security vulnerabilities. The Company Entities provide their respective employees with regular training on privacy and data security matters.

 

(e)           Except as set forth in Section 4.11(e) of the Company Disclosure Schedules, none of the Company Entities has experienced any loss, damage, or unauthorized access, disclosure, use or breach of security of any Personal Information in the possession, custody or control of any Company Entity or otherwise held or processed on its behalf. None of the Company Entities’ Systems have been subject to any unauthorized access.

 

(f)           The consummation of any of the transactions contemplated hereby or thereby, will not violate any applicable Privacy Requirements as they currently exist or as they existed at any time during which any of the Personal Information was collected or obtained.

 

(g)          There have not been any claims or proceedings related to any data security incidents or any violations of any Privacy Requirements, and there are no facts or circumstances which could reasonably serve as the basis for any such allegations or claims, and none of the Company Entities has received any correspondence relating to, or notice of any proceedings, claims, investigations or alleged violations of, Privacy Requirements, or any subject access or other individual rights requests made pursuant to the Privacy Requirements, with respect to Personal Information from any person or governmental authority, and there is no such ongoing proceeding, claim, investigation or allegation.

 

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(h)          The Company Entities, to the extent applicable, comply with and have at all times complied with the CAN-SPAM Act, TCPA and other applicable legislation regulating direct marketing activities (“UCE Laws”). No Claims have been asserted against the Company Entities alleging a violation of any UCE Laws. None of the products or services of the Company Entities install “spyware,” “adware” or other malicious code that could compromise the privacy or data security of end-users and/or their computer systems and/or collect information from an end user without their knowledge (collectively, “Spyware”).

 

(i)            In relation to Personal Information originating from the European Economic Area, where processing of such Personal Information is based on the consent of a data subject (including marketing by electronic means), each data subject has freely and unambiguously given its specific and informed consent to all such processing of his or her Personal Information carried on by or on behalf of the Company Entities, and the Company Entities hold records evidencing such consents.

 

(j)            No Personal Information in respect of which any Company Entity is (a) a controller has been transferred outside the European Economic Area, other than in accordance with Articles 45 and 46(2) of the GDPR; or (b) a processor has been transferred by the Company outside the European Economic Area, other than in accordance with the instructions of the controller of that Personal Information and in accordance with Articles 45 and 46(2) of the GDPR.

 

Section 4.12         Systems and IT.

 

(a)           The Company Entities’ Systems are in good working order and condition and are sufficient in all material respects for the purposes for which they are used in the conduct of the Business and owns or has a license to use the applicable Company Entity’s Systems (whether in terms of authorized sites, units, users, seats or otherwise) for Software, in each case as necessary for the conduct of the Business as currently conducted.

 

(b)          Each Company Entity maintains commercially reasonable back-up and data recovery, disaster recovery and business continuity plans, procedures and facilities and test such plans and procedures on a regular basis, and such plans and procedures have been proven effective upon such testing.

 

(c)           The Systems are adequate for, and operate and perform in all material respects in accordance with their documentation and functional specifications and otherwise as required in connection with, the operation of the Business. The Systems have not malfunctioned or failed at any time in a manner that resulted in significant or chronic disruptions to the operation of the Business. The Systems do not contain any computer code designed to disrupt, disable or harm in any manner the operation of any software or hardware nor any unauthorized feature (including any worm, bomb, backdoor, clock, timer or other disabling device, code, design or routine) that causes the software or any portion thereof to be erased, inoperable or otherwise incapable of being used, either automatically, with the passage of time or upon command. The Company Entities have implemented reasonable backup, security and disaster recovery technology consistent with industry practices.

 

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Section 4.13         Contracts. Section 4.13 of the Company Disclosure Schedules sets forth a complete and accurate list of all of the following Contracts to which any Company Entity is a party or by which it is bound as of the date hereof (each Contract, and each Company IP Agreement, a “Material Contract” and collectively, the “Material Contracts”), as well as the applicable subsection to which such Material Contract corresponds:

 

(a)           each Contract (excluding ordinary course purchase orders) with consideration paid or payable to the Company Entities of more than $1,000,000, in the aggregate, over any 12-month period;

 

(b)           each Contract (excluding ordinary course purchase orders) with Suppliers to the Company Entities, including those relating to the design, development, manufacture or sale of the Company Products, for expenditures paid or payable by the Company Entities requiring payment obligation of an amount equal to or greater than $1,000,000 over any 12-month period;

 

(c)           all Contracts involving the payment of royalties or other amounts calculated based upon the revenues or income of the Company Entities or income or revenues related to any Company Product to which any Company Entity is a party pursuant to which a Company Entity has paid an amount equal to or greater than $250,000 over any 12-month period;

 

(d)           Contracts for the sale of any of the assets of any Company Entity with a value in excess of $250,000 individually or $500,000 in the aggregate, other than in the Ordinary Course, or for the grant to any Person of any preferential rights to purchase any of such assets other than in the Ordinary Course;

 

(e)           Contracts for joint ventures, partnerships, sharing of profits, collaboration, co-promotion, commercialization or research or development Contract;

 

(f)            Contracts evidencing Indebtedness in excess of $250,000 (whether incurred, assumed, guaranteed or secured by any asset) and any pledge agreements, security agreements or other collateral agreements in which a Company Entity granted to any person a security interest in or lien on any of the property or assets of a Company Entity, and all agreements or instruments guarantying the debts or other obligations of any person;

 

(g)           any Contract under which any Company Entity has advanced or loaned any amount to any of its managers or executive officers and such advance or loan remains outstanding;

 

(h)           any Contract imposing any restriction on the right or ability of any Company Entity (or that would purport to limit the freedom of Buyer or the Company Entity following the Closing): (A) to engage in any business practices, (B) to compete with any other Person or to engage in any line of business, market or geographic area, or to sell, license, manufacture or otherwise distribute any of its technology or products, or from providing services, to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of the market; (C) to solicit employment of, or hire, any potential employees, consultants or independent contractors, in any case solely to the extent that such restrictions materially limit the Company’s ability to obtain qualified employees, consultants or independent contractors; (D) to acquire any product, property or other asset (tangible or intangible), or any services, from any other Person, to sell any product or other asset to or perform any services for any other Person or to transact business or deal in any other manner with any other Person or (E) to develop or distribute any Company product or Intellectual Property;

 

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(i)            any Contract between any Company Entity, on the one hand, and any of its members of the board of managers, officers, or members on the other hand (excluding agreements relating solely to the granting or issuance of Units or Options);

 

(j)            any Contract (A) governing the terms of, or otherwise related to, the employment, engagement or services of any current director, manager, officer, employee, Contingent Worker or other service provider of the Company Entities whose annual base salary (or, in the case of an independent contractor, annual base compensation) is in excess of $250,000, or (B) providing for any payments that may be triggered in connection with the Transactions;

 

(k)           any Contract between any Company Entity, on the one hand, and any Governmental Entity, on the other hand;

 

(l)            all Contracts under which a Company Entity has agreed to purchase goods or services from a vendor, Supplier or other person on a preferred supplier or “most favored supplier” basis; and

 

(m)          collective bargaining agreements.

 

Except as set forth in Section 4.13 of the Company Disclosure Schedules, each Material Contract is valid, binding and enforceable on the applicable Company Entity in accordance with its terms and, to the Company’s Knowledge, each other party thereto, and is in full force and effect, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or similar Laws relating to or affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) (the “General Enforceability Exceptions”). No Company Entity, nor to the Company’s Knowledge, any other party thereto is in breach of or default under in any material respect, or has provided or received any written or, to the Company’s Knowledge, oral notice of any intention to terminate, any Material Contract. To the Company’s Knowledge, as of the date hereof, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default in any material respect under any Material Contract by the Company Entity party thereto. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto) have been made available to Parent.

 

Section 4.14         Litigation. Except as set forth in Section 4.14 of the Company Disclosure Schedules, as of the date hereof, there are, and since December 31, 2018, there have been, no Legal Proceedings pending or, to the Company’s Knowledge, threatened in writing (a) against any Company Entity, (b) any Company Entity’s respective officers or managers in their capacities as such, that if determined adversely would result in Liabilities that are material to the Company Entities, taken as a whole, or (c) that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement, at law, in equity or otherwise. Except as set forth in Section 4.14 of the Company Disclosure Schedules, as of the date hereof, there are no outstanding Governmental Orders that would reasonably be expected to result in Liabilities that are material to the Company Entities, taken as a whole.

 

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Section 4.15         Compliance with Laws; Permits.

 

(a)           Except as set forth in Section 4.15(a) of the Company Disclosure Schedules, each Company Entity is now, and for the past three (3) years has been, in compliance in all material respects with all Laws applicable to it or its Business, properties or assets, except for such non-compliance that has not and would not reasonably be expected to result in Liabilities that are material to the Company Entities. The Company has adopted, implemented and maintains a written compliance management system, including policies and procedures, that ensures compliance with Laws.

 

(b)           Each Company Entity is and has always been in compliance with the AML Laws. No Company Entity has received any written notice from a Governmental Authority alleging that the Company or its directors, officers, employees or agents has violated, is in violation of, or is otherwise subject to any penalty or any inquiry, investigation, proceeding or action under, any AML Laws.

 

(c)           As of the date hereof (i) all Permits required for each Company Entity to conduct its respective Business have been obtained and are valid and in full force and effect; (ii) Section 4.15(c) of the Company Disclosure Schedules lists all Permits issued to any Company Entity that are currently in effect, including the names of the Permits and their respective dates of issuance and expiration; and (iii) no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 4.15(c) of the Company Disclosure Schedules.

 

(d)           No Company Entity is currently or has been engaged in any activity that requires it to register as a money services business with the Financial Crimes Enforcement Network or to obtain a Permit under any Law regulating the transmission of money or any activity relating to any digital or virtual currency, token, asset or thing of value, including the storage of the same.

 

(e)           Each Company Entity is and has always been in compliance with the Card Network Rules and PCI-DSS, in each case solely to the extent applicable to such Company Entity.

 

Section 4.16         Environmental Matters. Except as set forth in Section 4.16 of the Company Disclosure Schedules:

 

(a)           Each Company Entity is, and for the past three (3) years has been, in compliance, in all material respects, with all Environmental Laws (including obtaining, and complying in all material respects with, any Environmental Permits required for its operations) and has not received from any Person any written claim, notice or request for information pursuant to Environmental Law, which, in each case, either was received within the past three (3) years or remains pending or unresolved.

 

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(b)           To the Company’s Knowledge, no real property currently owned, leased or operated by any Company Entity is listed on the National Priorities List under the Comprehensive Environmental Response, Compensation, and Liability Act, or any similar state list.

 

(c)           To the Company’s Knowledge, there has been no Release of Hazardous Substances as a result of any Company Entity’s operations or at, to, on, under or from any real property currently or formerly owned, leased or operated by any Company Entity, in each case, in an amount, manner, condition or concentration that has resulted, or would reasonably be expected to result, in material liability to any Company Entity under Environmental Laws.

 

(d)           There is no civil, criminal, arbitral or administrative action, suit, hearing, investigation, inquiry, Governmental Order, or proceeding pending or, to the Company’s Knowledge, threatened against any Company Entity that is based on or alleges liability under Environmental Laws.

 

(e)           Neither this Agreement nor the consummation of the transactions contemplated herein will result in any obligations for site investigation or cleanup, or notice or consent to or of any Governmental Authority, pursuant to the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq., as amended, or any other “transaction-triggered” Environmental Law.

 

(f)            The representations and warranties in this Section 4.16 are the Company’s exclusive representations and warranties in respect of environmental matters, including, without limitation, any matters arising under or involving Environmental Laws, Environmental Permits, or Releases of Hazardous Substances.

 

Section 4.17         Employee Benefit Matters.

 

(a)           Section 4.17(a) of the Company Disclosure Schedules sets forth a list of each Benefit Plan.

 

(b)           As applicable with respect to the Benefit Plans, the Company has delivered to Parent, true and complete copies of the following documents (i) all current plan documents governing each Benefit Plan, including all amendments thereto (or for unwritten Benefit Plans a written description of the material terms of such Benefit Plan), (ii) the current summary plan description and each summary of material modifications thereto, (iii) the most recent Internal Revenue Service determination letter (or opinion or advisory letter), (iv) the most recently filed annual report (Form 5500 and all schedules thereto), (v) the last three years of non-discrimination testing results, (vi) the most recent summary annual report, (vii) all records, notices and filings made, or received, by the Company Entities or any ERISA Affiliate during the last three (3) years concerning IRS or DOL audits or investigations and (viii) all non-routine correspondence to and from any governmental agency.

 

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(c)           (i) Each Benefit Plan has been maintained, operated and administered in compliance in all material respects with its terms and all applicable Laws, including ERISA and the Code. (ii) No Benefit Plan is, or within the past six years has been, the subject of an application or filing under a government sponsored amnesty, voluntary compliance, or similar program, or been the subject of any self-correction under any such program.

 

(d)           Each Benefit Plan, which is intended to meet the qualification requirements of Section 401(a) of the Code is so qualified and has received a determination letter from the IRS, or with respect to a prototype plan, an opinion letter from the IRS to the prototype plan sponsor, to the effect that such plan is qualified and exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code and each such Benefit Plan is so qualified and exempt from federal income taxes and, to the Company’s Knowledge, no event or omission has occurred that would reasonably be expected to cause any such Benefit Plan to lose such qualification.

 

(e)           Each Company Entity has complied in all material respects with the notice and continuation coverage requirements of Section 4980B of the Code and the regulations thereunder with respect to each Benefit Plan that is a group health plan within the meaning of Section 5000(b)(1) of the Code. Each Benefit Plan is in compliance in all material respects with the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, to the extent applicable.

 

(f)            Except as set forth in Section 4.17(f) of the Company Disclosure Schedules, all payments and/or contributions required to have been timely made under the Benefit Plans, except those to be made from a trust qualified under Section 401(a) and 501(a) of the Code or through an insurance contract, for any period ending before the Closing Date that are not yet, but will be, required to be made have either been made or are properly accrued and reflected in the Financial Statements (if such accrual is required by GAAP) in accordance with the terms of the applicable Benefit Plan and applicable law.

 

(g)           No Company Entity nor, to the Company’s Knowledge, any fiduciary, trustee or administrator of any Benefit Plan, has engaged in or, in connection with the transactions contemplated by this Agreement, will engage in, any transaction with respect to any Benefit Plan which would subject any such Benefit Plan, any Company Entity, Merger Sub, the Surviving Entity or Parent or any of their respective Affiliates to a tax, penalty or liability for a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code.

 

(h)           Neither the Company nor any ERISA Affiliate has ever maintained, contributed to, or been required to contribute to or had any liability or obligation (including on account of any ERISA Affiliate) with respect to (whether contingent or otherwise) (i) any employee benefit plan that is subject to Part 3, Subtitle B of Title I of ERISA or Title IV of ERISA, Section 412 of the Code, Section 302 of ERISA, (ii) any funded welfare benefit plan within the meaning of Section 419 of the Code, (iii) any “multiple employer plan” (within the meaning of Section 210 of ERISA or Section 413(c) of the Code), or (iv) any “multiple employer welfare arrangement” (as such term is defined in Section 3(40) of ERISA), and neither the Company nor any ERISA Affiliate has ever incurred any liability under Title IV of ERISA that has not been paid in full. No asset of any Company Entity, which is to be acquired by Parent or any of its Subsidiaries pursuant to this Agreement, is subject to any lien under Code Section 401(a)(29), ERISA Section 302(F), Code Section 412(n) or ERISA Section 4068 or arising out of any action filed under ERISA Section 4301(b).

 

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(i)            No Company Entity nor any ERISA Affiliate thereof has ever maintained, contributed to or been required to contribute to, or had any liability or obligation (including on account of any ERISA Affiliate) with respect to (whether contingent or otherwise) or incurred any withdrawal liability, within the meaning of Section 4201 of ERISA, to any Multiemployer Plan, nor does any Company Entity or any ERISA Affiliate thereof have any potential withdrawal liability arising from a transaction described in Section 4204 of ERISA.

 

(j)            No Benefit Plan provides benefits, including death or medical benefits, beyond termination of service or retirement other than (i) coverage mandated by Law or (ii) death or retirement benefits under a plan qualified under Section 401(a) of the Code and no Company Entity has ever promised to provide such post-termination benefits.

 

(k)           (i) No Company Entity or any ERISA Affiliate has announced its intention to modify or terminate any Benefit Plan or adopt any arrangement or program which, once established, would come within the definition of a Benefit Plan, in each case, other than adoptions, amendments, or terminations in the ordinary course of business consistent with past practices, except as required under this Agreement and (ii) no Benefit Plan provides health or long-term disability benefits that are not fully insured through an insurance contract.

 

(l)            (i) The execution of, and performance of the transactions contemplated by this Agreement could not either alone or in connection with any other event(s) (A) result in any payment becoming due to any employee, former employee, manager, officer, agent or independent contractor of the Company Entities or any of ERISA Affiliates, (B) increase any amount of compensation or benefits otherwise payable under any Benefit Plan, (C) result in the acceleration of the time of payment, funding or vesting of any benefits under any Benefit Plan, (D) require any contributions or payments to fund any obligations under any Benefit Plan or (E) limit the right to merge, amend or terminate any Benefit Plan. (ii) No payment which is or may be made by, from or with respect to any Benefit Plan, to any employee, former employee, manager, officer, agent or independent contractor of the Company Entities, either alone or in conjunction with any other payment, event or occurrence, will or could reasonably be characterized as an “excess parachute payment” under Section 280G of the Code. (iii) No such employee, former employee, manager, officer, agent or independent contractor of the Company Entities has any “gross up” agreements or other assurance of reimbursement for any Taxes resulting from any such “excess parachute payments.”

 

(m)          There are no pending audits, investigations or other proceedings by any Governmental Authority involving any Benefit Plan and, to the Company’s Knowledge, no threatened claims (except for individual claims for benefits payable in the normal operation of the Benefit Plans), suits or proceedings involving any Benefit Plan or asserting any rights or claims to benefits under any Benefit Plan and, to the Company’s Knowledge, there is no reasonable basis for any such litigation, claims or proceeding.

 

(n)           The per unit exercise price of each Option is no less than the fair market value of a Unit on the date of grant of such Option determined in a manner consistent with Section 409A of the Code. Each Benefit Plan that constitutes a “non-qualified deferred compensation plan” within the meaning of Section 409A of the Code, complies in both form and operation with the requirements of Section 409A of the Code so that no amounts paid pursuant to any such Benefit Plan is subject to tax under Section 409A of the Code.

 

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(o)           No Company Entities have any commitment to modify or amend any Benefit Plan (except as required by Law, to retain the tax qualified status of any Benefit Plan, or this Agreement). No Company Entities have any commitment to establish any new benefit plan, program or arrangement, other than as required pursuant to this Agreement.

 

(p)           No Benefit Plan is subject to the laws of any jurisdiction outside the United States.

 

Section 4.18         Taxes. Except as set forth in Section 4.18 of the Company Disclosure Schedules:

 

(a)           All income, sales and use and other material Tax Returns required to be filed on or before the Closing Date by any Company Entity have been, or will be, timely filed (giving effect to all extensions validly obtained). Such Tax Returns are, or will be, true, complete and correct in all material respects. All material Taxes due and owing by any Company Entity (whether or not shown on any Tax Return) have been, or will be, timely paid.

 

(b)           The Company Entities have withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, agent, creditor, customer, member or other party, and complied in all material respects with all information reporting and backup withholding provisions of applicable Law.

 

(c)           No written claim has been made by any Tax Authority in any jurisdiction where any Company Entity does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction.

 

(d)           No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of any Company Entity, which extension or waiver is still in effect.

 

(e)           There is no Tax Proceeding now being conducted, pending or threatened in writing (or, to the Company’s Knowledge, otherwise threatened) with respect to any Taxes or Tax Returns of or with respect to any Company Entity. No Company Entity has commenced a voluntary disclosure proceeding in any jurisdiction that has not been fully resolved or settled.

 

(f)            All deficiencies asserted, or assessments made, against any Company Entity as a result of any completed examinations by any Tax Authority have been fully paid.

 

(g)           The Company Entities are not a party to any current Legal Proceeding by any Tax Authority, and no written notice has been received as to any threatened Legal Proceedings by any Tax Authority.

 

(h)           There are no Encumbrances for Taxes (other than Permitted Encumbrances) upon the assets of any Company Entity.

 

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(i)            The Company Entities are not a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement (excluding any agreement entered into in the Ordinary Course, the primary purpose of which is not related to Taxes).

 

(j)            No private letter rulings, technical advice memoranda or similar agreements or rulings have been requested, entered into or issued by any Tax Authority with respect to any Company Entity.

 

(k)           No Company Entity has been a member of an affiliated, combined, consolidated or unitary Tax group for Tax purposes (other than a group of which the common parent is the Company). No Company Entity has any Liability for Taxes of any Person (other than a Person that is a member of a group of which the Company is the common parent) under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or foreign Law), as transferee or successor or by contract.

 

(l)            No Company Entity will be required to include an item of income, or exclude an item of deduction, for any period after the Closing Date (determined with and without regard to the transactions contemplated hereby) as a result of: (i) an installment sale transaction occurring on or before the Closing Date governed by Code Section 453 (or any similar provision of state, local or non-U.S. laws); (ii) a transaction occurring on or before the Closing Date reported as an open transaction for U.S. federal income Tax purposes (or any similar doctrine under state, local, or non-U.S. laws); (iii) any prepaid amounts received or paid on or prior to the Closing Date or deferred revenue realized, accrued or received on or prior to the Closing Date; (iv) a change in method of accounting with respect to a Pre-Closing Tax Period that occurs or was requested on or prior to the Closing Date (or as a result of an impermissible method used in a Pre-Closing Tax Period); (v) an agreement entered into with any Governmental Authority (including a “closing agreement” under Code Section 7121) on or prior to the Closing Date; (vi) the application of Code Section 263A (or any similar provision of state, local, or non-U.S. laws); or (vii) intercompany transaction occurring or any excess loss account existing on or prior to the Closing Date, in each case described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local, or non-U.S. laws). No Company Entity uses the cash method of accounting for income Tax purposes or will be required to make any payment after the Closing Date as a result of an election under Section 965 of the Code (or any similar provision of state, local, or non-U.S. laws).

 

(m)          The unpaid Taxes of the Company Entities (i) did not, as of the Balance Sheet Date, exceed the reserves for Tax liabilities (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Financial Statements (rather than in any notes thereto) and (ii) do not exceed such reserves as adjusted for the passage of time through the Closing Date in accordance with the past practices of the Company Entities in filing their Tax Returns.

 

(n)           No Company Entity has (i) elected to defer the payment of any “applicable employment taxes” (as defined in Section 2302(d)(1) of the CARES Act) pursuant to Section 2302 of the CARES Act, (ii) deferred payment of any Taxes (including withholding Taxes) pursuant to Internal Revenue Service Notice 2020-65 or any related or similar order or declaration from any Governmental Authority (including, without limitation, the Presidential Memorandum, dated August 8, 2020, issued by the President of the United States) or (iii) claimed any “employee retention credit” pursuant to Section 2301 of the CARES Act.

 

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(o)           No Company Entity is or has been, a party to, or a promoter of, a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b).

 

(p)           The Company and any other Company Entity that is treated as a partnership for United States federal income tax purposes is eligible to make an election under Section 754 of the Code.

 

(q)           No election has been made to have the provisions of Section 1101 of the Bipartisan Budget Act of 2015 (the “BBA Audit Rules”) apply to a Company Entity prior to the otherwise effective date of the BBA Audit Rules.

 

(r)            None of the “section 197 intangibles” (as defined in Section 197(d) of the Code) of any Company Entity are or will be excluded from being treated as “amortizable section 197 intangible” (as defined in Section 197(c)) as a result of the application of Section 197(f)(9) of the Code.

 

(s)           With respect to the Units that are outstanding and that were issued in consideration for the provision of services and subject to a substantial risk of forfeiture, each holder thereof has timely filed with the IRS a valid election under Section 83(b) of the Code, and all of such Units have at all times been treated and qualify as interests in the profits of the Company and had a liquidation value (for purposes of IRS Revenue Procedure 93-27) of zero at the time they were granted.

 

(t)            At all times since its formation until June 11, 2020, OpCo has been properly characterized as a “partnership” for U.S. federal income Tax purposes, and after such date has been properly characterized as a “disregarded entity” for U.S. federal income Tax purposes. At all times since its formation, the Company has been properly characterized as a “partnership” for U.S. federal income Tax purposes, and has, for U.S. federal income Tax purposes been properly characterized as a “continuation” of OpCo.

 

Section 4.19         Employee Relations.

 

(a)         The Company has provided Parent a complete and accurate list of all employees of the Company as of the date of this Agreement, setting forth for each employee: the employee’s position or title; whether classified as exempt or non-exempt for wage and hour purposes; whether paid on a salary, hourly or commission basis and the employee’s actual annual base salary or other rates of compensation; bonus potential; date of hire; business location (city/town and state); status (i.e., active or inactive and if inactive, the type of leave and estimated duration); any visa or work permit status and the date of expiration, if applicable; and the total amount of bonus, retention, severance and other amounts to be paid to such employee at the Closing or otherwise in connection with the transactions contemplated hereby.

 

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(b)           The Company has provided Parent a complete and accurate list of all of the independent contractors, consultants, temporary employees, or leased employees employed or used by the Company as of the date of this Agreement and classified by the Company as other than employees, or compensated other than through wages paid by the Company through the Company’s payroll (“Contingent Workers”), showing for each Contingent Worker such individual’s role in the business, location (city/town and state), fee or compensation arrangements and other contractual terms with the Company.

 

(c)           The Company currently classifies and has properly classified each of its employees as exempt or non-exempt for the purposes of the Fair Labor Standards Act and state, local and foreign wage and hour laws, and is and has been otherwise in material compliance with such laws.

 

(d)           To the extent that any Contingent Workers are or were engaged by the Company, the Company currently classifies and has properly classified and treated them as Contingent Workers (as distinguished from Form W-2 employees) in accordance with applicable law and for the purpose of all employee benefit plans and perquisites.

 

(e)           The Company is, and for the past three (3) years has been, in material compliance with all applicable Laws and regulations respecting labor and employment matters, including fair employment practices, workplace safety and health, work authorization and immigration, unemployment compensation, workers’ compensation, affirmative action, terms and conditions of employment, employee leave and wages and hours, including payment of minimum wages and overtime.

 

(f)            Except as set forth in Schedule 4.19(f), currently and within the three (3) years preceding the date of this Agreement, the Company is not, and has not been involved in any way in, any form of litigation, governmental audit, governmental investigation, administrative agency proceeding, investigation of alleged employee misconduct, or private dispute resolution procedure, in each case that is material to the Company and that is with respect to employment or labor matters (including but not limited to allegations of employment discrimination, retaliation, noncompliance with wage and hour laws, sexual harassment, or other unlawful harassment or unfair labor practices).

 

(g)           Currently and within the three (3) years preceding the date of this Agreement, the Company maintains and has maintained policies (i) prohibiting employment discrimination on all grounds constituting unlawful discrimination, (ii) prohibiting sexual harassment and all other forms of discriminatory harassment, and (iii) providing complaint and investigation procedures with respect to (i) and (ii). Currently and within the three (3) years preceding the date of this Agreement, any and all such policies have materially conformed with applicable legal requirements, including, as applicable, with respect to independent contractors. Currently and within the three (3) years preceding the date of this Agreement, the Company materially complies and, to the Company’s Knowledge, has materially complied with any applicable legal requirements with respect to training concerning prevention of sexual harassment prevention and/or abusive conduct. Except as set forth on Section 4.19(g)(i) of the Company Disclosure Schedules, to the Company’s Knowledge, at no time within the three (3) years preceding the date of this Agreement have any allegations been made within or outside the Company alleging conduct that, if confirmed, would constitute violations of any of the policies referenced in (i) and/or (ii), in each case that are material to the Company. Except as set forth on Section 4.19(g) of the Company Disclosure Schedules, at no time within the three (3) years preceding the date of this Agreement has the Company received a complaint within the scope of (iii) or conducted an investigation of allegations of any alleged violation of (i) or (ii), in any case that is material to the Company.

 

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(h)           The consummation of the transactions contemplated in this Agreement will not (i) entitle any employee of the Company to severance pay, unemployment compensation, bonus payment, (ii) accelerate the time of payment for vesting of, or increase the amount of compensation due to, any such employee, or (iii) entitle any such employee to terminate, shorten or otherwise change the terms of his or her employment.

 

(i)            Except as set forth on Section 4.19(i) of the Company Disclosure Schedules (i) there is no, and during the past three (3) years there has not been, any labor strike, picketing of any nature, organizational campaigns, labor dispute, slowdown or any other concerted interference with normal operations, stoppage or lockout pending or, to the Company’s Knowledge, threatened against or affecting the business of the Company; (ii) the Company does not have any duty to bargain with any union or labor organization or other person purporting to act as exclusive bargaining representative (“Union”) of any employees or Contingent Workers with respect to the wages, hours or other terms and conditions of employment of any employee or Contingent Worker; (iii) there is no collective bargaining agreement or other contract with any Union, or work rules or practices agreed to with any Union, binding on the Company, or being negotiated, with respect to the Company’s operations or any employee or Contingent Worker; and (iv) the Company has not engaged in any unfair labor practice.

 

(j)            Except as set forth on Section 4.19(j) of the Company Disclosure Schedules, all employees of the Company are employed at-will and no employee is subject to any employment contract with the Company, whether oral or written.

 

(k)           Each employee of the Company is subject to a non-competition, non-solicitation, confidentiality, and/or invention assignment agreement with the Company.

 

(l)            Except as set forth on Section 4.19(l) of the Company Disclosure Schedules, in the past 12 months (i) no officer’s employment with the Company has been terminated by the Company for any reason; and (ii) to the Company’s Knowledge, no officer or group of employees has expressed any plans to terminate their employment with the Company.

 

(m)          The Company has not experienced a “plant closing” or “mass layoff” or similar group employment loss as defined in the federal Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any similar state, local or foreign law or regulation affecting any site of employment of the Company or one or more facilities or operating units within any site of employment or facility of the Company. During the ninety (90) day period preceding the date hereof, no employee or Contingent Worker has suffered an “employment loss” as defined in the WARN Act with respect to the Company.

 

(n)           The Company is and at all relevant times has been in material compliance with (i) COVID-19 related Laws (including without limitation relating to business reopening), including Laws issued and enforced by the Occupational Safety and Health Administration, the Centers for Disease Control, the Equal Employment Opportunity Commission, and any other state, local and/or other Governmental Authority; (ii) the Families First Coronavirus Response Act (including with respect to eligibility for tax credits under such Act) and (iii) any other applicable COVID-19 related leave Law, whether state, local or otherwise.

 

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Section 4.20         Insurance. Section 4.20 of the Company Disclosure Schedule sets forth, with respect to each material insurance policy under which any Company Entity is an insured (the “Insurance Policies”), a named insured or otherwise the principal beneficiary of coverage as of the date of this Agreement (a) the names of the insurer, the principal insured and each named insured, (b) the policy number, (c) the period, scope and amount of coverage and (d) the premium most recently charged. With respect to each such Insurance Policy, except as would not be expected to result in a Material Adverse Effect: (i) the policy is legal, valid, binding and enforceable in accordance with its terms (subject to the General Enforceability Exceptions) and, except for policies that have expired under their terms in the ordinary course, is in full force and effect; (ii) no Company Entity is in material breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, under the policy; and (iii) to the Company’s Knowledge, no insurer on the policy has been declared insolvent or placed in receivership, conservatorship or liquidation.

 

Section 4.21         Transactions with Related Parties. Except for agreements related to employment with Company Entities, and except as set forth in Section 4.19(a) of the Company Disclosure Schedules, there are no transactions, agreements, arrangements or understandings between any Company Entity, on the one hand, and any manager, officer or member (or Affiliate thereof) of any Company Entity, on the other hand, either (a) currently in effect or (b) that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the Securities Act (if the Securities Act were applicable to such Company Entity).

 

Section 4.22         Brokers. Except as set forth on Section 4.22 of the Company Disclosure Schedules, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangement made by or on behalf of any Company Entity.

 

Section 4.23         Exchange Act. No Company Entity is currently (nor has it previously been) subject to the requirements of Section 12 of the Exchange Act.

 

Section 4.24         Parent Common Stock. No Company Entity owns beneficially or of record any shares of Parent Common Stock or any securities convertible into, exchangeable for or carrying the right to acquire, any shares of Parent Common Stock.

 

Section 4.25         Information Supplied. The information relating to the Company Entities furnished by or on behalf of the Company Entities in writing for inclusion in the Proxy Statement will not, as of the date of mailing of the Proxy Statement to the holders of Parent Common Stock or at the time of the Parent Stockholders’ Meeting, contain any statement which, at such time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading, except for any change disclosed in writing by or on behalf of a Company Entity to Parent or its counsel prior to such mailing date pursuant to Section 6.8 hereof.

 

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Section 4.26         Disclaimer of Other Warranties.

 

THE COMPANY AND ITS AFFILIATES HEREBY ACKNOWLEDGE THAT (A) NONE OF PARENT OR ANY OF ITS AFFILIATES OR REPRESENTATIVES HAS MADE, IS MAKING OR SHALL BE DEEMED TO MAKE TO THE COMPANY ENTITIES, OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES ANY REPRESENTATION OR WARRANTY OTHER THAN AS EXPRESSLY MADE BY PARENT TO THE COMPANY IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF PARENT HEREUNDER AND (B) OTHER THAN AS EXPRESSLY MADE BY PARENT TO THE COMPANY IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF PARENT HEREUNDER, NONE OF PARENT OR ANY OF ITS AFFILIATES OR REPRESENTATIVES HAS MADE, IS MAKING, OR SHALL BE DEEMED TO MAKE TO THE COMPANY ENTITIES, OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES OR ANY OTHER PERSON, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO (I) THE INFORMATION DISTRIBUTED OR MADE AVAILABLE TO THE COMPANY OR ITS REPRESENTATIVES BY OR ON BEHALF OF PARENT IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, (II) ANY PRESENTATION, CONFIDENTIAL INFORMATION MEMORANDUM, OFFERING MATERIALS OR SIMILAR DOCUMENT OR (III) ANY FINANCIAL PROJECTION, FORECAST, ESTIMATE, BUDGET OR SIMILAR ITEM RELATING TO PARENT AND/OR THE BUSINESS, ASSETS, LIABILITIES, PROPERTIES, FINANCIAL CONDITION OF PARENT. THE COMPANY HEREBY ACKNOWLEDGES THAT IT HAS NOT RELIED ON ANY PROMISE, REPRESENTATION OR WARRANTY THAT IS NOT EXPRESSLY SET FORTH IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF PARENT HEREUNDER. THE COMPANY ACKNOWLEDGES THAT IT HAS CONDUCTED, TO ITS SATISFACTION, AN INDEPENDENT INVESTIGATION AND VERIFICATION OF PARENT AND THE BUSINESS, ASSETS, LIABILITIES, PROPERTIES, AND FINANCIAL CONDITION OF PARENT AND, IN MAKING ITS DETERMINATION TO PROCEED WITH THE TRANSACTIONS, THE COMPANY HAS RELIED ON THE RESULTS OF ITS OWN INDEPENDENT INVESTIGATION AND VERIFICATION, IN ADDITION TO THE REPRESENTATIONS AND WARRANTIES OF PARENT EXPRESSLY AND SPECIFICALLY SET FORTH IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF PARENT HEREUNDER.

 

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Section 4.27         No Other Representations or Warranties. THE COMPANY AND ITS AFFILIATES ARE MAKING NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF THE COMPANY HEREUNDER. IT IS UNDERSTOOD THAT ANY FINANCIAL ESTIMATE, FORECAST, PROJECTION OR OTHER PREDICTION AND ALL OTHER INFORMATION OR MATERIALS IN RESPECT OF THE BUSINESS, THE COMPANY OR ITS ASSETS THAT HAVE BEEN OR SHALL HEREAFTER BE PROVIDED BY OR ON BEHALF OF THE COMPANY OR THE COMPANY’S MEMBERS TO PARENT OR ANY OF ITS AFFILIATES OR ITS OR THEIR RESPECTIVE REPRESENTATIVES, WHETHER WRITTEN OR ORAL, ARE NOT, AND SHALL NOT BE RELIED UPON AS OR DEEMED TO BE, REPRESENTATIONS AND WARRANTIES OF THE COMPANY OR ANY OF ITS AFFILIATES OR REPRESENTATIVES, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF THE COMPANY HEREUNDER.

 

ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

Except with respect to matters set forth in the Parent Disclosure Schedules (it being agreed that any matter disclosed in the Parent Disclosure Schedules with respect to any section of this Agreement shall be deemed to have been disclosed with respect to any other section to the extent the applicability thereto is reasonably apparent from the face of such disclosure), Parent and Merger Sub jointly and severally represent and warrant to the Company as of the date of this Agreement as follows:

 

Section 5.1           Organization. Parent is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has full corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as currently conducted, and, subject to, in the case of the consummation of the Merger, adoption of this Agreement by obtaining the Parent Stockholder Approval, has full requisite corporate power and authority to execute, deliver, and perform this Agreement and the Ancillary Agreements to which it is a party, and to consummate the Transactions contemplated hereby and thereby. Merger Sub is a limited liability company wholly owned by Parent that is duly formed, validly existing and in good standing under the laws of the State of Delaware, and has all requisite limited liability company power and authority to execute, deliver, and perform this Agreement and the Ancillary Agreements to which it is a party, and to consummate the Transactions contemplated hereby and thereby.

 

Section 5.2           Authorization. The execution, delivery and performance by Parent and Merger Sub of this Agreement, and each Ancillary Agreement to which it is a party, and the consummation by Parent and Merger Sub of the Transactions contemplated hereby and thereby have been duly authorized by all necessary corporate or limited liability company action, as applicable, on the part of Parent and Merger Sub and no other corporate or limited liability company proceedings on the part of Parent or Merger Sub are necessary to authorize the execution, delivery and performance of this Agreement, any Ancillary Agreements to which it is a party or to consummate the Transactions, including the Merger, subject only, in the case of consummation of the Merger, to the receipt of the Parent Stockholder Approval. This Agreement has been and each Ancillary Agreement to which Parent or Merger Sub is a party will be, duly and validly executed and delivered by each of Parent and Merger Sub, and (assuming due authorization, execution and delivery by the other parties hereto) this Agreement constitutes a legal, valid and binding obligation of Parent and Merger Sub enforceable against Parent and Merger Sub in accordance with its terms, except as the enforceability hereof may be limited by the General Enforceability Exceptions. When each Ancillary Agreement to which Parent or Merger Sub is or will be a party has been duly executed and delivered by Parent or Merger Sub, as applicable, (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Agreement will constitute a legal and binding obligation of Parent and Merger Sub enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by the General Enforceability Exceptions.

 

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Section 5.3           No Conflict. Except as set forth in Section 5.3 of the Parent Disclosure Schedules, assuming the Parent Stockholder Approval and approval under the HSR Act have been obtained and the effectiveness of the Parent Charter and Bylaws Amendment, the execution, delivery, and performance by Parent and Merger Sub of this Agreement, and any Ancillary Agreement to which Parent or Merger Sub is a party, and the consummation by Parent and Merger Sub of the Transactions contemplated hereby and thereby do not and will not, with or without the giving of notice or the lapse of time, or both, (i) conflict with or result in a violation or breach of any provision of any applicable Law or Governmental Order applicable to Parent or Merger Sub, (ii) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Parent or Merger Sub or (iii) result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration or create in any party the right to accelerate, terminate or modify, or require the consent of any third party under any provision of, any Contract to which Parent or Merger Sub is a party or by which it may be bound, or result in the creation or imposition of any Encumbrance of any nature whatsoever upon any assets or property of Parent or Merger Sub.

 

Section 5.4           Consents. Except as set forth in Section 5.4 of the Parent Disclosure Schedules and for the filing of the Certificate of Merger with the Secretary of State of Delaware and such filings as may be required under the Securities Act, the Exchange Act and the HSR Act and any other applicable antitrust law, no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Parent or Merger Sub in connection with the execution, delivery and performance of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions or the taking of any other action contemplated hereby and thereby.

 

Section 5.5           Brokers. Except for as set forth in Section 5.5 of the Parent Disclosure Schedule (each of whose fees will constitute Parent Transaction Expenses and otherwise be paid by Parent), neither Parent nor Merger Sub has retained any broker, finder or investment banking firm to act on their behalf which is entitled to any fee or commission from the Company, Parent or Merger Sub upon consummation of the Transactions based upon arrangement made by or on behalf of Parent.

 

Section 5.6           SEC Filings.

 

(a)           Parent has filed and furnished in a timely manner all reports, schedules, forms, prospectuses and registration, proxy and other statements, in each case, required to be filed or furnished by it with or to the SEC (collectively, and in each case including all exhibits thereto and documents incorporated by reference therein, the “Parent SEC Documents”). As of their respective effective dates (in the case of Parent SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of the respective dates of the last amendment filed with the SEC (in the case of all other Parent SEC Documents), and except as set forth in Section 5.6(a) of the Parent Disclosure Schedules, the Parent SEC Documents complied in all material respects with the requirements of the Exchange Act and the Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder, each as in effect on the applicable date referred to above, applicable to such Parent SEC Documents, and none of the Parent SEC Documents as of such respective dates contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

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(b)           The Parent SEC Documents contain true and complete copies of the audited balance sheet as of December 31, 2020, and statements of operations, cash flows and stockholders’ equity (deficit) of Parent for the period commencing on August 21, 2020 through December 31, 2020, together with the auditor’s report thereon, (the “Parent Financial Statements”). Except as disclosed in the Parent SEC Documents, the Parent Financial Statements (i) fairly present in all material respects the financial position of Parent as at the respective dates thereof, and the results of operations and cash flows for the respective periods then ended, (ii) were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto), and (iii) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof. The books and records of Parent have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements.

 

(c)           Parent has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act) and such disclosure controls and procedures are designed to ensure that material information relating to Parent is made known to Parent’s principal executive officer and its principal financial officer by others within Parent, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared.

 

(d)           There are no liabilities of Parent or Merger Sub, whether fixed, contingent or otherwise, other than liabilities (i) disclosed and provided for in the balance sheet included in the Form 10-K filed by Parent for the year ending December 31, 2020, (ii) incurred in the Ordinary Course since December 31, 2020, (iii) incurred in connection with the Transactions or (iv) which are not material, individually or in the aggregate, to Parent. There are no “off balance sheet arrangements” as defined in Item 303 of Regulation S-K under the Securities Act involving Parent. Parent and Merger Sub do not have any Indebtedness.

 

(e)           Since inception, (i) Parent has not received any complaint, allegation, assertion or claim, regarding the accounting or auditing practices, procedures, methodologies or methods of Parent or its internal accounting controls, including any compliant, allegation, assertion or claim that Parent has engaged in questionable accounting or auditing practices, and (ii) no attorney representing Parent has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar material violation by Parent or its officers, managers or employees to the board of directors of Parent or any committee thereof or to any director or officer of Parent pursuant to the rules of the SEC adopted under Section 307 of the Sarbanes-Oxley Act of 2002.

 

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Section 5.7           Capitalization.

 

(a)           As of the date of this Agreement and without taking into effect the PIPE Investment, the authorized capital stock of Parent consists of: (i) 200,000,000 shares of Class A Parent Common Stock, of which 23,156,000 shares are outstanding; (ii) 20,000,000 shares of Class B Parent Common Stock, of which 5,789,000 shares are outstanding; and (iii) 1,000,000 shares of Parent Preferred Stock, of which no shares are outstanding. Warrants to purchase 22,415,400 shares of Class A Parent Common Stock are issued and outstanding. All shares of Parent Common Stock are validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right. Except as set forth in this Section 5.7(a), there are no outstanding shares of capital stock of or other voting securities or ownership interests in Parent.

 

(b)           Parent owns all of the issued and outstanding membership interests of Merger Sub. Except as described in the Parent SEC Documents, there are no outstanding securities convertible into, exchangeable for or carrying the right to acquire equity securities of Parent or Merger Sub, or subscriptions, warrants, options, rights (including preemptive rights), stock appreciation rights, phantom stock interests, or other arrangements or commitments obligating either Parent or Merger Sub to issue or dispose of any of its respective equity securities or any ownership interest therein. The consummation of the Transactions will not cause any Encumbrances to be created or suffered on the capital stock of either Parent or Merger Sub, other than Encumbrances created by the Company. Except as described in the Parent SEC Documents, there are no existing agreements, subscriptions, options, warrants, calls, commitments, trusts (voting or otherwise), or rights of any kind whatsoever between Parent or Merger Sub, on the one hand and any Person on the other hand with respect to the capital stock of Parent or any Subsidiary of Parent, including Merger Sub. Neither Parent, nor Merger Sub owns, directly or indirectly, any stock or other equity interest of any other Person.

 

(c)           The shares of Class B Parent Common Stock to be issued pursuant to this Agreement, assuming the Parent Stockholder Approval is obtained and the effectiveness of the Parent Charter and Bylaws Amendment, will, upon issuance, be duly authorized, validly issued, fully paid and non-assessable.

 

(d)           Except as described in the Parent SEC Documents, there are no outstanding contractual obligations of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of or other equity interests in Parent or any of its Subsidiaries. All distributions, dividends, repurchases and redemptions in respect of the capital stock (or other equity interests) of Parent were undertaken in compliance with the Parent’s charter documents then in effect, any agreement to which Parent is a party (as disclosed in the Parent SEC Documents) and in compliance with applicable Law.

 

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(e)           Parent has made available to the Company true, correct and complete copies of the Subscription Agreements. As of the date of this Agreement, the Subscription Agreements (i) are in full force and effect without amendment or modification, (ii) are the valid, binding and enforceable obligations of Parent and, to Parent’s Knowledge, each other party thereto, in each case, except for the Enforceability Exceptions, and (iii) have not been withdrawn, terminated or rescinded in any respect. The Subscription Agreements provide that the Company is a third-party beneficiary thereof and is entitled to enforce such agreements. There are no other Contracts between Parent and any PIPE Investor relating to any Subscription Agreement that would reasonably be expected to affect the obligations of the PIPE Investors to contribute to Parent the applicable portion of the PIPE Investment set forth in the Subscription Agreements, and, to Parent’s Knowledge, no facts or circumstances exist that may reasonably be expected to result in any of the conditions set forth in any Subscription Agreement not being satisfied, or the PIPE Investment not being available to Parent, on the Closing Date. No event has occurred that, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent under any material term or condition of any Subscription Agreement and, as of the date hereof, Parent has no reason to believe that it will be unable to satisfy in all material respects on a timely basis any term or condition of Closing to be satisfied by it contained in any Subscription Agreement.

 

Section 5.8           Litigation. There is no Legal Proceeding pending or, to Parent’s Knowledge, threatened in writing, against Parent or Merger Sub at law, in equity or otherwise, or in, before, or by, any Governmental Authority. There are no material judgments or outstanding orders, injunctions, decrees, stipulations or awards against or affecting Parent or Merger Sub.

 

Section 5.9           Compliance with Laws. Parent and Merger Sub are now and have been in compliance with all Laws applicable to their respective business, properties or assets, except, in each case, for any such noncompliance that would not have or reasonably be expected to have a Parent Material Adverse Effect. All Permits required for Parent and Merger Sub to conduct their business as currently conducted have been obtained and are valid and in full force and effect. Neither Parent nor Merger Sub has received any written notice of any violation of Law.

 

Section 5.10         Stock Exchange Listing. Since November 6, 2020, Parent has complied in all material respects with the applicable listing and corporate governance rules and regulations of the Stock Exchange. The Class A Parent Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed for trading on the Stock Exchange. There is no Legal Proceeding pending or, to Parent’s Knowledge, threatened against Parent by the Stock Exchange, the SEC or the Financial Industry Regulatory Authority to prohibit, suspend or terminate the listing of the Class A Parent Common Stock on the Stock Exchange. Parent has taken no action designed to terminate the registration of Class A Parent Common Stock and any registered warrants.

 

Section 5.11         Capitalization of Parent Post-Closing. Except as set forth in Section 5.11 of the Parent Disclosure Schedules or in the Parent SEC Documents, immediately following the Closing, neither Parent nor any Subsidiary of Parent will have outstanding securities convertible into, exchangeable for or carrying the right to acquire equity securities of Parent or any Subsidiary of Parent, or subscriptions, warrants, options, rights (including pre-emptive rights), stock appreciation rights, phantom stock interests or other arrangements or commitments obligating Parent or any Subsidiary of Parent to issue or dispose of any of its respective equity securities or any other ownership interest in Parent or any of its Subsidiaries.

 

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Section 5.12         Transactions with Related Parties. Except as set forth in Section 5.12 of the Parent Disclosure Schedules or the Parent SEC Documents, there are no transactions, agreements, arrangements or understandings between Parent, on the one hand, and any director, officer or stockholder (or Affiliate thereof) of Parent, on the other hand, either (a) currently in effect or (b) that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the Securities Act.

 

Section 5.13         Board Approval; Stockholder Vote. The board of directors or other governing body of Parent and Merger Sub (including any required committee or subgroup of the board of directors or other governing body of each such Person) has unanimously (a) approved and declared the advisability of this Agreement and the Ancillary Agreements and the consummation of the Transactions, and (b) determined that the consummation of the Transactions are in the best interests of Parent and Merger Sub (as applicable) and the Parent Stockholders and Merger Sub (as applicable). Other than the approval of the Voting Matters, no other corporate proceedings on the part of Parent or Merger Sub are necessary to approve the consummation of the transactions contemplated hereby.

 

Section 5.14         Trust Account. Parent has made available to the Company a true, correct and complete copy of the fully executed Investment Management Trust Agreement (the “Trust Agreement”), dated November 5, 2020, by and between Parent and Continental Stock Transfer & Trust Company, a New York corporation (the “Trustee”). As of the date of this Agreement, Parent has at least $236,200,000 in the account established by Parent for the benefit of certain Parent Stockholders and the underwriter of Parent’s initial public offering (the “Trust Account”), with such funds invested in government securities or money market funds meeting certain conditions pursuant to the Trust Agreement. The Trust Agreement is in full force and effect and is a legal, valid and binding obligation of Parent and, to Parent’s Knowledge, the Trustee, enforceable in accordance with its terms, subject to the General Enforceability Exceptions. The Trust Agreement has not been terminated, repudiated, rescinded, amended or supplemented or modified, in any respect, and no such termination, repudiation, rescission, amendment, supplement or modification is contemplated. There are no side letters and (except for the Trust Agreement) there are no agreements, contracts, arrangements or understandings, whether written or oral, with the Trustee or any other Person that would (i) cause the description of the Trust Agreement in the Parent SEC Documents to be inaccurate or (ii) entitle any Person (other than (A) the underwriter of Parent’s initial public offering and (B) holders of Class A Parent Common Stock who have elected to redeem their Class A Parent Common Stock in accordance with the Parent’s charter documents) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released, except to pay income taxes from any interest earned in the Trust Account and to redeem Class A Parent Common Stock in accordance with the provisions of Parent’s charter documents. There is no Legal Proceeding pending, or to Parent’s Knowledge, threatened in writing with respect to the Trust Account.

 

Section 5.15         Taxes.

 

(a)           All income, sales and use and other material Tax Returns required to be filed on or before the Closing Date by Parent have been, or will be, timely filed (giving effect to all extensions validly obtained). Such Tax Returns are, or will be, true, complete and correct in all material respects. All material Taxes due and owing by Parent (whether or not shown on any Tax Return) have been, or will be, timely paid.

 

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(b)           Parent has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, agent, creditor, customer, shareholder or other party, and complied in all material respects with all information reporting and backup withholding provisions of applicable Law.

 

(c)           No written claim has been made by any Tax Authority in any jurisdiction where Parent does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction.

 

(d)           No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of Parent, which extension or waiver is still in effect.

 

(e)           There is no Tax Proceeding now being conducted, pending or threatened in writing (or, to the Parent’s Knowledge, otherwise threatened) with respect to any Taxes or Tax Returns of or with respect to Parent. Parent has not commenced a voluntary disclosure proceeding in any jurisdiction that has not been fully resolved or settled.

 

(f)            All deficiencies asserted, or assessments made, against Parent as a result of any completed examinations by any Tax Authority have been fully paid.

 

(g)           Parent is not a party to any current Legal Proceeding by any Tax Authority, and no written notice has been received as to any threatened Legal Proceedings by any Tax Authority.

 

(h)           There are no Encumbrances for Taxes (other than Permitted Encumbrances) upon the assets of Parent.

 

(i)            Parent is not a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement (excluding any agreement entered into in the Ordinary Course, the primary purpose of which is not related to Taxes).

 

(j)            No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into or issued by any Tax Authority with respect to Parent.

 

(k)           Parent has not been a member of an affiliated, combined, consolidated or unitary Tax group for Tax purposes (other than a group of which the common parent is Parent). Parent has no Liability for Taxes of any Person (other than a Person that is a member of a group of which Parent is the common parent) under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or foreign Law), as transferee or successor or by contract.

 

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(l)            Parent will not be required to include an item of income, or exclude an item of deduction, for any period after the Closing Date (determined with and without regard to the transactions contemplated hereby) as a result of: (i) an installment sale transaction occurring on or before the Closing Date governed by Code Section 453 (or any similar provision of state, local or non-U.S. laws); (ii) a transaction occurring on or before the Closing Date reported as an open transaction for U.S. federal income Tax purposes (or any similar doctrine under state, local, or non-U.S. laws); (iii) any prepaid amounts received or paid on or prior to the Closing Date or deferred revenue realized, accrued or received on or prior to the Closing Date; (iv) a change in method of accounting with respect to a Pre-Closing Tax Period that occurs or was requested on or prior to the Closing Date (or as a result of an impermissible method used in a Pre-Closing Tax Period); (v) an agreement entered into with any Governmental Authority (including a “closing agreement” under Code Section 7121) on or prior to the Closing Date; (vi) the application of Code Section 263A (or any similar provision of state, local, or non-U.S. laws); or (vii) intercompany transaction occurring or any excess loss account existing on or prior to the Closing Date, in each case described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local, or non-U.S. laws). Parent does not use the cash method of accounting for income Tax purposes and will not be required to make any payment after the Closing Date as a result of an election under Section 965 of the Code (or any similar provision of state, local, or non-U.S. laws).

 

(m)          Parent has not (i) elected to defer the payment of any “applicable employment taxes” (as defined in Section 2302(d)(1) of the CARES Act) pursuant to Section 2302 of the CARES Act, (ii) deferred payment of any Taxes (including withholding Taxes) pursuant to Internal Revenue Service Notice 2020-65 or any related or similar order or declaration from any Governmental Authority (including, without limitation, the Presidential Memorandum, dated August 8, 2020, issued by the President of the United States) or (iii) claimed any “employee retention credit” pursuant to Section 2301 of the CARES Act.

 

(n)           Parent is not, and has not been, a party to, or a promoter of, a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b).

 

Section 5.16         Information Supplied. The information relating to Parent and Merger Sub furnished by or on behalf of Parent and Merger Sub in writing for inclusion in the Proxy Statement will not, as of the date of mailing of the Proxy Statement to the holders of Parent Common Stock or at the time of the Parent Stockholders’ Meeting, contain any statement which, at such time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading, except for any change disclosed in writing by or on behalf of Parent to the Company or its counsel prior to such mailing date pursuant to Section 6.8 hereof.

 

Section 5.17         Organization and Operations of Parent and Merger Sub.

 

(a)           Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has not conducted any business prior to the date hereof and has no assets, liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the other transactions contemplated by this Agreement.

 

(b)           Except for Merger Sub, Parent has no Subsidiaries and does not own, directly or indirectly, any equity interests or other interests or investments (whether equity or debt) in any other Person, whether incorporated or unincorporated.

 

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(c)           Except as provided for in the Ancillary Agreements, neither Parent nor Merger Sub is party to any Contract that obligates Parent or Merger Sub to invest money in, loan money to or make any capital contribution to any other Person. Parent is not party to any Contract that is material to Parent, other than the Parent Material Contracts. Parent has performed all material obligations required to be performed by it to date under the Parent Material Contracts and is not (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder in any material respect.

 

(d)           Parent is not, and following the Closing will continue not to be, an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act. Parent constitutes an “emerging growth company” within the meaning of the JOBS Act.

 

(e)           Parent owns good and marketable title to, or holds a valid leasehold interest in, or a valid license to use, all of the assets used by Parent in the operation of its business and which are material to Parent, free and clear of any Encumbrances (other than Permitted Encumbrances).

 

(f)            Parent is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

Section 5.18         Independent Investigation. Parent has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Company Entities and is capable of bearing the economic risks of such investment. Parent has conducted its own independent review and analysis of, and based thereon has formed an independent judgment concerning, the assets, liabilities, condition, operations and prospects of the business of the Company Entities. In entering into this Agreement and the other Ancillary Agreements to which they are parties, Parent and Merger Sub have relied solely upon their own review and analysis and the specific representations and warranties of the Company expressly set forth in ARTICLE IV and not on any representations, warranties, statements or omissions by any Person other than the Company, or by the Company other than those specific representations and warranties expressly set forth in ARTICLE IV.

 

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Section 5.19         Disclaimer of Other Warranties. PARENT AND MERGER SUB HEREBY ACKNOWLEDGE THAT (A) NONE OF THE COMPANY OR ANY OF ITS RESPECTIVE AFFILIATES OR REPRESENTATIVES HAS MADE, IS MAKING OR SHALL BE DEEMED TO MAKE TO PARENT, MERGER SUB, OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES ANY REPRESENTATION OR WARRANTY OTHER THAN AS EXPRESSLY MADE BY THE COMPANY TO PARENT AND MERGER SUB IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF THE COMPANY HEREUNDER AND (B) OTHER THAN AS EXPRESSLY MADE BY THE COMPANY TO PARENT AND MERGER SUB IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF THE COMPANY HEREUNDER, NONE OF THE COMPANY OR ANY OF ITS RESPECTIVE AFFILIATES OR REPRESENTATIVES HAS MADE, IS MAKING, OR SHALL BE DEEMED TO MAKE TO PARENT OR MERGER SUB, OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES OR ANY OTHER PERSON, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO (I) THE INFORMATION DISTRIBUTED OR MADE AVAILABLE TO PARENT OR ITS REPRESENTATIVES BY OR ON BEHALF OF THE COMPANY IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, (II) ANY MANAGEMENT PRESENTATION, CONFIDENTIAL INFORMATION MEMORANDUM OR SIMILAR DOCUMENT OR (III) ANY FINANCIAL PROJECTION, FORECAST, ESTIMATE, BUDGET OR SIMILAR ITEM RELATING TO THE COMPANY AND/OR THE BUSINESS, ASSETS, LIABILITIES, PROPERTIES, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROJECTED OPERATIONS OF THE FOREGOING. EACH OF PARENT AND MERGER SUB HEREBY ACKNOWLEDGES THAT IT HAS NOT RELIED ON ANY PROMISE, REPRESENTATION OR WARRANTY THAT IS NOT EXPRESSLY SET FORTH IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF THE COMPANY HEREUNDER. EACH OF PARENT AND MERGER SUB ACKNOWLEDGES THAT IT HAS CONDUCTED, TO ITS SATISFACTION, AN INDEPENDENT INVESTIGATION AND VERIFICATION OF THE COMPANY AND THE BUSINESS, ASSETS, LIABILITIES, PROPERTIES, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROJECTED OPERATIONS OF THE FOREGOING AND, IN MAKING ITS DETERMINATION TO PROCEED WITH THE TRANSACTIONS, EACH OF PARENT AND MERGER SUB HAS RELIED ON THE RESULTS OF ITS OWN INDEPENDENT INVESTIGATION AND VERIFICATION, IN ADDITION TO THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY EXPRESSLY AND SPECIFICALLY SET FORTH IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF THE COMPANY HEREUNDER.

 

Section 5.20         No Other Representations or Warranties. PARENT AND ITS AFFILIATES ARE MAKING NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF PARENT HEREUNDER. IT IS UNDERSTOOD THAT ANY FINANCIAL ESTIMATE, COST ESTIMATE, FORECAST, PROJECTION OR OTHER PREDICTION AND ALL OTHER INFORMATION OR MATERIALS IN RESPECT OF THE BUSINESS AND AFFAIRS OR HOLDINGS OF PARENT OR ITS ASSETS THAT HAVE BEEN OR SHALL HEREAFTER BE PROVIDED BY OR ON BEHALF OF PARENT TO THE COMPANY ENTITIES OR ANY OF ITS AFFILIATES OR ITS OR THEIR RESPECTIVE REPRESENTATIVES, WHETHER WRITTEN OR ORAL, OR ANY MEMORANDA OR OFFERING MATERIALS OR PRESENTATIONS, INCLUDING, BUT NOT LIMITED TO, ANY OFFERING MEMORANDUM OR SIMILAR MATERIALS MADE AVAILABLE BY OR ON BEHALF OF PARENT OR ITS AFFILIATES, ARE NOT, AND SHALL NOT BE RELIED UPON AS OR DEEMED TO BE, REPRESENTATIONS AND WARRANTIES OF PARENT OR ANY OF ITS AFFILIATES OR REPRESENTATIVES, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED BY OR ON BEHALF OF PARENT HEREUNDER.

 

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ARTICLE VI.
COVENANTS AND AGREEMENTS

 

Section 6.1           Access to, and Information of, the Company; Financial Statements of the Company.

 

(a)            From the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, subject to applicable Law, the Company shall permit Parent and Merger Sub and their respective advisers and other representatives to have reasonable access to the Company Entities’ officers, employees, agents, offices, properties and facilities, books and records, Contracts and other documents and data related to the Company Entities; provided, however, that any such access shall (x) be upon no less than two (2) Business Days prior written notice from Parent to the Company, and (y) be conducted at Parent’s sole cost and expense, during normal business hours and in such a manner as not to interfere unreasonably with the normal operations of the Company, and (z) not include any invasive sampling or testing without the prior written consent of the Company Entities, which can be withheld in the Company’s sole discretion. All information provided to or obtained by Parent heretofore or hereafter, including pursuant to this Section 6.1 or pursuant to the Company Disclosure Schedules, shall be held in confidence by Parent in accordance with and subject to the terms of the Non-Disclosure Agreement, dated December 10, 2020, between Parent and the Company (the “Confidentiality Agreement”) and nothing herein shall modify or limit the obligations of Parent set forth therein. Notwithstanding anything herein to the contrary, the Company shall not be required to take any action, provide any access or furnish any information that the Company in good faith reasonably believes would be reasonably likely to (A) cause or constitute a waiver of the attorney-client or other privilege or (B) violate any Contract to which any Company Entity is a party or bound. No information provided to or obtained by Parent pursuant to this Section 6.1(a) shall limit or otherwise affect the remedies available hereunder to Parent, or act as a waiver or otherwise affect the representations or warranties of Company and its Subsidiaries in this Agreement.

 

(b)           The parties hereby acknowledge and agree that the Confidentiality Agreement shall be automatically terminated effective as of the Closing without any further action by any party or any other Person.

 

Section 6.2           Conduct of Business by the Company Entities. From the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, except (i) as otherwise provided in this Agreement or required by Law, (ii) consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), or (iii) as set forth in Section 6.2, the Company shall, and shall cause each Company Entity to, operate the Business in all material respects in the Ordinary Course, including with respect to working capital practices and procedures; provided, that, the Company Entities may take any action in response to COVID-19, including the establishment of any (or maintenance of any existing) policy, procedure or protocol, in order to respond to the impact of COVID-19; provided, further, in each case, that (a) such actions are commercially reasonable, taken in good faith and taken to preserve the continuity of the Business, and/or the health and safety of their respective employees and (b) the Company shall, to the extent reasonably practicable, inform Parent of any such actions prior to the taking thereof and shall consider in good faith any suggestions or modifications from Parent with respect thereto. Except as set forth in Schedule 6.2, without limiting the foregoing, from the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, the Company shall not, and shall cause each other Company Entity not to:

 

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(a)          amend or change in any way its certificate of formation, operating agreement or other organizational documents;

 

(b)          (i) issue, sell, pledge, dispose, grant or encumber, or authorize the issuance, sale, pledge, disposal, grant or encumbrance of, any equity interests of the Company or any of its Subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire any equity interests (including, without limitation, any phantom interest), of the Company or any of its Subsidiaries; or (ii) sell, assign, transfer, convey, lease or otherwise dispose of any material assets or properties of the Company or any of its Subsidiaries, except for transactions in the Ordinary Course;

 

(c)          form any Subsidiary or acquire any equity interest or other interest in any other entity or enter into a joint venture with any other entity;

 

(d)          other than the payment of tax distributions in accordance with Section 7.3 of the Current LLC Agreement, as in effect on the date hereof, or any distributions between the Company and OpCo, declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of the Company’s equity interests or its Subsidiary’s capital stock or equity interests;

 

(e)          reclassify, combine, split, recapitalize, subdivide or redeem, or purchase or acquire, directly or indirectly, any of the Company’s equity interests or otherwise amend any terms of any Company Entities’ equity interests;

 

(f)           incur, assume or guarantee of any Indebtedness by any Company Entity (other than ordinary course trade payables or draw-downs under the Company Debt Documents and the Exchangeable Notes);

 

(g)          impose any material Encumbrance upon any Company Entity’s properties, capital stock or assets, tangible or intangible;

 

(h)          (i) except in the Ordinary Course and with respect to the Employment Agreements, grant any material bonuses, whether monetary or otherwise, or material increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, managers or consultants, except as required by applicable Law, or (ii) materially change the terms of employment of any employee or terminate any employees, in each case for which the aggregate costs in connection with such changes or terminations for any one employee exceed $250,000;

 

(i)            other than with respect to the Employment Agreements, the Parent Equity Compensation Plan, the Parent Employee Stock Purchase Plan, or as required by applicable Law or in the Ordinary Course, adopt, amend, modify or terminate any: (i) Benefit Plan or (ii) collective bargaining or other agreement with a union;

 

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(j)           (i) make any loan to, (ii) forgive any loan of, or (iii) except as contemplated by this Agreement, enter into any Contract with, any of its Holders or current or former members, managers, officers and employees;

 

(k)          enter into a new line of business that is unrelated to the current Business or abandon or discontinue an existing line of business;

 

(l)           except for the Merger, adopt any plan of merger, consolidation, reorganization, liquidation or dissolution or file a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

 

(m)         acquire by merger or consolidate with, or purchase a substantial portion of the assets or stock of, or by any other manner (including, without limitation, by merger, consolidation or acquisition of stock or substantially all of the assets or any other business combination), any business or any Person or any division thereof;

 

(n)          materially amend (other than reasonable and usual amendments in the Ordinary Course) the accounting policies or procedures of the Company, other than as required by GAAP;

 

(o)          amend in a manner that is material and adverse to the Company or any of its Subsidiaries any Material Contract;

 

(p)          waive, release, assign; settle, compromise or otherwise resolve any Legal Proceeding, other than waivers, releases, assignments, settlements or compromises that are solely monetary in nature and do not exceed $1,000,000 individually or $2,000,000 in the aggregate;

 

(q)          (i) make, change or rescind any material Tax election, (ii) amend any material Tax Return, (iii) settle any income or other material Tax Proceeding or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment (it being understood that any Tax Proceeding, or Tax claim or assessment that are solely monetary in nature and relate to Tax liabilities of the Company and its Subsidiaries that do not exceed $1,000,000 shall not be considered material purposes of this clause (iii)), (iv) surrender any right to claim a Tax refund, (v) adopt (inconsistent with past practices) or change any method of accounting with respect to Taxes, or (vi) enter into any Tax indemnity, Tax sharing or Tax allocation agreement (excluding any agreement entered into in the Ordinary Course, the primary purpose of which is not related to Taxes);

 

(r)           acquire any ownership interest in any real property, other than in the Ordinary Course;

 

(s)          limit the right of the Company Entities to engage in any line of business or in any geographic area, to develop, market or sell products or services, or to compete with any Person, in each case, except where such limitation does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the operation of the Business, taken as a whole, in the Ordinary Course;

 

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(t)           grant to, or agree to grant to, any Person rights to any Intellectual Property that is material to the Company Entities, taken as a whole, or sell, lease, license (other than licenses to Intellectual Property granted by the Company Entities in the Ordinary Course), abandon or permit to lapse or become subject to a Encumbrance (other than a Permitted Encumbrance) or otherwise dispose of, any rights to any Intellectual Property that is material to the Company Entities, taken as a whole, except for the expiration of Company IP Registrations in accordance with the applicable statutory term (or in the case of domain names, applicable registration period) or in the reasonable exercise of the Company’s business judgment as to the costs and benefits of maintaining the item;

 

(u)          disclose or agree to disclose to any Person (other than Parent or any of its representatives) any material trade secret or any other material confidential or proprietary information, know-how or process of the Company or any of its Subsidiaries other than in the Ordinary Course or pursuant to obligations to maintain the confidentiality thereof;

 

(v)          make or commit to make capital expenditures outside of the Ordinary Course other than in an amount not in excess of $2,000,000 or as contemplated by the Company Entities’ annual budget, in the aggregate; or

 

(w)          enter into any Contract or other binding commitment to do any of the foregoing.

 

Section 6.3           Further Assurances.

 

(a)           Each party hereto shall, as promptly as reasonably practicable, (i) make, or cause or be made, all filings and submissions required under any applicable Law to consummate the transactions contemplated hereunder (including those under the HSR Act); and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the Ancillary Agreements. In the case of any filings required under the HSR Act, each party shall make such filings in no event later than ten (10) Business Days from the execution of this Agreement, and any filing fees associated therewith shall be paid by Parent and such initial filings shall request early termination of any applicable waiting period under the HSR Act. Each party shall use reasonable best efforts to cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. Each party agrees not to extend any waiting period under the HSR Act or enter into any agreement with any Governmental Authority not to consummate the transactions contemplated by this Agreement, except with the prior written consent of the other party not to be unreasonably withheld, conditioned or delayed. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding in any material respect the receipt of any required consents, authorizations, orders and approvals that, if not received, would have or would reasonably be expected to have, a material adverse impact on the business of the Company Entities, taken as a whole.

 

(b)          Subject to the terms and conditions set forth herein and to applicable Law, the Company and Parent shall cooperate and use their respective commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties that are described in Sections 4.2 and 4.3 of the Company Disclosure Schedules.

 

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(c)          Without limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the parties hereto shall use its reasonable best efforts to (i) respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any Ancillary Agreement; and (ii) in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any Ancillary Agreement has been issued, to have such Governmental Order vacated or lifted; provided that no party nor any of their respective Affiliates shall be obligated in the exercise of such efforts to propose, negotiate, commit to or effect, by consent decree, hold separate orders, or otherwise, the sale, divesture or disposition of any of its assets, properties or businesses or any of the assets, properties or businesses to be acquired by it pursuant to this Agreement.

 

(d)          To the extent reasonably practicable and upon request, all material analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between the Company Entities and Governmental Authorities in the Ordinary Course unrelated to the transactions contemplated hereunder, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each party shall, to the extent not prohibited by applicable Law, give notice to the other party with respect to any meeting, discussion, appearance, contact, or any material communication with any Governmental Authority or the staff or regulators of any Governmental Authority in connection with the transactions contemplated hereunder, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

 

Section 6.4           Public Announcements(a). Except as otherwise provided herein, the timing and content of all public announcements regarding any aspect of this Agreement, the Merger and the other transactions contemplated hereby, whether to the financial community, Governmental Authorities, the general public or otherwise shall be mutually agreed upon in advance by the Company and Parent; provided, however, that each party hereto may make any such announcement which, based on the written opinion of external counsel, is required by applicable Law. Notwithstanding the foregoing, each party shall use its reasonable best efforts to consult with the other parties prior to any such announcement to the extent practicable, shall take into account, in good faith, any comments provided by the other party, and shall in any event promptly provide the other parties hereto with copies of any such announcement. Disclosures resulting from the parties’ efforts to obtain approval or early termination under the HSR Act and to make any relating filing shall be deemed not to violate this Section 6.4. This Section 6.4 shall not apply to communications by any party to its counsel, accountants or other advisors or, if the substance of such communication would not reasonably be expected to require Parent to file a Form 8-K and/or make a disclosure under Regulation FD promulgated under the Exchange Act.

 

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Section 6.5           Member Consent. The Company shall use its reasonable best efforts to obtain and deliver to Parent a true and correct copy of, as promptly as reasonably practicable (and in any event within five (5) Business Days) following the date of this Agreement (the “Written Consent Deadline”), the Company Member Vote pursuant to a written consent of the Company’s members in a form reasonably acceptable to Parent (the “Written Consent”). The materials submitted to the Company’s members in connection with the Written Consent shall include the Company Board Recommendation.

 

Section 6.6           Forms of Consents and Waivers. Any consents, waivers, approvals and notices necessary, proper or advisable to consummate the transactions described herein shall be in form and substance reasonably satisfactory to the Company and Parent, and executed counterparts of any consents, waivers and approvals shall be delivered to the other party as promptly as reasonably practicable after receipt thereof, and copies of such notices shall be delivered to the other party as promptly as reasonably practicable after the making thereof. Except with respect to costs that constitute Reimbursable Transaction Expenses (which Reimbursable Transaction Expenses will be handled as otherwise set forth in this Agreement), any costs incurred as payments to any Person with respect to such consents, waivers, approvals and notices shall be borne by the party seeking such consents, waivers, approvals or notices. In the event the Closing does not occur, any such costs shall be borne by the Person incurring such costs.

 

Section 6.7           Director & Officer Indemnification.

 

(a)           The Surviving Entity immediately following the Merger Effective Time shall ensure that all rights to indemnification, advancement of expenses, and limitation of liability now existing in favor of any individual who, at or prior to the Merger Effective Time was, a manager, director and officer of (i) the Company Entities (the “Company Indemnified Persons”) and (ii) Parent (the “Parent Indemnified Persons” and together with the Company Indemnified Persons, collectively, with such individual’s heirs, executors or administrators, the “Indemnified Persons”) solely to the extent provided in the respective governing documents and indemnification or similar agreements to which the Company or any of its Subsidiaries, on the one hand, or Parent on the other hand, is a party or bound, shall survive the Merger and shall continue in full force and effect for a period of six (6) years from the Merger Effective Time and indemnification or similar agreements and the provisions with respect to indemnification, advancement of expenses, and limitations on liability set forth in such governing documents shall not be amended, repealed or otherwise modified in any manner that would adversely affect the rights of the Indemnified Persons thereunder; provided, that in the event any claim or claims are asserted or made within such six (6) year period, all rights to indemnification, advancement of expenses, and limitation of liability in respect of any such claim or claims shall continue until final disposition of any and all such claims. Neither Parent nor the Surviving Entity shall settle, compromise or consent to the entry of judgment in any Legal Proceeding or threatened Legal Proceeding involving or potentially involving one or more Indemnified Persons without obtaining (i) an express, complete and unconditional release for any such Indemnified Person (and their respective directors, officers, employees and Representatives) or (ii) written consent from any such Indemnified Person.

 

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(b)          Prior to the Closing, the Company shall obtain and pay for a “tail” officers’ and directors’ liability insurance policy with a claims period of at least six (6) years from the Merger Effective Time with at least the same coverage and amount and containing terms and conditions that are not less advantageous to the managers and officers of the Company as the Company’s existing policies with respect to claims arising out of or relating to events which occurred before or at the Merger Effective Time (including in connection with the transactions contemplated by this Agreement) (the “D&O Tail Policy”). The cost of the D&O Tail Policy shall be a Reimbursable Transaction Expense. During the term of the D&O Tail Policy, Parent shall not (and shall cause the Surviving Entity not to) take any action following the Closing to cause the D&O Tail Policy to be cancelled or any provision therein to be amended or waived.

 

(c)          From and after the Merger Effective Time, Parent shall cause the Surviving Entity to, and the Surviving Entity shall, indemnify, defend and hold harmless, as set forth as of the date hereof in the organizational documents of the Company and its Subsidiaries and to the fullest extent permitted under applicable Law, all Indemnified Persons with respect to all acts and omissions arising out of such individuals’ services as officers, managers, employees or agents of the Company or any of its Subsidiaries or as trustees or fiduciaries of any plan for the benefit of employees of the Company or any of its Subsidiaries, occurring at or prior to the Merger Effective Time, including the execution of, and the transactions contemplated by, this Agreement. Without limitation of the foregoing, in the event that any such Indemnified Person is or becomes involved, in any capacity, in any action, proceeding or investigation in connection with any matter for which indemnification is available pursuant to the foregoing sentence, including the transactions contemplated by this Agreement, the Surviving Entity, from and after the Merger Effective Time, shall pay, as incurred, such Indemnified Person’s legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith, within thirty (30) days after any request for advancement (including attorneys’ fees which may be incurred by any Indemnified Person in enforcing this Section 6.7), subject to receipt of an undertaking from such Indemnified Person to repay such advancement if such Indemnified Person is ultimately determined to not be entitled to indemnification hereunder.

 

(d)          Notwithstanding any other provisions hereof, the obligations of Parent and the Surviving Entity contained in this Section 6.7 shall be binding upon the successors and assigns of Parent and the Surviving Entity. In the event Parent or the Surviving Entity, or any of their respective successors or assigns, (i) consolidates with or merges into any other Person, or (ii) transfers all or substantially all of its properties or assets to any Person, then, and in each case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Entity, as the case may be, honor the indemnification and other obligations set forth in this Section 6.7.

 

(e)           This Section 6.7 shall survive the consummation of the Merger, is intended to benefit, and shall be enforceable by each Indemnified Person and their respective successors, heirs and representatives, and shall not be amended in any manner that is adverse to an Indemnified Person without the prior written consent of the Member Representative.

 

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Section 6.8           Proxy Statement; Parent Stockholders’ Meeting.

 

(a)           As promptly as reasonably practicable after the date of this Agreement, Parent shall, in consultation with the Company, prepare and file a proxy statement of Parent on Form Schedule 14-A with the SEC (as such filing is amended or supplemented, the “Proxy Statement”) for the purposes of soliciting proxies from Parent’s stockholders to obtain the requisite approval of the transactions contemplated hereby and the other matters to be voted on at a meeting of the holders of Parent Common Stock to be called and held for such purpose (the “Parent Stockholders’ Meeting”). As promptly as reasonably practicable after the execution of this Agreement, Parent shall, in consultation with the Company, prepare and file any other filings required under, and in accordance with, the Exchange Act, the Securities Act, the applicable Stock Exchange listing rules or any other Laws relating to the transactions contemplated hereby (collectively, the “Other Filings”). Parent shall notify the Company promptly upon the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff or any other Governmental Authority for amendments or supplements to the Proxy Statement or any Other Filing or for additional information, and, each of Parent and the Company will use their respective reasonable best efforts to respond as promptly as reasonably practicable to and resolve all such comments and requests. To the extent not prohibited by Law, as promptly as practicable after receipt thereof, Parent shall provide the Company and its counsel with copies of all written correspondence between Parent or any of its representatives, on the one hand, and the SEC, or its staff or other government officials, on the other hand, with respect to the Proxy Statement or any Other Filing. Parent shall permit the Company and its counsel to review the Proxy Statement and any exhibits, amendments or supplements thereto and shall consult with the Company and its advisors, in good faith, concerning any comments from the SEC with respect thereto, and shall reasonably consider and take into account the reasonable suggestions, comments or opinions of the Company and its advisors, and shall not file the Proxy Statement or any exhibits, amendments or supplements thereto or any response letters to any comments from the SEC without the prior written consent of the Company, such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that Parent shall be permitted to make such filing or response in the absence of such consent if the basis of the Company’s failure to consent is the Company’s unwillingness to permit the inclusion in such filing or response of information that, based on the written advice of outside counsel to Parent, is required by the SEC and United States securities Laws to be included therein. Whenever any event occurs which would reasonably be expected to result in the Proxy Statement containing any untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, Parent or the Company, as the case may be, shall promptly inform the other party of such occurrence and cooperate in filing with the SEC or its staff or any other government officials, and/or mailing to Parent Stockholders, an amendment or supplement to the Proxy Statement.

 

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(b)          The Proxy Statement will be sent to the Parent Stockholders as promptly as reasonably practicable following its approval by the SEC for the purpose of soliciting proxies from holders of Parent Common Stock to vote at the Parent Stockholders’ Meeting in favor of: (i) the adoption of this Agreement and the approval of the Merger and other transactions contemplated hereby; (ii) adoption of the Parent Amended and Restated Certificate of Incorporation and the Parent Amended and Restated Bylaws to increase the authorized number of shares of Parent Common Stock, change the name of Parent to “CompoSecure, Inc.”, and such other changes as agreed by Parent and the Company (the “Parent Charter and Bylaws Amendment”); (iii) approval as required by the applicable Stock Exchange listing rules of the issuance of more than 20% of Parent’s issued and outstanding common stock in connection with the Transactions; (iv) election of directors as contemplated by the Stockholders Agreement; (v) approval of the Parent equity compensation plan in the form attached hereto as Annex E-1, which provides for 10.0% of the outstanding shares of Parent Common Stock (on a fully diluted basis, excluding any potential Earnout Consideration), after giving effect to the transactions contemplated hereby and in addition to the Converted Options, to be reserved for issuance (the “Parent Equity Compensation Plan”) and the Parent employee stock purchase plan in the form attached hereto as Annex E-2 (the “Parent Employee Stock Purchase Plan”), which provides for 2% of the outstanding shares of Parent Common Stock (on a fully diluted basis, excluding any potential Earnout Consideration), after giving effect to the transactions contemplated hereby and in addition to the Converted Options, to be available for purchase, (vi) approval of any matters as agreed by Parent and the Company and (vii) the adjournment of the Parent Stockholders’ Meeting (the matters described in clauses (i) through (vii), shall be referred to as the “Voting Matters” and approval of the Voting Matters by the Parent Stockholders at the Parent Stockholders’ Meeting or any postponement or adjournment thereof shall be referred to as the “Parent Stockholder Approval”).

 

(c)          The Company shall provide Parent, as promptly as reasonably practicable, with such information concerning the Company Entities as may be reasonably necessary for the information concerning the Company Entities in the Proxy Statement and the Other Filings to comply with all applicable provisions of and rules under the Securities Act, the Exchange Act and the Act in connection with the preparation, filing and distribution of the Proxy Statement, the solicitation of proxies thereunder, the calling and holding of the Parent Stockholders’ Meeting and the preparation and filing of the Other Filings. The information relating to the Company Entities furnished by or on behalf of the Company Entities for inclusion in the Proxy Statement will not, as of the date of mailing of the Proxy Statement to the holders of Parent Common Stock or at the time of the Parent Stockholders’ Meeting, contain any statement which, at such time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading. Without limiting the foregoing, Parent shall use its reasonable best efforts to ensure that the Proxy Statement does not, as of the date on which it is distributed to the holders of Parent Common Stock, and as of the date of the Parent Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading (provided that Parent shall not be responsible for the accuracy or completeness of any information relating to the Company or any other information furnished in writing by any Company Entity for inclusion in the Proxy Statement).

 

(d)          Subject to the fiduciary duties of its board of directors (i) Parent shall include in the Proxy Statement the unanimous recommendation of its board of directors that the holders of Parent Common Stock vote in favor of the adoption of this Agreement and the approval of the Merger and the other Voting Matters, and shall otherwise use its reasonable best efforts to solicit and obtain the Parent Stockholder Approval and (ii) neither Parent’s board of directors nor any committee thereof shall withdraw or modify, or publicly propose or resolve to withdraw or modify in a manner adverse to the Company, the recommendation of Parent’s board of directors that the Parent Stockholders vote in favor of the Voting Matters.

 

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Section 6.9           Form 8-K Filings. Parent and the Company shall cooperate in good faith with respect to the preparation of, and as promptly as practicable after the execution of this Agreement, Parent shall file with the SEC, a Current Report on Form 8-K to report the execution of this Agreement. Parent and the Company shall cooperate in good faith with respect to the preparation of, and at least five (5) days prior to the Closing, Parent shall prepare a draft Current Report on Form 8-K announcing the Closing, together with, or incorporating by reference, the required pro forma financial statements and the historical financial statements prepared by the Company and its accountant (the “Transaction Form 8-K”). Prior to Closing, Parent and the Company shall prepare the press release announcing the consummation of the Transactions (the “Press Release”). Simultaneously with the Closing, Parent shall file the Transaction Form 8-K with the SEC and distribute the Press Release.

 

Section 6.10         Concurrent Execution of Agreements. Concurrently with the execution of this Agreement, each signatory set forth on the signature pages of the Voting Agreement, and the Expense Cap and Waiver Agreement shall have delivered to the Company and Parent a duly executed counterpart signature page to the applicable agreement.

 

Section 6.11         Exclusivity.

 

(a)           Exclusivity Obligations of the Company.

 

(i)              From the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, the Company shall not, and shall not authorize or permit any of its Affiliates (including the Company’s members) or any of its or their representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate (including by means of furnishing or disclosing information) or continue inquiries regarding a Company Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person in connection with, or that could reasonably be expected to lead to, a possible Company Acquisition Proposal; (iii) enter into any Contract or other arrangement, agreements or other instruments (whether or not binding) regarding a Company Acquisition Proposal; or (iv) otherwise cooperate in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any Person to do or seek to do any of the foregoing.

 

(ii)             The Company shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, a Company Acquisition Proposal. For purposes hereof, “Company Acquisition Proposal” shall mean any inquiry, proposal or offer, whether written or oral, from any Person (other than Parent or any of its Affiliates) concerning (i) a merger, consolidation, liquidation, equity recapitalization, share exchange or other business combination transaction involving any Company Entity; (ii) the issuance or acquisition of membership interests or other equity securities of any Company Entity (excluding the exercise of any outstanding Options); or (iii) the sale, lease, exchange or other disposition of all or substantially all of any Company Entity’s properties or assets.

 

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(iii)            In addition to the other obligations under this Section 6.11(a), the Company shall promptly (and in any event within one (1) Business Day after receipt thereof by the Company or its representatives) advise Parent orally and in writing of any Company Acquisition Proposal, any request for information with respect to any Company Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in a Company Acquisition Proposal and the material terms and conditions of such request, Company Acquisition Proposal or inquiry and Company shall keep Parent fully informed on a current basis of such Company Acquisition Proposal or inquiry; provided that the Company shall not be obligated to disclose the identity of the Person making the same.

 

(iv)            The Company agrees that the rights and remedies for noncompliance with this Section 6.11(a) shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Parent and that money damages may not provide an adequate remedy to Parent.

 

(b)          Exclusivity Obligations of Parent.

 

(i)              From the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, Parent shall not, and shall not authorize or permit any of its Affiliates or any of its or their representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate (including by means of furnishing or disclosing information) or continue inquiries regarding a Parent Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person in connection with, or that could reasonably be expected to lead to, a possible Parent Acquisition Proposal; (iii) enter into any Contract or other arrangement, agreements or other instruments (whether or not binding) regarding a Parent Acquisition Proposal; or (iv) otherwise cooperate in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any Person to do or seek to do any of the foregoing. Parent shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, a Parent Acquisition Proposal. For purposes hereof, “Parent Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than the Company or any of its Affiliates) concerning (i) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving any of Parent or its Subsidiaries; (ii) the issuance or acquisition of shares of capital stock or other equity securities of Parent or any of its Subsidiaries; or (iii) the sale, lease, exchange or other disposition of all or substantially all of Parent’s or any of its Subsidiaries’ properties or assets.

 

(ii)             Parent agrees that the rights and remedies for noncompliance with this Section 6.11(b) shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to the Company and that money damages may not provide an adequate remedy to the Company.

 

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Section 6.12         Trust Account.

 

(a)           Upon satisfaction or waiver of the conditions set forth in ARTICLE VII and provision of notice thereof to the Trustee (which notice Parent shall provide to the Trustee in accordance with the terms of the Trust Agreement), (i) in accordance with and pursuant to the Trust Agreement, at the Closing, Parent (A) shall cause any documents, opinions and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered and (B) shall use its reasonable best efforts to cause the Trustee to, and the Trustee shall thereupon be obligated to (1) pay as and when due all amounts payable to Parent Stockholders pursuant to the Parent Common Stockholder Redemption Elections, and (2) pay all remaining amounts then available in the Trust Account to Parent for immediate use, subject to this Agreement and the Trust Agreement and (ii) thereafter, the Trust Account shall terminate, except as otherwise provided therein.

 

Section 6.13         Tax Matters.

 

(a)           Transfer Taxes. All Transfer Taxes incurred in connection with this Agreement shall be borne by the Surviving Entity. Parent and the Member Representative shall cooperate in filing, when required by applicable Law, all necessary documentation and Tax Returns with respect to such Transfer Taxes.

 

(b)           Intended Tax Treatment. It is the intent of Parent, the Company, the Holders and the Member Representative that the exchange of a portion of a Holder’s Units for the Cash Merger Consideration and the Tax Receivable Amount shall constitute a sale of such Units by such Holder to Parent and the exchange of the remaining portion of such Holder’s Units for the Equity Merger Consideration shall constitute a retention of Units in the Company, for all applicable U.S. federal, state and local income Tax purposes, and all parties hereby agree to treat the Merger in accordance with the foregoing intended Tax treatment. As soon as reasonably practicable following the Closing, but no later than 120 days thereafter, the Member Representative shall deliver to Parent for Parent’s review and approval an allocation statement setting forth the Member Representative’s allocation of the Cash Merger Consideration (including any associated liabilities) for Tax purposes pursuant to Sections 751, 755, and 1060 of the Code and any other applicable Tax Laws (as the same may be revised pursuant to this paragraph, the “Allocation Statement”). The Allocation Statement shall be prepared in accordance with the methodology described in Exhibit 6.13(b). Parent will notify the Member Representative in writing of any objections to the Allocation Statement prepared by the Member Representative within 30 days after receipt of the Allocation Statement. Parent and the Member Representative will cooperate in good faith to reach agreement on any disputed items or amounts, if any. If Parent and the Member Representative are unable to reach an agreement regarding the Allocation Statement, then within 30 days following receipt by the Member Representative of Parent’s written objections, any disagreement will be resolved by an Accounting Firm, whose involvement will be limited solely to disputed items. The Accounting Firm’s determination shall not be subject to review or appeal, absent a showing of fraud or manifest error. The costs, fees and disbursements of the Accounting Firm shall be paid by the Surviving Entity. Except as otherwise required by Law, Parent, the Company and the Holders shall file all Tax Returns in a manner that is consistent with the Allocation Statement (including for purposes of the determination and allocation of adjustments under Section 743 of the Code) and refrain from taking any action inconsistent therewith. Parent and the Member Representative shall cooperate in the preparation of such forms and file such forms timely and in the manner required by applicable Law. Parent shall cause the Company to file a valid election under Section 754 of the Code (and any equivalent election for applicable state and local Tax purposes) which election shall be filed by the Company with its federal income Tax Return (and applicable state and local income Tax returns) for the Tax year that includes the Closing Date and shall be in effect for the Company for such Tax year and all subsequent Tax years.

 

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(c)           Tax Return Preparation, Cooperation and Contests.

 

(i)            Subject to Section 6.13(c)(iii), the Company shall prepare and timely file all Tax Returns required to be filed by any Company Entity (taking into account extensions) prior to the Closing Date. Unless otherwise required by Law, none of Parent or any of its Affiliates, including any Company Entity, shall (or shall cause or permit any other Person to) amend, re-file or otherwise modify any Partnership Tax Return relating in whole or in part to the Company with respect to any Pre-Closing Tax Period (or portion thereof) or make any income Tax election relating in whole or in part to the Company that has retroactive effect to any Pre-Closing Tax Period (or portion thereof) without the prior written consent of the Member Representative, not to be unreasonably withheld, conditioned or delayed.

 

(ii)           Subject to Section 6.13(c)(iii), Parent shall prepare, or cause to be prepared, and timely file, or cause to be filed, all other Tax Returns with respect to the Company Entities. The Company shall make, or cause to be made, all payments required with respect to any such Tax Returns.

 

(iii)          Any Tax Return to be prepared and filed after the Closing Date for taxable periods beginning before the Closing Date shall be prepared on a basis consistent with the last previous similar Tax Return, unless otherwise required by Law. Any U.S. federal income Tax Return for a taxable period ending on or including the Closing Date shall include (and shall not rescind) a valid election under Section 754 of the Code (and under applicable state and local Tax Law) that is effective for the taxable year that includes the Closing Date. Subject to Section 6.13(c)(iv), the Member Representative shall timely prepare and file any Tax Return with respect to an income Tax of any Company Entity where the Holders are directly or indirectly allocated income, such as a Tax Return on IRS Form 1065, or similar state or local Tax Return, (a “Partnership Tax Return”) for any taxable year ending on or before the Closing Date. Subject to Section 6.13(c)(v), Parent shall timely prepare and file any Partnership Tax Return for a Straddle Period. For any Partnership Tax Return for a Straddle Period, all allocations of items of income, gain, loss and deduction of the Company attributable to the Pre-Closing Tax Period shall be allocated to the Holders using an interim closing of the books method under Code Section 706 (and any corresponding or similar provision of state or local Law) and the Treasury Regulations promulgated thereunder, using the “calendar day” convention, effective as of the end of the day on the Closing Date.

 

(iv)         With respect to any Partnership Tax Return to be prepared by the Company pursuant to Section 6.13(c)(i) or any Partnership Tax Return prepared by the Member Representative pursuant to Section 6.13(c)(iii), the Company or the Member Representative, as applicable (i) shall provide Parent with a copy of such proposed Tax Return (and such additional information regarding such Tax Return as may reasonably be requested by Parent) at least thirty (30) days prior to the filing of such Tax Return, and (ii) shall not file any such Tax Returns without Parent’s prior written consent, not to be unreasonably withheld, conditioned or delayed. Parent will promptly notify the Company or the Member Representative, as applicable, in writing of any objections to such Tax Returns. Parent and the Company or the Member Representative, as applicable, will cooperate in good faith to reach agreement on any disputed items or amounts, if any. If Parent and the Company or the Member Representative, as applicable, are unable to reach an agreement regarding such Tax Returns, then any disagreement will be resolved by an Accounting Firm, whose involvement will be limited solely to disputed items. The Accounting Firm’s determination shall not be subject to review or appeal, absent a showing of fraud or manifest error. Any costs, fees and disbursements of an Accounting Firm incurred on or prior to the Closing Date shall be borne fifty percent (50%) by Parent and fifty percent (50%) by the Company, and any costs, fees and disbursements of an Accounting Firm incurred after the Closing Date shall be paid by the Surviving Entity.

 

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(v)          With respect to any Tax Return to be prepared by Parent pursuant to Section 6.13(c)(iii), Parent (i) shall provide the Member Representative with a copy of such proposed Tax Return (and such additional information regarding such Tax Return as may reasonably be requested by the Member Representative) at least thirty (30) days prior to the filing of such Tax Return, and (ii) shall not file any such Tax Returns without Member Representative’s prior written consent, not to be unreasonably withheld, conditioned or delayed. The Member Representative will promptly notify Parent in writing of any objections to such Tax Returns. Parent and the Member Representative will cooperate in good faith to reach agreement on any disputed items or amounts, if any. If Parent and the Member Representative are unable to reach an agreement regarding such Tax Returns, then any disagreement will be resolved by an Accounting Firm, whose involvement will be limited solely to disputed items. The Accounting Firm’s determination shall not be subject to review or appeal, absent a showing of fraud or manifest error. The costs, fees and disbursements of the Accounting Firm shall be paid by the Surviving Entity.

 

(vi)          Parent, on the one hand, and the Member Representative on the other hand, and their respective Affiliates shall cooperate in (i) the preparation of all Tax Returns for any Tax periods and (ii) the conduct of any Tax Proceeding, for which one party could reasonably require the assistance of the other party in obtaining any necessary information. Such cooperation shall include, but not be limited to, furnishing prior years’ Tax Returns or return preparation packages illustrating previous reporting practices or containing historical information relevant to the preparation of such Tax Returns, and furnishing such other information within such party’s possession reasonably requested by the other party as is relevant to the preparation of the Tax Returns or the conduct of the Tax Proceeding. Such cooperation and information also shall include promptly forwarding copies of appropriate notices and forms or other communications received from or sent to any Tax Authority which relate to any Company Entity, and providing copies of all relevant Tax Returns, together with accompanying schedules and related workpapers, documents relating to rulings or other determinations by any Tax Authority and records concerning the ownership and tax basis of property, which the requested party may possess.

 

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(vii)            At its election, the Member Representative shall control any Tax Proceeding with respect to a Partnership Tax Return for any taxable period ending on or before the Closing Date. Parent shall control all other Tax Proceedings with respect to any Company Entity. The Member Representative shall consult with Parent regarding any Tax Proceeding it controls with respect to any Company Entity, provide Parent with information and documents related thereto, permit Parent or its representative to attend any such Tax Proceeding, and not settle any such issue without the consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed). In the event that the Member Representative does not elect to control a Tax Proceeding, or the Tax Proceeding relates to a Partnership Tax Return for a Straddle Period, Parent shall consult with the Member Representative regarding any such Tax Proceeding, provide the Member Representative with information and documents related thereto, permit the Member Representative or his representative to attend any such Tax Proceeding, and not settle any such issue without the consent of the Member Representative (which consent shall not be unreasonably withheld, conditioned or delayed). In connection with any Tax Proceeding with respect to a Partnership Tax Return a “push out” election pursuant to Section 6226 of the Code (or any state or local equivalent thereof) shall be made.

 

(d)           Allocation of Taxable Income. For all purposes of this Agreement:

 

(i)                If the Company is permitted, but not required, under applicable foreign, state or local income Tax Laws to treat the Closing Date as the last day of a taxable period, such day shall be treated as the last day of a taxable period.

 

(ii)               Except as otherwise provided in Section 6.13(d)(iii), any income Taxes for a taxable period beginning before the Closing Date and ending after the Closing Date (a “Straddle Period”) with respect to any Company Entity shall be apportioned between the portion of the period ending on the Closing Date and the portion of the period commencing on the day immediately following the Closing Date, based on the actual operations of the applicable Company, as the case may be, during such portions of the periods, and each such portion of such period shall be deemed to be a taxable period (whether or not it is in fact a taxable period). For purposes of computing income Taxes attributable to the two portions of a taxable period pursuant to this Section 6.13(d)(ii), (i) all transactions not expressly contemplated by this Agreement or the Ancillary Agreements occurring outside the Ordinary Course on the Closing Date after the Closing shall be allocated to the post-Closing portion of any Straddle Period or the taxable period beginning on the day after the Closing Date, as the case may be, and (ii) the amount of any item that is taken into account only once for each taxable period (e.g., the benefit of graduated tax rates, exemption amounts, etc.) shall be allocated between the two portions of the period in proportion to the number of days in each portion.

 

(iii)             The Transaction Tax Deductions shall be allocated to the taxable period ending on the Closing Date or the pre-Closing portion of the Straddle Period, as applicable.

 

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Section 6.14         Resignations; Parent D&O Tail Policy. At or prior to Closing, Parent shall deliver to the Company written resignations, effective as of the Merger Effective Time, of the officers and directors of Parent set forth on Schedule 6.14. Prior to the Closing, Parent shall obtain and pay for a “tail” officers’ and directors’ liability insurance policy with a claims period of six (6) years from the Merger Effective Time with at least the same coverage and amount and containing terms and conditions that are, in the aggregate, not less advantageous to the directors and officers of Parent as Parent’s existing policies with respect to claims arising out of or relating to events which occurred before or at the Merger Effective Time (including in connection with the transactions contemplated by this Agreement) (the “Parent D&O Tail Policy”). During the term of the Parent D&O Tail Policy, Parent shall not (and shall cause the Surviving Entity not to) take any action following the Closing to cause the Parent D&O Tail Policy to be cancelled or any provision therein to be amended or waived.

 

Section 6.15         Update of Financial Statements. During the period from the date of this Agreement until the earlier of the termination of this Agreement in accordance with its terms and the Closing Date, the Company shall prepare in the Ordinary Course, and deliver to Parent promptly upon completion, but in any event no later than sixty (60) days after the end of the applicable fiscal month, unaudited consolidated financial statements for the Company and its Subsidiaries for each fiscal month ending after the first full month following the date hereof, consisting of the standard monthly reporting package provided to the management of the Company, which may include a balance sheet as of the end of such month and related statements of operations and comprehensive income for that month and for the portion of the year then ended.

 

Section 6.16         Closing Conditions. From the date hereof until the Closing and upon the terms and subject to the conditions set forth in this Agreement, each party hereto shall use its reasonable best efforts to take, or cause to be taken, such actions as are necessary, proper or advisable to satisfy the conditions to the Closing set forth in ARTICLE VII hereof and to consummate the Transactions.

 

Section 6.17         Section 16 Matters. Prior to the Merger Effective Time, each of Parent and the Company shall take all such reasonable steps (to the extent permitted under applicable Law) to cause any acquisitions of shares of Parent Common Stock (including, in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) resulting from the transactions contemplated hereby by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act in connection with the transactions contemplated hereby to be exempt under Rule 16b-3 promulgated under the Exchange Act.

 

Section 6.18         Access to, and Information of, Parent. From the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, subject to applicable Law, Parent shall permit the Company and its advisers and other representatives to have reasonable access to Parent’s properties and facilities, books and records, Contracts and other documents and data related to Parent and its Subsidiaries; provided, however, that any such access shall be (x) upon no less than two (2) Business Days prior written notice from the Company to Parent and (y) conducted at the Company’s sole cost and expense, during normal business hours and in such a manner as not to interfere unreasonably with the normal operations of each of Parent and its Subsidiaries. No information provided to or obtained by the Company pursuant to this Section 6.18 shall limit or otherwise affect the remedies available hereunder to the Company, or act as a waiver or otherwise affect the representations or warranties of Parent and its Subsidiaries in this Agreement. All information provided to or obtained by the Company heretofore or hereafter, including pursuant to this Section 6.18, shall be held in confidence by the Company in accordance with and subject to the terms of the Confidentiality Agreement and nothing herein shall modify or limit the obligations of the Company set forth therein. Notwithstanding anything herein to the contrary, Parent shall not be required to take any action, provide any access or furnish any information that would be reasonably likely to (A) cause or constitute a waiver of the attorney-client or other privilege or (B) violate any Contract to which Parent is a party or bound.

 

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Section 6.19         Conduct of Business by Parent. From the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, except as otherwise provided in this Agreement, required by Law or consented to in writing by the Company (which consent shall not be unreasonably withheld, conditioned or delayed) Parent shall, and shall cause its Subsidiaries to, operate its business in the Ordinary Course. Without limiting the foregoing, except as set forth on Schedule 6.19, from the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, Parent shall not, and shall cause each of its Subsidiaries not to:

 

(a)           other than as contemplated herein, amend or alter the certificate of incorporation, bylaws or other organizational documents of Parent or any of its Subsidiaries, or form any new Subsidiary;

 

(b)           (i) make or declare any dividend or distribution to the Parent Stockholders or make any other distributions in respect of any of Parent’s or any of its Subsidiary’s capital stock, except for dividends by any of Parent’s wholly-owned Subsidiaries, (ii) split, combine, reclassify or otherwise amend any terms of any shares or series of Parent’s or any of its Subsidiary’s capital stock or (iii) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, membership interests, warrants or other equity interests of Parent or its Subsidiaries, other than a redemption of shares of Class A Parent Common Stock in connection with the Merger in accordance with the terms set forth in the Proxy Statement;

 

(c)           incur or assume any Indebtedness or guarantee any Indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Parent or any Subsidiary or guaranty any debt securities of another Person, other than any Indebtedness or guarantee incurred between Parent and any of its wholly-owned Subsidiaries or between any of such wholly-owned Subsidiaries;

 

(d)           (i) issue any shares of Parent securities or securities exercisable for or convertible into capital stock, other than issuance of the Class B Common Stock Merger Consideration or in connection with the Exchangeable Notes, or (ii) grant any additional options, warrants or stock appreciation rights with respect to Parent securities not outstanding on the date hereof;

 

(e)           make any loans, advances or capital contributions to, or investments in, any other Person;

 

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(f)           grant any material Encumbrances on any property or assets (whether tangible or intangible) of Parent;

 

(g)           except as required by changes in GAAP, change any of its methods of accounting in any manner;

 

(h)           purchase or otherwise acquire (whether by merger or otherwise), or lease or license, any property or assets;

 

(i)           enter into any joint venture with a third party; or

 

(j)           enter into any agreement, or otherwise become obligated, to take any action prohibited under this Section 6.19.

 

Section 6.20         No Control of the Other Party’s Business. Nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Merger Effective Time, and nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations prior to the Merger Effective Time. Prior to the Merger Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.

 

Section 6.21         Post-Closing Directors and Officers of Parent. Subject to the terms of the Parent Amended and Restated Certificate of Incorporation and the Parent Amended and Restated Bylaws, Parent shall take all such action within its power as may be necessary or appropriate such that immediately following the Merger Effective Time:

 

(a)           the board of directors of Parent (the “Parent Board”) shall consist of seven directors; and

 

(b)           the initial officers of Parent as of the Merger Effective Time shall be determined by the Parent Board following the Merger Effective Time.

 

Section 6.22         Subscription Agreements. Parent shall not amend, modify or replace any of, or waive any provision or remedy under, the Subscription Agreements in a manner adverse to the Company, without the Company’s prior written consent (not to be unreasonably conditioned, withheld or delayed). Parent shall use its reasonable best efforts to take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable to consummate the transactions contemplated by the Subscription Agreements on the terms and conditions described therein, including maintaining in effect the Subscription Agreements and using its reasonable best efforts to (a) satisfy in all material respects on a timely basis all conditions and covenants applicable to Parent in the Subscription Agreements and otherwise comply with its obligations thereunder, (b) in the event that all conditions to Closing in this Agreement and the conditions to the consummation of the transactions contemplated by the Subscription Agreements (other than conditions that Parent, the Company or any of their respective Affiliates control the satisfaction of and other than those conditions that by their nature are to be satisfied at the Closing) have been satisfied, consummate transactions contemplated by the Subscription Agreements at or prior to Closing, and (c) enforce its rights under the Subscription Agreements in the event that all conditions in the Subscription Agreements (other than conditions that Parent or any of its Affiliates control the satisfaction of and other than those conditions that by their nature are to be satisfied at the Closing) have been satisfied, to cause the applicable PIPE Investors to contribute to Parent the applicable portion of the PIPE Investment set forth in the Subscription Agreements at or prior to the Closing. Without limiting the generality of the foregoing, Parent shall give the Company prompt written notice: (i) of any amendment to any Subscription Agreement (together with a copy of such amendment), (ii) of any breach or default (or any event or circumstance that, with or without notice, lapse of time or both, could give rise to any breach or default) by any party to any Subscription Agreement known to Parent; (iii) of the receipt of any written notice or other written communication from any party to any Subscription Agreement with respect to any actual, potential or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation by any party to any Subscription Agreement or any provisions of any Subscription Agreement and (iv) if Parent does not expect to receive all or any portion of the PIPE Investment on the terms, in the manner or from the sources contemplated by the Subscription Agreements.

 

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Section 6.23         Company Debt Financing.

 

(a)           Parent shall take commercially reasonable efforts to cooperate with the Company in order to allow the Company to obtain the consent or an amendment as may be reasonably required pursuant to the terms of the Company Debt Financing in connection with the Transactions contemplated herein, including with respect to the issuance of the Exchangeable Notes.

 

(b)           Without limiting, amending or waiving any other obligation of a party under this Agreement (including Section 6.22), prior to the Closing, each party shall use its respective reasonable best efforts, and shall cause their respective officers, directors and employees to use their reasonable best efforts to provide such customary cooperation in connection with the timely arrangement and implementation of the debt financing described in the Note Subscription Agreement(s) on the terms specified therein as the other party may reasonably request from time to time as long as any such request is timely made so as not to delay the Closing, including:

 

(i)            assisting with the preparation of the Exchangeable Notes indenture governing the Exchangeable Notes as promptly as practicable after the date hereof and consistent with the Note Subscription Agreement(s), including assisting in engaging a trustee and settlement agent (in Parent’s reasonable discretion);

 

(ii)           assisting in the preparation of, and executing and delivering, definitive financing documents, including documents contemplated by or related to the Exchangeable Notes indenture, customary closing certificates as may be required by the issuance of the Exchangeable Notes (none of which shall be a solvency or similar certificate) and other customary documents as may be reasonably requested by either party (all of which in the case of the Company and its Subsidiaries shall be subject to the occurrence of the Closing and none of which require the delivery of a legal opinion); and

 

(iii)           cooperating with the other party, and taking all corporate actions, subject to the occurrence of the Closing, reasonably requested by the other party to permit the consummation of the transactions contemplated by the Note Subscription Agreement(s).

 

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Section 6.24         Employee Benefit Matters.

 

(a)           The Company shall cause all notices to be timely provided to each participant under the Equity Compensation Plan as required by the Equity Compensation Plan in connection with the Transactions and in accordance with Section 2.10(c).

 

(b)           With respect to any employee benefits that are provided to employees of the Company Entities who remain employed immediately after the Merger Effective Time (the “Company Group Employees”) under employee benefits plans of the Surviving Entity (the “Surviving Company Plans”) that replace the Benefit Plans (as provided by the Company Entities immediately prior to the Merger Effective Time), the Surviving Entity shall use commercially reasonable efforts to provide that each Company Group Employee shall be immediately eligible to participate, without any waiting time, and service accrued by the Company Group Employees during employment with the Company Entities prior to Closing Date shall be recognized to the same extent and for the same purpose as recognized under the analogous Benefit Plan, except to the extent necessary to prevent duplication of benefits. With respect to any medical, dental or other group health benefits that are provided to the Company Group Employees under the Surviving Company Plans, the Surviving Entity shall use commercially reasonable efforts to provide that any applicable pre-existing condition exclusions and actively-at-work requirements (except to the extent not satisfied under the comparable Benefit Plan as of such time) shall be waived, and any expenses incurred before such time under the comparable Benefit Plan shall be taken into account under such Surviving Company Plan for purposes of satisfying applicable deductible, coinsurance and maximum out-of-pocket provisions.

 

(c)           Prior to the effectiveness of the Proxy Statement, Parent shall adopt the Parent Equity Compensation Plan and the Parent Employee Stock Purchase Plan, each of which will become effective as of the Closing, subject to approval of the stockholders of Parent. Parent will prepare and file with the SEC a registration statement on Form S-8 (or other appropriate form) registering a number of shares of Class A Parent Common Stock reserved for issuance under the Parent Equity Compensation Plan and the Parent Employee Stock Purchase Plan.

 

(d)           Subject to the approval of the Parent Equity Compensation Plan by the stockholders of Parent, Parent covenants and agrees that on or within a reasonably practicable time following the Closing Parent shall grant an amount of equity compensation awards representing at least 75% of Parent Common Stock reserved for issuance under the Parent Equity Compensation Plan upon the adoption of such plan to the Key Employees, directors, managers, executives and other employees and service providers of Parent and its Subsidiaries, at such time, as determined by the Compensation Committee of Parent in its sole discretion. Such awards shall be in the form of restricted stock units and shall have time-based and/or performance-based vesting as determined by the Compensation Committee of Parent in its sole discretion.

 

(e)           As soon as practicable following the date hereof, Parent and the Company shall each use its commercially reasonable efforts to cause to be negotiated and entered into, effective as of or as soon as practicable following, and conditioned upon the occurrence of, the Effective Time, executive employment agreements with each employee of the Company Entities set forth on Schedule 6.24 (the “Key Employees”), in each case in the form and substance reasonably agreed upon by Parent, the Company and each such Key Employee (the “Employment Agreements”).

 

(f)           Nothing herein shall (i) be construed to establish or be treated as an amendment or modification of any Benefit Plan or Surviving Company Plan, (ii) alter or limit the Surviving Entity’s ability to amend, modify or interpret or terminate any Surviving Company Plan at any time in accordance with the terms of such plan and applicable Law or (iii) give any third party, including any Company Group Employee, any right to continued employment or any particular term or condition of employment following the Closing or to rely upon or demand or enforce the provisions of this Section 6.24.

 

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ARTICLE VII.
CONDITIONS TO CLOSING AND THE MERGER

 

Section 7.1           Mutual Conditions. The respective obligations of each party to this Agreement to consummate and effect the Merger shall be subject to the fulfillment at or prior to the Merger Effective Time of each of the following conditions:

 

(a)           No Injunction. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

 

(b)          Parent Stockholder Approval. The Parent Stockholder Approval shall have been obtained.

 

(c)          Stock Exchange Approval. The shares of Class A Parent Common Stock to be issued in connection with the Common PIPE Investment shall have been approved for listing on the Stock Exchange, subject to official notice of issuance.

 

(d)          Company Member Vote. The Company Member Vote shall have been obtained and the Written Consent shall have been delivered to Parent, and such Written Consent shall not have been amended, supplemented, modified, annulled or revoked.

 

(e)          HSR Filings. The filings of Parent and the Company pursuant to the HSR Act, if any, shall have been made and the applicable waiting period and any extensions thereof shall have expired or been terminated.

 

(f)           PIPE Investment. The PIPE Investment shall have been consummated immediately prior to the Merger Effective Time in accordance with the terms set forth in the applicable Subscription Agreements.

 

(g)          Net Tangible Assets. After giving effect to the transactions contemplated by this Agreement, Parent shall have net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) of at least $5,000,001.

 

(h)          Minimum Cash. The amount of Minimum Cash shall not be less than $210,000,000.

 

(i)           Ancillary Agreements. Each Ancillary Agreement (other than the Subscription Agreements) shall have been executed and delivered by the parties thereto and shall be in full force and effect.

 

Section 7.2           Conditions to the Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger shall be subject to the fulfillment at or prior to the Merger Effective Time of each of the following conditions, any and all of which may be waived, in whole or in part, in writing by Parent and Merger Sub to the extent permitted by applicable Law:

 

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(a)          Representations and Warranties. (i) The Company Fundamental Representations shall be true and correct (in each case without giving effect to any qualification as to “material,” “materiality,” “material respects,” “Material Adverse Effect” or words of similar import or effect set forth therein) in all material respects as of the date of this Agreement and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of the specified date), and (ii) the representations and warranties of the of the Company set forth in ARTICLE IV (other than the Company Fundamental Representations) shall be true and correct (in each case without giving effect to any qualification as to “material,” “materiality,” “material respects,” “Material Adverse Effect” or words of similar import or effect set forth therein) in all respects as of the date of this Agreement and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of the specified date), except where the failure of such representations and warranties to be true and correct would not have (and would not reasonably be expected to have) a Material Adverse Effect.

 

(b)          Agreements and Covenants. The Company and the Member Representative shall have performed or complied, in each case, in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by the Company and the Member Representative on or prior to the Closing Date.

 

(c)          Material Adverse Effect. No Material Adverse Effect shall have occurred since the date of this Agreement.

 

(d)          Officer’s Certificate. The Company shall have delivered a certificate, dated as of the Closing Date and signed by an authorized representative of the Company, that each of the conditions set forth in Section 7.2(a), Section 7.2(b), and Section 7.2(c) have been satisfied.

 

(e)          Closing Net Indebtedness. The Closing Net Indebtedness shall be no more than $250,000,000.

 

(f)           Closing Cash. Closing Cash shall be no less than $5,000,000.

 

(g)          Certain Consents. The Company shall have obtained and delivered to Parent at or prior to Closing the consents, authorizations or approvals listed on Schedule 7.2(g), in each case in substance and form reasonably satisfactory to the parties hereto, and no such consents, authorizations or approvals shall have been revoked.

 

Section 7.3           Conditions to the Obligations of the Company. The obligations of the Company to consummate the Merger shall be subject to the fulfillment at or prior to the Merger Effective Time of each of the following conditions, any and all of which may be waived, in whole or in part, in writing by the Company to the extent permitted by applicable Law:

 

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(a)           Representations and Warranties. (i) The Parent Fundamental Representations shall be true and correct (in each case without giving effect to any qualification as to “material,” “materiality,” “material respects,” “Material Adverse Effect” or words of similar import or effect set forth therein) in all material respects as of the date of this Agreement and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of the specified date), and (ii) the representations and warranties of the of Parent set forth in ARTICLE V (other than the Parent Fundamental Representations) shall be true and correct (in each case without giving effect to any qualification as to “material,” “materiality,” “material respects,” “Material Adverse Effect” or words of similar import or effect set forth therein) in all respects as of the date of this Agreement and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of the specified date), except where the failure of such representations and warranties to be true and correct would not have (and would not reasonably be expected to have) a Parent Material Adverse Effect.

 

(b)           Agreements and Covenants. Parent and Merger Sub shall have performed or complied, in each case, in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by them on or prior to the Closing Date.

 

(c)           Officer’s Certificate. Parent and Merger Sub shall have delivered a certificate, dated as of the Closing Date and signed by an authorized officer of each of Parent and Merger Sub, that each of the conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied.

 

(d)           SEC Compliance. Immediately prior to Closing, Parent shall be in compliance in all material respects with the reporting requirements applicable to it under the Exchange Act.

 

(e)           Stockholders Agreement; Board Appointment. Parent shall have delivered to the Company a duly executed counterpart signature page of Parent and Roman DBDR Tech Sponsor LLC to the Stockholders Agreement, and Parent shall have appointed to its board of directors the directors contemplated by such Stockholders Agreement.

 

(f)            Parent Material Adverse Effect. No Parent Material Adverse Effect shall have occurred since the date of this Agreement.

 

ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER

 

Section 8.1           Termination. This Agreement may be terminated at any time prior to the Closing Date:

 

(a)           by mutual written consent of Parent and the Company;

 

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(b)           by either Parent or the Company:

 

(i)             if the Closing has not occurred on or before December 31, 2021 (the “Outside Date”); provided, however, that the right to terminate this Agreement under this Section 8.1(b)(i) shall not be available to any party whose failure to fulfill any material obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date; provided, further, however, that if, on the Outside Date, the condition set forth in Section 7.1(e) shall not have been satisfied and all other conditions to Closing in ARTICLE VII shall have been satisfied (or in the case of conditions that by their terms are to be satisfied at the Closing, shall be capable of being satisfied on the Closing Date), then either the Company or Parent, through written notice to the other, shall have the right to extend the Outside Date to a date that is not later than January 31, 2022;

 

(ii)            if a Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law which has become final and non-appealable, and which permanently restrains, enjoins or otherwise prohibits the transactions contemplated hereby; or

 

(iii)           if, the Parent Stockholders’ Meeting has been held (including any adjournment or postponement thereof), has concluded, Parent Stockholders have duly voted and the Parent Stockholder Approval is not obtained;

 

(c)           by Parent, if neither it nor Merger Sub is in material breach of their obligations under this Agreement and if (i) at any time any of the representations and warranties of the Company contained herein become untrue or inaccurate such that Section 7.2(a) could not be satisfied (treating such time as if it were the Closing Date for purposes of this Section 8.1(c)); or (ii) there has been a breach on the part of the Company of any of its covenants or agreements contained in this Agreement such that Section 7.2(b) could not be satisfied (treating such time as if it were the Closing Date for purposes of this Section 8.1(c)), and, with respect to both clause (i) and clause (ii), such breach has not been cured within 30 days after written notice thereof to the Company, if curable;

 

(d)           by the Company, if the Company is not in material breach of its obligations under this Agreement and if (i) at any time any of the representations and warranties of Parent and Merger Sub contained herein become untrue or inaccurate such that Section 7.3(a) could not be satisfied (treating such time as if it were the Closing Date for purposes of this Section 8.1(d)); or (ii) there has been a breach on the part of Parent or Merger Sub of any of their covenants or agreements contained in this Agreement such that Section 7.3(b) could not be satisfied (treating such time as if it were the Closing Date for purposes of this Section 8.1(d)), and, with respect to both clause (i) and clause (ii), such breach has not been cured within 30 days after written notice thereof to Parent, if curable; or

 

(e)           by Parent, if the Company does not deliver, or cause to be delivered to Parent, the Written Consent in accordance with this Agreement on or prior to the Written Consent Deadline; provided further that if the Company subsequently delivers, or causes to be delivered to Parent, the Written Consent, and Parent does not exercise its termination right within three (3) Business Days thereof, then such termination right shall automatically and permanently terminate.

 

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Section 8.2           Manner of Exercise. In the event of termination by Parent or the Company, or both, in accordance with Section 8.1, written notice thereof shall be given to the other party by the terminating party and this Agreement shall terminate.

 

Section 8.3           Effect of Termination. If this Agreement is terminated pursuant to Section 8.1, all further obligations and liabilities of the parties under this Agreement will terminate and become void and of no force and effect, except that the obligations in Section 6.1, Section 6.4, ARTICLE VIII and ARTICLE IX will survive termination of this Agreement.

 

Section 8.4           Waiver. At any time prior to the Closing Date, the parties may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, or (iii) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

 

ARTICLE IX.
MISCELLANEOUS

 

Section 9.1           Survival. The representations, warranties, covenants and agreements of the parties hereto contained herein shall not survive the Closing, except for those covenants and agreements contained herein that by their explicit terms apply or are to be performed in whole or in part after the Closing. Except in the case of Fraud, there are no remedies available to the parties hereto with respect to any breach of the representations, warranties, covenants or agreements of the parties to this Agreement after the Closing, except for (i) those covenants and agreements explicitly to be performed in whole or in part after the Closing and (ii) this ARTICLE IX and any corresponding definitions set forth in ARTICLE I. Notwithstanding anything to the contrary in this Agreement, no party shall, in any event, be liable to the other party for any consequential, special or punitive damages.

 

Section 9.2           Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be delivered personally, by facsimile or email to the extent email is listed below, or sent by certified, registered or express air mail, postage prepaid, and shall be deemed given when so delivered personally, or by facsimile or email upon electronic confirmation of receipt (excluding automatic acknowledgements of receipt), or if mailed by overnight courier service guaranteeing next day delivery, one Business Day after mailing, or if mailed in any other way, then upon receipt, to the parties at the following addresses (or at such other address for a party as is specified by like notice):

 

If to Parent or Merger Sub, to:

Roman DBDR Tech Acquisition Corp.

2877 Paradise Road, #702

Las Vegas, NV 89109

 

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Attention: Dr. Donald Basile; Dixon Doll, Jr.; John Small

Phone: (650) 618-2524

Email: don.basile@romandbdr.com; don.basile@stanfordalumni.org; drdolljr@gmail.com; jcsmall@romandbdr.com

 

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

 

Goodwin Procter LLP

100 Northern Avenue

Boston, MA 02210

Attention: Anthony J. McCusker; Jocelyn M. Arel; Gregg L. Katz

Phone: (617) 570-1000

Email: amccusker@goodwinlaw.com; jarel@goodwinlaw.com; gkatz@goodwinlaw.com

 

If to the Company, to:

 

CompoSecure Holdings, L.L.C.

309 Pierce Street

Somerset, NJ 08873

Attention: Jonathan C. Wilk, President and CEO

Phone: (908) 518-0500, ext. 2220

Email: jwilk@composecure.com

 

If to the Member Representative, to:

 

LLR Equity Partners IV, L.P.

2929 Arch Street, Suite 2700

Philadelphia, PA 19104

Attention: Mitchell Hollin, Sam Ryder and Joshua Loftus

Phone: (215) 717-2900

Email: mhollin@llrpartners.com, sryder@llrpartners.com and jloftus@llrpartners.com

 

in each case, with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103

Attention: Kevin S. Shmelzer and Barbara J. Shander

Phone: (215) 963-5029 and (215) 963-5716

Email: kevin.shmelzer@morganlewis.com and barbara.shander@morganlewis.com

 

Section 9.3           Annexes, Exhibits and Schedules. All annexes, exhibits and schedules attached hereto, the Parent Disclosure Schedules, and the Company Disclosure Schedules are hereby incorporated in and made a part of this Agreement as if set forth in full herein. The Company Disclosure Schedules have been arranged for purposes of convenience only, in sections corresponding to the sections of this Agreement. Certain information set forth in the Company Disclosure Schedules is or may be included solely for informational purposes, is not an admission of liability with respect to the matters covered by the information, and may not be required to be disclosed pursuant to this Agreement. The specification of any dollar amount in the representations and warranties contained in this Agreement or the inclusion of any specific item in the Company Disclosure Schedules is not intended to imply that such amounts (or higher or lower amounts) are or are not material, and no Party shall use the fact of the setting of such amounts or the fact of the inclusion of any such item in the Company Disclosure Schedules in any dispute or controversy between the Parties as to whether any obligation, item, or matter not described herein or included in a Disclosure Schedule is or is not material for purposes of this Agreement. The inclusion of any item in the Company Disclosure Schedules should not be interpreted as indicating that the Company has determined that such item is necessarily material to the business, assets, liabilities, financial condition, results of operation or prospects of the Company Entities, or amounts to a Company Material Adverse Effect, or is otherwise material, or that such information is required to be included in the Company Disclosure Schedules, or is outside of the Ordinary Course of the Company Entities.

 

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Section 9.4           Computation of Time. Whenever the last day for the exercise of any privilege or the discharge or any duty hereunder shall fall upon a day that is not a Business Day, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a Business Day.

 

Section 9.5           Expenses. Regardless of whether the Transactions are consummated, except as otherwise provided herein, each party hereto shall pay its own expenses incident to this Agreement, the Ancillary Agreements and the Transactions; provided, that if the Closing shall occur, Parent shall pay or cause to be paid, as the case may be, at the Closing all unpaid Company Transaction Expenses and all Parent Transaction Expenses; it being understood that any payments to be made (or to cause to be made) by Parent under this Section 9.5 shall be paid as soon as reasonably practicable upon consummation of the Merger and release of proceeds from the Trust Account.

 

Section 9.6           Governing Law. This Agreement, the rights and duties of the parties hereto, and any disputes (whether in contract, tort or statute) arising out of, under or in connection with this Agreement will be governed by and construed and enforced in accordance with the Laws of the State of Delaware, without giving effect to its principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the Laws of another jurisdiction. The parties irrevocably and unconditionally submit to the exclusive jurisdiction of the United States District Court for the District of Delaware or, if such court does not have jurisdiction, the Delaware state courts located in Wilmington, Delaware, in any action arising out of or relating to this Agreement. The parties irrevocably agree that all such claims shall be heard and determined in such a Delaware federal or state court, and that such jurisdiction of such courts with respect thereto will be exclusive. Each party hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding arising out of or relating to this Agreement that it is not subject to such jurisdiction, or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agree that mailing of process or other papers in connection with any such action, suit or proceeding in the manner provided in Section 9.2 or in such other manner as may be permitted by Law, will be valid and sufficient service thereof.

 

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Section 9.7           Assignment; Successors and Assigns; No Third Party Rights. Except as otherwise provided herein, this Agreement may not, without the prior written consent of the other parties hereto, be assigned by operation of Law or otherwise, and any attempted assignment shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors, permitted assigns and legal representatives, and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement; provided, that the Indemnified Persons who are not otherwise party to this Agreement shall be third party beneficiaries of this Agreement. Notwithstanding the foregoing, Parent and/or Merger Sub may assign this Agreement without the consent of any Person to any lender (or agent therefor) to Parent or Merger Sub or their subsidiaries or Affiliates thereof as security for obligations to such lender (or lenders) in respect of any financing agreements or arrangements entered into by Parent or Merger Sub or their subsidiaries and affiliates with such lenders or to an acquirer of all or substantially all of the assets or business of Parent or Merger Sub in any form of transaction, which assignment shall not relieve Parent or Merger Sub of its obligations hereunder.

 

Section 9.8          Counterparts. This Agreement may be executed in two or more counterparts for the convenience of the parties hereto, each of which shall be deemed an original and all of which together will constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format shall be effective as delivery of a mutually executed counterpart to this Agreement.

 

Section 9.9          Titles and Headings. The titles, captions and table of contents in this Agreement are for reference purposes only, and shall not in any way define, limit, extend or describe the scope of this Agreement or otherwise affect the meaning or interpretation of this Agreement.

 

Section 9.10        Entire Agreement. Except as otherwise contemplated herein, this Agreement, including the Schedules, Annexes, Company Disclosure Schedules and Parent Disclosure Schedules, and the Ancillary Agreements constitute the entire agreement among the parties with respect to the subject matter contained herein and therein, and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to such subject matter.

 

Section 9.11        Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties.

 

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Section 9.12        Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and it is accordingly agreed that the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court specified in Section 9.6, in addition to any other remedy to which they are entitled at law or in equity. Each of the parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief as provided herein on the basis that (x) any party has an adequate remedy at law or (y) an award of specific performance is not an appropriate remedy for any reason at law or equity; for the avoidance of doubt, the parties may argue that no breach has occurred. Each party further agrees that no party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtain any remedy referred to in this Section 9.12, and each party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

Section 9.13        Waiver of Jury Trial. To the extent not prohibited by applicable Law that cannot be waived, each of the parties hereto irrevocably waives any right it may have to trial by jury in respect of any litigation based on, arising out of, under or in connection with this Agreement, including the Schedules, Annexes, Company Disclosure Schedules and Parent Disclosure Schedules, the Ancillary Agreements, THE TRANSACTIONS or any course of conduct, course of dealing, verbal or written statement or action of any party hereto or thereto, in each case, whether now existing or hereafter arising, and whether in contract, tort, statute, equity or otherwise. Each party hereby further agrees and consents that any such litigation shall be decided by court trial without a jury and that the parties to this Agreement may file a copy of this Agreement with any court as written evidence of the consent of the parties to the waiver of their right to trial by jury. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER, (b) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) ACKNOWLEDGES THAT IT AND THE OTHER HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 9.13.

 

Section 9.14        Failure or Indulgence not Waiver. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or any other right. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

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Section 9.15        Company Privilege. The Company has advised Parent that Morgan, Lewis & Bockius LLP (the “Firm”) has represented both the Company Entities and the Holders prior to the Closing with respect to the transactions contemplated hereby (the “Pre-Closing Engagement”), and, recognizing that the Company intends to engage the Firm to act as legal counsel to the Company and its Affiliates after the Closing, Parent hereby waives, on its own behalf, and agrees to cause its Affiliates, to waive any conflict of interest that may arise in connection with the Firm representing the Company or any of its Affiliates after the Closing as it relates to the Pre-Closing Engagement. In light of the foregoing and subject to the following sentence, the Parties agree that any attorney-client privilege or attorney work-product to the extent recognized as such under applicable Law with respect to the Pre-Closing Engagement and all information and documents to the extent covered by such privilege or protection under applicable Law and all confidential communications solely between and documents solely exchanged by the Company Entities, the Holders, their respective Affiliates, on one hand, and the Firm, on the other hand, with respect to the Pre-Closing Engagement (the “Privileged Communications”) shall belong to and be controlled by the Company and may be waived only by the Company and shall not pass to or be claimed or used by Parent or any of its respective Affiliates after the Closing. Accordingly, Parent shall not, without the Company’s consent, have access to the files of the Firm relating to the Pre-Closing Engagement to the extent they constitute Privileged Communications.

 

Section 9.16        Member Representative.

 

(a)          Effective upon and by virtue of the Company Member Vote, and without any further act of any of the Holders or Optionholders, the Member Representative is hereby irrevocably appointed as the representative, agent, proxy, and attorney in fact (coupled with an interest) for all the Securityholders for all purposes under this Agreement including the full power and authority on the Holders’ and Optionholders’ behalf: (i) to consummate the Transactions, (ii) to negotiate claims and disputes arising under, or relating to, this Agreement and the other agreements, instruments, and documents contemplated hereby or executed in connection herewith, (iii) to receive and disburse to, or caused to be received or disbursed to, any Holder or Optionholder any funds received on behalf of such Holder or Optionholder under this Agreement (including, for the avoidance of doubt, any portion of the Merger Consideration) or otherwise, (iv) to withhold any amounts received on behalf of any Holder or Optionholder pursuant to this Agreement (including, for the avoidance of doubt, any portion of the Merger Consideration) or to satisfy (on behalf of the Securityholders) any and all obligations or liabilities of any Holder, Optionholder or the Member Representative in the performance of any of their commitments hereunder, (v) to execute and deliver any amendment or waiver to this Agreement and the other agreements, instruments, and documents contemplated hereby or executed in connection herewith (without the prior approval of any Holder or Optionholder), (vi) to receive and disburse to, or cause to be received or disbursed to, any individual pursuant to any incentive compensation agreement providing for a transaction bonus, in effect as of the Closing and (vii)  to take all other actions to be taken by or on behalf of any Holder or Optionholder in connection with this Agreement and the other agreements, instruments, and documents contemplated hereby or executed in connection herewith. Such agency and proxy are coupled with an interest, are therefore irrevocable without the consent of the Member Representative and shall survive the death, incapacity, bankruptcy, dissolution or liquidation of each Holder and Optionholder. Each of the other parties shall be entitled to rely conclusively, without inquiry, on any document executed or purported to be executed on behalf of any Holder or Optionholder by the Member Representative and on all decisions, consents, instructions, omissions and actions by the Member Representative taken or purported to be taken on behalf of any Holder or Optionholder by the Member Representative, all of which shall be legally binding upon each Holder and Optionholder, and no Holder or Optionholder shall have the right to object, dissent, protest or otherwise contest the same, and each of the other parties to this Agreement are hereby relieved from any liability to any Person in accordance with the foregoing. The Member Representative shall have no duties or obligations hereunder, including any fiduciary duties, except those set forth herein, and such duties and obligations shall be determined solely by the express provisions of this Agreement.

 

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(b)          Effective upon and by virtue of the Company Member Vote, and without any further act of any of the Holders or Optionholders, the Member Representative shall be indemnified, held harmless and reimbursed by each Holder and Optionholder against all costs, expenses (including reasonable attorneys’ fees), judgments, fines and amounts paid or incurred by the Member Representative in connection with any claim, action, suit or proceeding to which the Member Representative or such other Person is made a party by reason of the fact that it is or was acting as the Member Representative pursuant to the terms of this Agreement. Any and all amounts paid or incurred by the Member Representative in connection with any claim, action, suit or proceeding to which the Member Representative or such other Person is made a party by reason of the fact that it is or was acting as the Member Representative pursuant to the terms of this Agreement are on behalf of the Securityholders (and, not for the avoidance of doubt, on behalf of the Member Representative in any other capacity, as a Holder or otherwise).

 

(c)          The Member Representative shall not incur any liability to any Holder or Optionholder by virtue of the failure or refusal of the Member Representative for any reason to consummate the Transactions or relating to the performance of their duties hereunder. The Member Representative shall have no liability in respect of any action, claim or proceeding brought against the Member Representative by any Holder or Optionholder, regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract or tort, or whether at law or in equity, or otherwise, if the Member Representative took or omitted taking any action in good faith.

 

(d)          If the Member Representative pays or causes to be paid any amounts (on behalf of the Securityholders) in connection with any obligation or liability of a Holder or Optionholder in connection with the Transactions, any such payments and the reasonable expenses of the Member Representative incurred in administering or defending the underlying dispute or claim may be reimbursed, when and as incurred, from the Member Representative Holdback Amount (and, if not so reimbursed from the Member Representative Holdback Amount, the Member Representative shall be indemnified, held harmless and reimbursed by each Member and Optionholder for such amount(s)). The Member Representative may, in its sole and absolute discretion, distribute, or caused to be distributed, any or all of the funds received or held by the Member Representative on behalf of the Securityholders (including, for the avoidance of doubt, any portion of the Merger Consideration) to one or more Holders or Optionholders at any time after the date hereof, which such distribution(s) of funds may be different (i.e., with respect to amount, timing, conditionality or otherwise) for each Holder and Optionholder. Upon full reimbursement of all expenses, costs, obligations or liabilities incurred by the Member Representative in the performance of its duties hereunder, the Member Representative shall distribute, or caused to be distributed, all remaining funds held by the Member Representative on behalf of the Securityholders to the Securityholders; provided, that to ensure compliance with Treasury Regulation 1.409A-3(i)(5)(iv), the Optionholders shall not be entitled to receive any payment, and no payment shall be made to the Optionholders, in connection with the transaction contemplated hereby later than the date which is five (5) years after the Closing Date (it being understood that other Holders may receive payments after the date which is five (5) years after the Closing Date, including, for the avoidance of doubt, amounts that, if paid prior to the date which is five (5) years after the Closing Date, would have been paid to the Optionholders).

 

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(e)          Notwithstanding anything to the contrary set forth herein, the Member Representative and its Affiliates shall not be liable for any loss to any Holder or Optionholder for any action taken or not taken by the Member Representative or for any act or omission taken or not taken in reliance upon the actions taken or not taken or decisions, communications or writings made, given or executed by Parent or the Merger Sub or the Surviving Entity.

 

(f)           Except as may have been expressly and specifically agreed to in writing by a Holder or Optionholder, on the one hand, and the Firm, on the other hand, and except for the Member Representative and its Affiliates (i) the Firm has not and is not representing, and shall not be deemed to have represented any Holder or Optionholder in connection with the transactions contemplated hereby, and (ii) the Firm has not and is not providing any advice or counsel (including legal advice or counsel), and shall not be deemed to have provided counsel or advice, to any Holder or Optionholder in connection with the transactions contemplated hereby. Each Holder and Optionholder agrees that Morgan, Lewis & Bockius LLP may represent the Member Representative and its Affiliates in any matter related to the transactions completed hereby including matters which maybe adverse to such Holder or Optionholder and, in furtherance thereof, each Holder and Optionholder consents to, and waives, without limitation, restriction or condition of any kind, any actual or potential conflict or other actual or potential objection with respect to the Firm’s representation of the Member Representative and its Affiliates in any matter related to the transactions completed hereby.

 

Section 9.17        Amendments. This Agreement may be amended, at any time prior to the Merger Effective Time, by an instrument in writing signed on behalf of Parent, Merger Sub and the Company; provided, however, that after the Parent Stockholder Approval is obtained, there shall be no amendment or waiver that, pursuant to applicable Law, requires further approval of the Parent Stockholders, without the receipt of such further approvals.

 

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Section 9.18        Trust Account Waiver. Notwithstanding anything else in this Agreement, the Company acknowledges that it has received a copy of the Prospectus and acknowledges, agrees and understands that Parent has established the Trust Account and that Parent may disburse monies from the Trust Account only in the express circumstances described in the Prospectus. For and in consideration of Parent entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Member Representative each hereby agrees on behalf of itself their respective Subsidiaries, and their respective officers, managers, shareholders, members, partners, affiliates, agents and other representatives (collectively, “Representatives”), that, notwithstanding anything to the contrary in this Agreement, none of the Company, the Member Representative nor any of their respective Representatives does now or shall at any time hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement or any proposed or actual business relationship between Parent or any of its Representatives, on the one hand, and, the Company, the Member Representative or any of their respective Representatives, on the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Claims”). The Company and the Member Representative each, on its own behalf and on behalf of its Representatives, hereby irrevocably waives any Claims they have or may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with Parent and will not seek recourse against the Trust Account or any funds distributed therefrom as a result of, or arising out of, this Agreement and any negotiations, Contracts or agreements with Parent for any reason whatsoever; provided, that (x) nothing herein shall serve to limit or prohibit the Company’s and its Representatives’ right to pursue a claim against Parent for legal relief against monies or other assets held outside the Trust Account or for specific performance or other equitable relief (including a claim for Parent to specifically perform its obligations under this Agreement and a claim for Parent to specifically perform its obligations under the Trust Agreement, including distribution of funds from the Trust Account upon the Closing in accordance with the terms of this Agreement (after giving effect to the Parent Common Stockholder Redemption Election)), and (y) nothing herein shall serve to limit or prohibit any claims that the Company or its Representatives may have in the future against Parent’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds). This Section 9.18 shall survive the termination of this Agreement and will not expire and may not be altered in any way prior to the Closing without the express written consent of Parent.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to be duly executed as of the day and year first above

 

  PARENT:
   
  ROMAN DBDR TECH ACQUISITION CORP.
   
  /s/ Donald Basile
  By: Dr. Donald Basile
  Title: Co-Chief Executive Officer
   
  MERGER SUB:
   
  ROMAN PARENT MERGER SUB, LLC
   
  /s/ Donald Basile
  By: Dr. Donald Basile
  Title: Managing Member
   
  COMPANY:
   
  COMPOSECURE HOLDINGS, L.L.C.
   
  /s/ Jonathan Wilk
  By: Jonathan C. Wilk
  Title: Chief Executive Officer
   
  MEMBER REPRESENTATIVE:
   
  LLR Equity Partners IV, L.P.
   
  /s/ Mitchell Hollin
  By: Mitchell Hollin
  Title: Member

 

[Signature Page to Merger Agreement]

 

 

 

Annex A

 

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

by and among

 

COMPOSECURE, INC.,

 

LLR INVESTORS,

 

MINORITY INVESTORS

 

and

 

ADDITIONAL INVESTORS THAT ARE SIGNATORIES HERETO

 

Dated as of [●], 2021

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
   
Section 1. Certain Definitions 2
Section 2. Registration Rights. 7
2.1. Demand Registrations. 7
2.2. Piggyback Registrations. 12
2.3. Allocation of Securities Included in Registration Statement. 13
2.4. Registration Procedures 16
2.5. Registration Expenses. 24
2.6. Certain Limitations on Registration Rights 24
2.7. Limitations on Sale or Distribution of Other Securities 24
2.8. No Required Sale 25
2.9. Indemnification. 25
2.10. Limitations on Registration of Other Securities; Representation 29
2.11. No Inconsistent Agreements 29
2.12. Partner Distributions 29
Section 3.  Underwritten Offerings. 29
3.1.  Requested Underwritten Offerings 29
3.2.  Piggyback Underwritten Offerings 30
Section 4.    General. 30
4.1.    Adjustments Affecting Registrable Securities 30
4.2.    Rule 144 and Rule 144A 30
4.3.    Nominees for Beneficial Owners 31
4.4.    Amendments and Waivers 31
4.5.    Notices 31
4.6.    Successors and Assigns 32
4.7.    Termination. 33
4.8.    Entire Agreement 33
4.9.    Governing Law; Jurisdiction; WAIVER OF JURY TRIAL. 33
4.10.    Interpretation; Construction. 33
4.11.    Counterparts 34
4.12.    Severability 34

 

-xcvi-

 

 

TABLE OF CONTENTS

(continued)

 

    Page
     
4.13.    Specific Enforcement 34
4.14.    Further Assurances 34
4.15.    Confidentiality 35
4.16.    Opt-Out Requests 35
4.17.    Founder Registration Rights Agreement 35

 

Schedule 1  CompoSecure Holders  
Schedule 4.5  Notices  
Exhibit A  Joinder Agreement  

 

-xcxlvii-

 

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of [●], 2021 (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), by and among (i) CompoSecure, Inc., a Delaware corporation formerly known as Roman DBDR Tech Acquisition Corp. (the “Company”), (ii) the LLR Investors (as defined herein), (iii) the CompoSecure Investors (as defined herein), (iv) the Founder Investors (as defined herein) and (v) the parties identified on the signature pages hereto as “Additional Investors” (the CompoSecure Investors, the Founder Investors, the Additional Investors and each Person who executes a Joinder Agreement (as defined herein) and falls under clause (y) in the second paragraph of the Joinder Agreement, collectively the “Minority Investors”), in each case, if such Holder is a signatory to the Shareholders Agreement (as defined herein) together with such Holder’s Permitted Transferees (as defined in the Shareholders Agreement).

 

RECITALS:

 

WHEREAS, the Company, Roman Parent Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”), CompoSecure Holdings, L.L.C., a Delaware limited liability company (“CompoSecure”), and LLR Equity Partners IV, L.P., a Delaware limited partnership, have entered into an Agreement and Plan of Merger, dated as of April 19, 2021 (as amended from time to time on or prior to the date hereof, the “Merger Agreement”), pursuant to which Merger Sub merged with and into CompoSecure with CompoSecure continuing as the surviving entity and an indirect subsidiary of the Company (the “Merger”);

 

WHEREAS, the Company and the Founder are parties to that certain Registration and Shareholder Rights Agreement, dated as of November 5, 2020 (the “Founder Registration Rights Agreement”), which shall be amended and restated by this Agreement;

 

WHEREAS, as of or immediately following the closing of the Merger (the “Closing”), the Founder Investors and the Additional Investors beneficially owned shares of Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), and the LLR Investors and the CompoSecure Investors beneficially owned shares of Class B Common Stock, par value $0.0001 per share (the “Class B Common Stock”), of the Company;

 

WHEREAS, as of or immediately following the Closing, the LLR Investors and the CompoSecure Investors beneficially owned Class B Units of CompoSecure, and are parties to that certain Exchange Agreement, dated as of the date hereof, that provides for the exchange from time to time of such Class B Units of CompoSecure, and the surrender of shares of Class B Common Stock for cancellation, for cash or for shares of Class A Common Stock on the terms and subject to the conditions set forth therein;

 

WHEREAS, the Company, the LLR Investors and the Minority Investors are parties to that certain Stockholders Agreement, dated as of the date hereof (as amended, modified or supplemented from time to time, the “Shareholders Agreement”), establishing and setting forth their agreement with respect to certain rights and obligations associated with the ownership of shares of capital stock of the Company; and

 

WHEREAS, in connection with the Merger, the Company has agreed to provide the registration rights set forth in this Agreement.

 

 

 

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, the parties hereto hereby agree as follows:

 

Section 1.               Certain Definitions. As used herein, the following terms shall have the following meanings:

 

Additional Investors” has the meaning ascribed to such term in the Preamble.

 

Additional Piggyback Rights” has the meaning ascribed to such term in Section 2.2(b).

 

Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with, such Person. For the purposes of this definition “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), 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 such specified Person, whether through the ownership of voting securities (the ownership of more than fifty percent (50%) of the voting securities of an entity shall for purposes of this definition be deemed to be “control”), by contract or otherwise. For the avoidance of doubt, neither the Company nor any Person controlled by the Company shall be deemed to be an Affiliate of any Holder.

 

Agreement” has the meaning ascribed to such term in the Preamble.

 

automatic shelf registration statement” has the meaning ascribed to such term in Section 2.4.

 

Board” means the Board of Directors of the Company.

 

Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

 

Claims” has the meaning ascribed to such term in Section 2.9(a).

 

Class A Common Stock” has the meaning ascribed to such term in the recitals.

 

Class A Common Stock Equivalents” means, with respect to the Company, all options, warrants and other securities convertible into, or exchangeable or exercisable for (at any time or upon the occurrence of any event or contingency and without regard to any vesting or other conditions to which such securities may be subject), shares of Class A Common Stock (including any note or debt security convertible into or exchangeable for shares of Class A Common Stock).

 

Class B Common Stock” has the meaning ascribed to such term in the recitals.

 

Common Stock” means all shares existing or hereafter authorized of the Class A Common Stock and Class B Common Stock, and any class of common stock of the Company and any and all securities of any kind whatsoever which may be issued after the date hereof in respect of, or in exchange for, such shares of common stock of the Company pursuant to a merger, consolidation, stock split, stock dividend or recapitalization of the Company or otherwise.

 

2

 

 

Company” has the meaning ascribed to such term in the Preamble and, for purposes of this Agreement, such term shall include any Subsidiary or parent company of CompoSecure, Inc. formerly known as Roman DBDR Tech Acquisition Corp. and any successor to CompoSecure, Inc. formerly known as Roman DBDR Tech Acquisition Corp.

 

CompoSecure” has the meaning ascribed to such term in the recitals.

 

CompoSecure Holders” means each holder on Schedule 1 attached hereto.

 

CompoSecure Investors” means (i) the CompoSecure Holders, (ii) any general or limited partnership, corporation or limited liability company having as a general partner, controlling equity holder or managing member (whether directly or indirectly) a Person who is a member of certain former members of CompoSecure or an Affiliate of any such Person and (iii) any successor or permitted assign or transferee of any of the foregoing.

 

Confidential Information” has the meaning ascribed to such term in Section 4.15.

 

Demand Exercise Notice” has the meaning ascribed to such term in Section 2.1(b)(i).

 

Demand Registration” has the meaning ascribed to such term in Section 2.1(b)(i).

 

Demand Registration Period” has the meaning ascribed to such term in Section 2.1(b)(i).

 

Demand Registration Request” has the meaning ascribed to such term in Section 2.1(b)(i).

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC issued under such Act, as they may from time to time be in effect.

 

Expenses” means any and all fees and expenses incident to the Company’s performance of or compliance with Section 2, including: (i) SEC, stock exchange, FINRA and all other registration and filing fees and all listing fees and fees with respect to the inclusion of securities on the Nasdaq or on any other U.S. or non-U.S. securities market on which the Registrable Securities are listed or quoted, (ii) fees and expenses of compliance with state securities or “blue sky” laws of any state or jurisdiction of the United States or compliance with the securities laws of foreign jurisdictions and in connection with the preparation of a “blue sky” survey, including reasonable fees and expenses of outside “blue sky” counsel and securities counsel in foreign jurisdictions, (iii) word processing, printing and copying expenses, (iv) messenger and delivery expenses, (v) expenses incurred in connection with any road show, (vi) fees and disbursements of counsel for the Company, (vii) with respect to each registration or underwritten offering, the reasonable fees and disbursements of one counsel for the Initiating Holder and one counsel for all other Participating Holder(s) collectively (selected by the holders of a majority of the Registrable Securities held by such other Participating Holder(s)), together in each case with any local counsel, provided that expenses payable by the Company pursuant to this clause (vii) shall not exceed (1) $150,000 for the first registration pursuant to this Agreement and (2) $100,000 for each subsequent registration, (viii) fees and disbursements of all independent public accountants (including the expenses of any opinion and/or audit/review and/or “comfort” letter and updates thereof) and fees and expenses of other Persons, including special experts, retained by the Company, (ix) fees and expenses payable to a Qualified Independent Underwriter (but expressly excluding any underwriting discounts and commissions), (x) fees and expenses of any transfer agent or custodian, (xi) any other fees and disbursements of underwriters, if any, customarily paid by issuers or sellers of securities, including reasonable fees and expenses of counsel for the underwriters in connection with any filing with or review by FINRA (but expressly excluding any underwriting discounts and commissions) and (xii) rating agency fees and expenses.

 

3

 

 

FINRA” means the Financial Industry Regulatory Authority, Inc.

 

Founder” means Roman DBDR Tech Sponsor LLC, a Delaware limited liability company.

 

Founder Investors” means (i) the Founder, (ii) any general or limited partnership, corporation or limited liability company having as a general partner, controlling equity holder or managing member (whether directly or indirectly) a Person who is a member of the parties to the Founder Registration Rights Agreement or an Affiliate of any such Person and (iii) any successor or permitted assign or transferee of any of the foregoing; provided, that for the avoidance of doubt, for purposes of this definition neither “Founder Investor” nor any Affiliate thereof shall include any portfolio company of the Founder or any of its Affiliates.

 

Founder Registration Rights Agreement” has the meaning ascribed to such term in the recitals.

 

Holder” or “Holders” means (1) any Person who is a signatory to this Agreement or (2) any permitted transferee of Registrable Securities to whom any Person who is a signatory to this Agreement shall assign or transfer any rights hereunder, provided that such transferee has agreed in writing to be bound by the terms of this Agreement in respect of such Registrable Securities.

 

Initiating Holders” has the meaning ascribed to such term in Section 2.1(b)(i).

 

Joinder Agreement” means a writing in the form set forth in Exhibit A hereto whereby a Permitted Transferee (as defined under the Shareholders Agreement) or new Holder of Registrable Securities becomes a party to, and agrees to be bound, to the same extent as its transferor, as applicable, by the terms of this Agreement.

 

LLR” means LLR Equity Partners IV, L.P., a Delaware limited partnership, and LLR Equity Partners Parallel IV, L.P., a Delaware limited partnership.

 

LLR Investors” means (i) LLR, (ii) any general or limited partnership, corporation or limited liability company having as a general partner, controlling equity holder or managing member (whether directly or indirectly) a Person who is a member of LLR or an Affiliate of any such Person and (iii) any successor or permitted assign or transferee of any of the foregoing; provided, that for the avoidance of doubt, for purposes of this definition neither “LLR Investor” nor any Affiliate thereof shall include any portfolio company of LLR or any of its Affiliates.

 

Majority Participating Holders” means Participating Holders holding more than 50% of the Registrable Securities proposed to be included in any offering of Registrable Securities by such Participating Holders pursuant to Section 2.1 or Section 2.2.

 

4

 

 

Manager” has the meaning ascribed to such term in Section 2.1(d).

 

Merger Agreement” has the meaning ascribed to such term in the Recitals.

 

Merger Sub” has the meaning ascribed to such term in the Recitals.

 

Minimum Threshold” means $25.0 million.

 

Opt-Out Request” has the meaning ascribed to such term in Section 4.16.

 

Participating Holders” means all Holders of Registrable Securities which are proposed to be included in any offering of Registrable Securities pursuant to Section 2.1 or Section 2.2.

 

Partner Distribution” has the meaning ascribed to such term in Section 2.1(b)(ii).

 

Person” means any individual, firm, corporation, company, limited liability company, partnership, trust, joint stock company, business trust, incorporated or unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.

 

Piggyback Notice” has the meaning ascribed to such term in Section 2.2(a).

 

Piggyback Shares” has the meaning ascribed to such term in Section 2.3(a)(ii).

 

Postponement Period” has the meaning ascribed to such term in Section 2.1(c).

 

Qualified Independent Underwriter” means a “qualified independent underwriter” within the meaning of FINRA Rule 5121.

 

Registrable Securities” means (a) any shares of Class A Common Stock held by the Holders at any time (including those held as a result of, or issuable upon, the conversion or exercise of Class A Common Stock Equivalents) or any other equity security (including warrants to purchase shares of Class A Common Stock), whether now owned or acquired by the Holders at a later time, (b) any shares of Class A Common Stock or any other equity security (including warrants to purchase shares of Class A Common Stock) issued or issuable, directly or indirectly, in exchange for or with respect to the Class A Common Stock or any other equity security (including warrants to purchase shares of Class A Common Stock) referenced in clause (a) above by way of stock dividend, stock split or combination of shares or in connection with a reclassification, recapitalization, merger, share exchange, consolidation or other reorganization and (c) any securities issued in replacement of or exchange for any securities described in clause (a) or (b) above. For purposes of this Agreement, a Person will be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire, directly or indirectly, such Registrable Securities (including upon conversion, exercise or exchange of any equity interests but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall not be required to convert, exercise or exchange such equity interests (or otherwise acquire such Registrable Securities) to participate in any registered offering hereunder until the closing of such offering. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (A) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (B) such securities shall have been disposed of in compliance with the requirements of Rule 144, (C) such securities have been sold in a public offering of securities or (D) such securities have ceased to be outstanding.

 

5

 

 

Rule 144” and “Rule 144A” have the meaning ascribed to such term in Section 4.2.

 

SEC” means the U.S. Securities and Exchange Commission or such other federal agency which at such time administers the Securities Act.

 

Section 2.3(a) Sale Number” has the meaning ascribed to such term in Section 2.3(a).

 

Section 2.3(b) Sale Number” has the meaning ascribed to such term in Section 2.3(b).

 

Section 2.3(c) Sale Number” has the meaning ascribed to such term in Section 2.3(c).

 

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC issued under such Act, as they may from time to time be in effect.

 

Shareholders Agreement” has the meaning ascribed to such term in the Recitals.

 

Shelf Registrable Securities” has the meaning ascribed to such term in Section 2.1(a)(ii).

 

Shelf Registration Statement” has the meaning ascribed to such term in Section 2.1(a)(i).

 

Shelf Underwriting” has the meaning ascribed to such term in Section 2.1(a)(ii).

 

Shelf Underwriting Initiating Holders” has the meaning ascribed to such term in Section 2.1(a)(ii).

 

Shelf Underwriting Notice” has the meaning ascribed to such term in Section 2.1(a)(ii).

 

Shelf Underwriting Request” has the meaning ascribed to such term in Section 2.1(a)(ii).

 

Significant Minority Investor” has the meaning ascribed to such term in Section 2.2(e).

 

Subsidiary” means any direct or indirect subsidiary of the Company on the date hereof and any direct or indirect subsidiary of the Company organized or acquired after the date hereof.

 

Underwritten Block Trade” has the meaning ascribed to such term in Section 2.1(a)(iii).

 

Valid Business Reason” has the meaning ascribed to such term in Section 2.1(c).

 

WKSI” means a “well-known seasoned issuer” (as defined in Rule 405 of the Securities Act).

 

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Section 2.                Registration Rights.

 

2.1.           Demand Registrations.

 

(a)           (i) As soon as practicable but no later than forty-five (45) calendar days following the closing of the Merger (the “Filing Date”), the Company shall prepare and file with (or confidentially submit to) the SEC a shelf registration statement under Rule 415 of the Securities Act (such registration statement, a “Shelf Registration Statement”) covering the resale of all the Registrable Securities (determined as of two business days prior to such filing) on a delayed or continuous basis and shall use its commercially reasonable efforts to have such Shelf Registration Statement declared effective as soon as practicable after the filing thereof and no later than the earlier of (x) the ninetieth (90th) calendar day following the Filing Date if the Commission notifies the Company that it will “review” the Shelf Registration Statement and (y) the tenth (10th) business day after the date the Company is notified in writing by the SEC that such Shelf Registration Statement will not be “reviewed” or will not be subject to further review. Such Shelf Registration Statement shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. The Company shall maintain the Shelf Registration Statement 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 a Shelf Registration Statement continuously effective, available for use to permit all Holders named therein to sell their Registrable Securities included therein 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 Shelf Registration Statement on Form S-1, the Company shall use its commercially reasonable efforts to convert such Shelf Registration Statement to a Shelf Registration Statement on Form S-3 as soon as practicable after the Company is eligible to use Form S-3. The Company shall, if requested by a Holder, (i) cause the removal of any restrictive legend related to compliance with the federal securities laws set forth on the Registrable Securities, (ii) cause its legal counsel to deliver an opinion, if necessary, to the transfer agent in connection with the instruction under subclause (i) to the effect that removal of such legends in such circumstances may be effected in compliance under the Securities Act, and (iii) issue Registrable Securities without any such legend in certificated or book-entry form or by electronic delivery through The Depository Trust Company, at the Holder’s option, within two (2) Business Days of such request, if (A) the Registrable Securities are registered for resale under the Securities Act, and the Holder has sold or proposes to sell such Registrable Securities pursuant to such registration, (B) the Registrable Securities may be sold by the Holder without restriction under Rule 144, including without limitation, any volume and manner of sale restrictions and without the requirement for the Company to be in compliance with the current public information required under Rule 144(c)(2) (or Rule 144(i)(2), if applicable), or (C) the Holder has sold or transferred, or proposes to sell or transfer within five (5) Business Days of such request, Registrable Securities pursuant to the Registration Statement or in compliance with Rule 144. The Company’s obligation to remove legends under this Section 2.1(a)(i) may be conditioned upon the Holder providing such representations and documentation as are reasonably necessary and customarily required in connection with the removal of restrictive legends related to compliance with the federal securities laws.

 

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(ii)           Subject to Section 2.1(c), each LLR Investor and each Founder Investor shall have the unlimited right at any time and from time to time to elect to sell all or any part (subject to the Minimum Threshold) of its and its Affiliates’ Registrable Securities pursuant to an underwritten offering pursuant to the Shelf Registration Statement by delivering a written request therefor to the Company specifying the number of Registrable Securities to be included in such registration and the intended method of distribution thereof. The LLR Investor(s) or Founder Investor(s) shall make such election by delivering to the Company a written request (a “Shelf Underwriting Request”) for such underwritten offering specifying the number of Registrable Securities that the LLR Investor or Founder Investor desires to sell pursuant to such underwritten offering (the “Shelf Underwriting”). With respect to any Shelf Underwriting Request, the LLR Investor(s) or Founder Investor(s) making such demand for registration shall be referred to as the “Shelf Underwriting Initiating Holders”. As promptly as practicable, but no later than two (2) Business Days after receipt of a Shelf Underwriting Request, the Company shall give written notice (the “Shelf Underwriting Notice”) of such Shelf Underwriting Request to the Holders of record of other Registrable Securities registered on such Shelf Registration Statement (“Shelf Registrable Securities”). The Company, subject to Sections 2.3 and 2.6, shall include in such Shelf Underwriting (x) the Registrable Securities of the Shelf Underwriting Initiating Holders and (y) the Shelf Registrable Securities of any other Holder of Shelf Registrable Securities which shall have made a written request to the Company for inclusion in such Shelf Underwriting (which request shall specify the maximum number of Shelf Registrable Securities intended to be disposed of by such Holder) within five (5) days after the receipt of the Shelf Underwriting Notice. The Company shall, as expeditiously as possible (and in any event within fifteen (15) Business Days after the receipt of a Shelf Underwriting Request), but subject to Section 2.1(b), use its reasonable best efforts to effect such Shelf Underwriting. The Company shall, at the request of any Shelf Underwriting Initiating Holder or any other Holder of Registrable Securities registered on such Shelf Registration Statement, file any prospectus supplement or, if the applicable Shelf Registration Statement is an automatic shelf registration statement, any post-effective amendments and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by the Shelf Underwriting Initiating Holders or any other Holder of Shelf Registrable Securities to effect such Shelf Underwriting. Once a Shelf Registration Statement has been declared effective, the Shelf Underwriting Initiating Holders may request, and the Company shall be required to facilitate, subject to Section 2.1(b), an unlimited number of Shelf Underwritings with respect to such Shelf Registration Statement. Notwithstanding anything to the contrary in this Section 2.1(a)(ii), each Shelf Underwriting must include, in the aggregate, Registrable Securities having an aggregate market value of at least the lesser of (a) the Minimum Threshold (based on the Registrable Securities included in such Shelf Underwriting by all Holders participating in such Shelf Underwriting) and (b) the market value of the Shelf Underwriting Initiating Holders’ remaining Registrable Securities, provided that such market value is at least $5.0 million. In connection with any Shelf Underwriting (including an Underwritten Block Trade), the Shelf Underwriting Initiating Holders shall have the right to designate the Manager and each other managing underwriter in connection with any such Shelf Underwriting or Underwritten Block Trade; provided that in each case, each such underwriter is reasonably satisfactory to the Company, which approval shall not be unreasonably withheld or delayed.

 

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(iii)           Notwithstanding the foregoing, if a Shelf Underwriting Initiating Holder wishes to engage in an underwritten block trade or similar transaction or other transaction with a 2-day or less marketing period (collectively, “Underwritten Block Trade”) off of a Shelf Registration Statement (either through filing an automatic shelf registration statement or through a take-down from an already effective Shelf Registration Statement), then notwithstanding the foregoing time periods, such Shelf Underwriting Initiating Holder only needs to notify (x) the Company and (y) the LLR Investor(s) or the Founder Investor(s) (whichever is not the Shelf Underwriting Initiating Holder) of the Underwritten Block Trade two (2) Business Days prior to the day such offering is to commence, and the Holders of record of other Registrable Securities (other than the LLR Investor(s) or the Founder Investor(s)) shall not be entitled to notice of such Underwritten Block Trade and shall not be entitled to participate in such Underwritten Block Trade; provided, however, that the Shelf Underwriting Initiating Holder requesting such Underwritten Block Trade shall use commercially reasonable efforts to work with the Company and the underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Underwritten Block Trade.

 

(b)           (i) At any time that a Shelf Registration Statement provided for in Section 2.1(a) is not available for use by the Holders following such Shelf Registration Statement being declared effective by the SEC (a “Demand Registration Period”), subject to this Section 2.1(b) and Sections 2.1(c) and 2.3, at any time and from time to time during such Demand Registration Period, each LLR Investor and each Founder Investor shall have the right to require the Company to effect one or more registration statements under the Securities Act covering all or any part (subject to the Minimum Threshold) of its and its Affiliates’ Registrable Securities by delivering a written request therefor to the Company specifying the number of Registrable Securities to be included in such registration and the intended method of distribution thereof. Any such request by any LLR Investor or Founder Investor pursuant to this Section 2.1(b)(i) is referred to herein as a “Demand Registration Request,” and the registration so requested is referred to herein as a “Demand Registration” (with respect to any Demand Registration, the LLR Investor(s) or Founder Investor(s) making such demand for registration being referred to as the “Initiating Holders”). Subject to Section 2.1(c), the LLR Investors and Founder Investors shall be entitled to request (and the Company shall be required to effect) an unlimited number of Demand Registrations. The Company shall give written notice (the “Demand Exercise Notice”) of such Demand Registration Request to each of the Holders of record of Registrable Securities as promptly as practicable but no later than two (2) Business Days after receipt of the Demand Registration Request. The Company, subject to Sections 2.3 and 2.6, shall include in a Demand Registration (x) the Registrable Securities of the Initiating Holders and (y) the Registrable Securities of any other Holder of Registrable Securities which shall have made a written request to the Company for inclusion in such registration pursuant to Section 2.2 (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Participating Holder) within five (5) days following the receipt of any such Demand Exercise Notice.

 

(ii)           The Company shall, as expeditiously as possible, but subject to Section 2.1(c), use its reasonable best efforts to (x) file or confidentially submit with the SEC (no later than (A) sixty (60) days from the Company’s receipt of the applicable Demand Registration Request if the Demand Registration is on Form S-1 or similar long-form registration and or (B) thirty (30) days from the Company’s receipt of the applicable Demand Registration Request if the Demand Registration is on Form S-3 or any similar short-form registration), (y) cause to be declared effective as soon as reasonably practicable such registration statement under the Securities Act that includes the Registrable Securities which the Company has been so requested to register, for distribution in accordance with the intended method of distribution, including a distribution to, and resale by, the members or partners of a Holder (a “Partner Distribution”) and (z) if requested by the Initiating Holders, obtain acceleration of the effective date of the registration statement relating to such registration.

 

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(c)           Notwithstanding anything to the contrary in Section 2.1(a) or Section 2.1(b), the Shelf Underwriting and Demand Registration rights granted in Section 2.1 (a) and 2.1(b) are subject to the following limitations: (i) the Company shall not be required to cause a registration statement filed pursuant to Section 2.1(b) to be declared effective within a period of ninety (90) days after the effective date of any other registration statement of the Company filed pursuant to the Securities Act (other than a Form S-4, Form S-8 or a comparable form or an equivalent registration form then in effect); (ii) the Company shall not be required to effect more than four (4) Demand Registrations on Form S-1 or any similar long-form registration statement at the request of each of the LLR Investors and the Founder Investors (it being understood that if a single Demand Registration Request is delivered by more than one LLR Investor or Founder Investor, as applicable, the registration requested by such Demand Registration Request shall constitute only one Demand Registration); provided, however, that the LLR Investors and the Founder Investors shall be entitled to request an unlimited number of Demand Registrations on Form S-3 or any similar short-form registration; (iii) each registration in respect of a Demand Registration Request made by any Initiating Holder and each Shelf Underwriting Request made by a Shelf Underwriting Initiating Holder must include, in the aggregate, Registrable Securities having an aggregate market value of at least the lesser of (a) the Minimum Threshold (based on the Registrable Securities included in such registration or Shelf Underwriting by all Holders participating in such registration) and (b) the market value of the Initiating Holder’s remaining Registrable Securities, provided that such market value is at least $5.0 million; and (iv) if the Board, in its good faith judgment, determines that any registration of Registrable Securities or Shelf Underwriting should not be made or continued because it would materially and adversely interfere with any existing or potential financing, acquisition, corporate reorganization, merger, share exchange or other transaction or event involving the Company or any of its subsidiaries or would otherwise result in the public disclosure of information that the Board in good faith has a bona fide business purpose for keeping confidential (a “Valid Business Reason”), then (x) the Company may postpone filing or confidentially submitting a registration statement relating to a Demand Registration Request or a prospectus supplement relating to a Shelf Underwriting Request until five (5) Business Days after such Valid Business Reason no longer exists, but in no event for more than forty five (45) days after the date the Board determines a Valid Business Reason exists or (y) if a registration statement has been filed or confidentially submitted relating to a Demand Registration Request or a prospectus supplement has been filed relating to a Shelf Underwriting Request, if the Valid Business Reason has not resulted in whole or in part from actions taken or omitted to be taken by the Company (other than actions taken or omitted with the consent of the Initiating Holder (not to be unreasonably withheld or delayed)), the Company may, to the extent determined in the good faith judgment of the Board to be reasonably necessary to avoid interference with any of the transactions described above, suspend use of or, if required by the SEC, cause such registration statement to be withdrawn and its effectiveness terminated or may postpone amending or supplementing such registration statement until five (5) Business Days after such Valid Business Reason no longer exists, but in no event for more than forty five (45) days after the date the Board determines a Valid Business Reason exists (such period of postponement or withdrawal under this clause (iv), the “Postponement Period”). The Company shall give written notice to the Initiating Holders or Shelf Underwriting Initiating Holders and any other Holders that have requested registration pursuant to Section 2.2 of its determination to postpone or suspend use of or withdraw a registration statement and of the fact that the Valid Business Reason for such postponement or suspension or withdrawal no longer exists, in each case, promptly after the occurrence thereof; provided, however, that the Company shall not be entitled to more than two (2) Postponement Periods during any twelve (12) month period.

 

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If the Company shall give any notice of postponement or suspension or withdrawal of any registration statement pursuant to clause (c) (iv) above, the Company shall not, during the Postponement Period, register any Class A Common Stock, other than pursuant to a registration statement on Form S-4 or S-8 (or an equivalent registration form then in effect). Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company that the Company has determined to suspend use of, withdraw, terminate or postpone amending or supplementing any registration statement pursuant to clause (c)(iv) above, such Holder will discontinue its disposition of Registrable Securities pursuant to such registration statement. If the Company shall have suspended use of, withdrawn or terminated a registration statement filed under Section 2.1(b)(i) (whether pursuant to clause (c)(iv) above or as a result of any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court), the Company shall not be considered to have effected a Demand Registration for the purposes of this Agreement and such request shall not count as a Demand Registration Request under this Agreement until the Company shall have permitted use of such suspended registration statement or filed a new registration statement covering the Registrable Securities covered by the withdrawn or terminated registration statement and such registration statement shall have been declared effective and shall not have been withdrawn. If the Company shall give any notice of suspension, withdrawal or postponement of a registration statement, the Company shall, not later than five (5) Business Days after the Valid Business Reason that caused such suspension, withdrawal or postponement no longer exists (but, with respect to a suspension, withdrawal or postponement pursuant to clause (c)(iv) above, in no event later than forty five (45) days after the date of the suspension, postponement or withdrawal), as applicable, permit use of such suspended registration statement or use its reasonable best efforts to effect the registration under the Securities Act of the Registrable Securities covered by the withdrawn or postponed registration statement in accordance with this Section 2.1 (unless the Initiating Holders or Shelf Underwriting Initiating Holders shall have withdrawn such request, in which case the Company shall not be considered to have effected a Demand Registration for the purposes of this Agreement and such request shall not count as a Demand Registration Request under this Agreement), and following such permission or such effectiveness such registration shall no longer be deemed to be suspended, withdrawn or postponed pursuant to clause (iv) of Section 2.1(c) above.

 

(d)           In connection with any Demand Registration, the Initiating Holder shall have the right to designate the lead managing underwriter (any lead managing underwriter for the purposes of this Agreement, the “Manager”) in connection with any underwritten offering pursuant to such registration and each other managing underwriter for any such underwritten offering; provided that in each case, each such underwriter is reasonably satisfactory to the Company, which approval shall not be unreasonably withheld or delayed.

 

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(e)           No Demand Registration shall be deemed to have occurred for purposes of Section 2.1(b) (i) if the registration statement relating thereto (x) does not become effective, (y) is not maintained effective for a period of at least one hundred eighty (180) days after the effective date thereof or such shorter period during which all Registrable Securities included in such Registration Statement have actually been sold (provided, however, that such period shall be extended for a period of time equal to the period any Holder of Registrable Securities refrains from selling any securities included in such Registration Statement at the request of the Company or an underwriter of the Company), or (z) is subject to a stop order, injunction, or similar order or requirement of the SEC during such period, (ii) for each Initiating Holder, if less than seventy five percent (75%) of the Registrable Securities requested by such Initiating Holder to be included in such Demand Registration are not so included pursuant to Section 2.3, (iii) if the method of disposition is a firm commitment underwritten public offering and less than seventy five percent (75%) of the applicable Registrable Securities have not been sold pursuant thereto (excluding any Registrable Securities included for sale in the underwriters’ overallotment option) or (iv) if the conditions to closing specified in any underwriting agreement, purchase agreement or similar agreement entered into in connection with the registration relating to such request are not satisfied (other than as a result of a default or breach thereunder by such Initiating Holder(s) or its Affiliates or are otherwise waived by such Initiating Holder(s)).

 

(f)           Any Initiating Holder may withdraw or revoke a Demand Registration Request delivered by such Initiating Holder at any time prior to the effectiveness of such Demand Registration by giving written notice to the Company of such withdrawal or revocation and such Demand Registration shall have no further force or effect and such request shall not count as a Demand Registration Request under this Agreement.

 

2.2.           Piggyback Registrations.

 

(a)           If the Company proposes or is required (pursuant to Section 2.1 or otherwise) to register any of its equity securities for its own account or for the account of any other shareholder under the Securities Act (other than pursuant to registrations on Form S-4 or Form S-8 or any similar successor forms thereto), the Company shall give written notice (the “Piggyback Notice”) of its intention to do so to each of the Holders of record of Registrable Securities, at least five (5) Business Days prior to the filing of any registration statement under the Securities Act. Upon the written request of any such Holder, made within five (5) days following the receipt of any such Piggyback Notice (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder and the intended method of distribution thereof), the Company shall, subject to Sections 2.2(c), 2.3 and 2.6 hereof, use its reasonable best efforts to cause all such Registrable Securities, the Holders of which have so requested the registration thereof, to be registered under the Securities Act with the securities which the Company at the time proposes to register to permit the sale or other disposition by the Holders (in accordance with the intended method of distribution thereof) of the Registrable Securities to be so registered, including, if necessary, by filing with the SEC a post-effective amendment or a supplement to the registration statement filed by the Company or the prospectus related thereto. There is no limitation on the number of such piggyback registrations which the Company is obligated to effect pursuant to the preceding sentence. No registration of Registrable Securities effected under this Section 2.2(a) shall relieve the Company of its obligations to effect Demand Registrations under Section 2.1 hereof. For the avoidance of doubt, this Section 2.2 shall not apply to any Underwritten Block Trade.

 

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(b)           The Company, subject to Sections 2.3 and 2.6, may elect to include in any registration statement filed pursuant to Section 2.1, (i) authorized but unissued shares of Class A Common Stock or shares of Class A Common Stock held by the Company as treasury shares and (ii) any other shares of Class A Common Stock which are requested to be included in such registration pursuant to the exercise of piggyback registration rights granted by the Company after the date hereof and which are not inconsistent with the rights granted in, or otherwise conflict with the terms of, this Agreement (“Additional Piggyback Rights”); provided, however, that, with respect to any underwritten offering, including an Underwritten Block Trade, such inclusion shall be permitted only to the extent that it is pursuant to, and subject to, the terms of the underwriting agreement or arrangements, if any, entered into by the Initiating Holders or the Majority Participating Holders in such underwritten offering.

 

(c)           Other than in connection with a Demand Registration or a Shelf Underwriting, at any time after giving a Piggyback Notice and prior to the effective date of the registration statement filed in connection with such registration, if the Company shall determine for any reason not to register or to delay registration of such equity securities, the Company may, at its election, give written notice of such determination to all Holders of record of Registrable Securities and (x) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such abandoned registration, without prejudice, however, to the rights of Holders under Section 2.1, and (y) in the case of a determination to delay such registration of its equity securities, shall be permitted to delay the registration of such Registrable Securities for the same period as the delay in registering such other equity securities.

 

(d)           Any Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any registration statement pursuant to this Section 2.2 by giving written notice to the Company of its request to withdraw; provided, however, that such request must be made in writing prior to the earlier of the execution by such Holder of the underwriting agreement or the execution by such Holder of the custody agreement with respect to such registration or as otherwise required by the underwriters.

 

(e)           Notwithstanding Section 2.2(a), if either the LLR Investors or the Founder Investor(s) (the “Block Trade Initiating Holder”) wishes to engage in an Underwritten Block Trade off of a Shelf Registration Statement (either through filing an automatic shelf registration statement or through a take-down from an already existing Shelf Registration Statement), then notwithstanding the foregoing time periods, such LLR Investors or Founder Investor(s) only need to notify the Company of the Underwritten Block Trade two (2) Business Days prior to the day such offering is to commence and the Company shall notify the LLR Investors or the Founder Investor(s) (whichever is not the Block Trade Initiating Holder, the “Non-Initiating Holder”) and any Minority Investor that owns 1% or more of the then-outstanding Class A Common Stock (each, a “Significant Minority Investor”) on the same day and the Non-Initiating Holder and such Significant Minority Investors must elect whether or not to participate by the next Business Day (i.e., one (1) Business Day prior to the day such offering is to commence), and the Company shall as expeditiously as possible use its reasonable best efforts to facilitate such Shelf Underwriting (which may close as early as two (2) Business Days after the date it commences); provided, however, that the Block Trade Initiating Holder shall use commercially reasonable efforts to work with the Company and the underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Underwritten Block Trade. In the event a Block Trade Initiating Holder requests such an Underwritten Block Trade, notwithstanding anything to the contrary in Section 2.1 or in this Section 2.2, any other Holder who does not constitute a Non-Initiating Holder or a Significant Minority Investor shall have no right to notice of or to participate in such Underwritten Block Trade at any time.

 

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2.3.           Allocation of Securities Included in Registration Statement.

 

(a)           If any requested registration or offering made pursuant to Section 2.1 (including a Shelf Underwriting) involves an underwritten offering and the Manager of such offering shall advise the Company in good faith that, in its view, the number of securities requested to be included in such underwritten offering by the Holders of Registrable Securities, the Company or any other Persons exercising Additional Piggyback Rights exceeds the largest number of securities (the “Section 2.3(a) Sale Number”) that can be sold in an orderly manner in such underwritten offering within a price range acceptable to the Initiating Holders and the Majority Participating Holders, the Company shall include in such underwritten offering:

 

(i)           first, all Registrable Securities requested to be included in such underwritten offering by the Holders thereof (including pursuant to the exercise of piggyback rights pursuant to Section 2.2); provided, however, that if the number of such Registrable Securities exceeds the Section 2.3(a) Sale Number, the number of such Registrable Securities (not to exceed the Section 2.3(a) Sale Number) to be included in such underwritten offering shall be allocated on a pro rata basis among all Holders (including each Initiating Holder) requesting that Registrable Securities be included in such underwritten offering (including pursuant to the exercise of piggyback rights pursuant to Section 2.2), based on the number of Registrable Securities then owned by each such Holder requesting inclusion in relation to the aggregate number of Registrable Securities owned by all Holders requesting inclusion;

 

(ii)           second, to the extent that the number of Registrable Securities to be included pursuant to clause (i) of this Section 2.3(a) is less than the Section 2.3(a) Sale Number, any securities that the Company proposes to register for its own account, up to the Section 2.3(a) Sale Number; and

 

(iii)           third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(a) is less than the Section 2.3(a) Sale Number, the remaining securities to be included in such underwritten offering shall be allocated on a pro rata basis among all Persons requesting that securities be included in such underwritten offering pursuant to the exercise of Additional Piggyback Rights (“Piggyback Shares”), based on the aggregate number of Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(a) Sale Number.

 

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Notwithstanding anything in this Section 2.3(a) to the contrary, no employee stockholder of the Company will be entitled to include Registrable Securities in an underwritten offering requested by the Initiating Holders or a Shelf Underwriting requested by the Shelf Underwriting Initiating Holders pursuant to Section 2.1 to the extent that the Manager of such underwritten offering shall determine in good faith that the participation of such employee stockholder would adversely affect the marketability of the securities being sold by the Initiating Holders or Shelf Underwriting Initiating Holders in such underwritten offering.

 

(b)           If any registration or offering made pursuant to Section 2.2 involves an underwritten primary offering on behalf of the Company and the Manager shall advise the Company that, in its view, the number of securities requested to be included in such underwritten offering by the Holders of Registrable Securities, the Company or any other Persons exercising Additional Piggyback Rights exceeds the largest number of securities (the “Section 2.3(b) Sale Number”) that can be sold in an orderly manner in such underwritten offering within a price range acceptable to the Company, the Company shall include in such underwritten offering:

 

(i)           first, all equity securities that the Company proposes to register for its own account;

 

(ii)           second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(b) is less than the Section 2.3(b) Sale Number, the remaining Registrable Securities to be included in such underwritten offering shall be allocated on a pro rata basis among all Holders requesting that Registrable Securities be included in such underwritten offering pursuant to the exercise of piggyback rights pursuant to Section 2.2(a), based on the aggregate number of Registrable Securities then owned by each such Holder requesting inclusion in relation to the aggregate number of Registrable Securities owned by all Holders requesting inclusion, up to the Section 2.3(b) Sale Number; and

 

(iii)           third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(b) is less than the Section 2.3(b) Sale Number, the remaining securities to be included in such underwritten offering shall be allocated on a pro rata basis among all Persons requesting that Piggyback Shares be included in such underwritten offering pursuant to the exercise of Additional Piggyback Rights, based on the aggregate number of Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(b) Sale Number.

 

(c)           If any registration pursuant to Section 2.2 involves an underwritten offering that was initially requested by any Person(s) (other than a Holder) to whom the Company has granted registration rights which are not inconsistent with the rights granted in, and do not otherwise conflict with the terms of, this Agreement and the Manager shall advise the Company that, in its view, the number of securities requested to be included in such underwritten offering exceeds the largest number of securities (the “Section 2.3(c) Sale Number”) that can be sold in an orderly manner in such underwritten offering within a price range acceptable to the Company, the Company shall include in such underwritten offering:

 

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(i)           first, the shares requested to be included in such underwritten offering shall be allocated on a pro rata basis among such Person(s) requesting the registration and all Holders requesting that Registrable Securities be included in such underwritten offering pursuant to the exercise of piggyback rights pursuant to Section 2.2(a), based on the aggregate number of securities or Registrable Securities, as applicable, then owned by each of the foregoing requesting inclusion in relation to the aggregate number of securities or Registrable Securities, as applicable, owned by all such Persons and Holders requesting inclusion, up to the Section 2.3(c) Sale Number;

 

(ii)           second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(c) is less than the Section 2.3(c) Sale Number, the remaining securities to be included in such underwritten offering shall be allocated on a pro rata basis among all Persons requesting that Piggyback Shares be included in such underwritten offering pursuant to the exercise of Additional Piggyback Rights, based on the aggregate number of Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(c) Sale Number; and

 

(iii)           third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(c) is less than the Section 2.3(c) Sale Number, any equity securities that the Company proposes to register for its own account, up to the Section 2.3(c) Sale Number.

 

(d)           If, as a result of the proration provisions set forth in clauses (a), (b) or (c) of this Section 2.3, any Holder shall not be entitled to include all Registrable Securities in an underwritten offering that such Holder has requested be included, such Holder may elect to withdraw such Holder’s request to include Registrable Securities in the registration to which such underwritten offering relates or may reduce the number requested to be included; provided, however, that (x) such request must be made in writing prior to the earlier of such Holder’s execution of the underwriting agreement or such Holder’s execution of the custody agreement with respect to such registration and (y) such withdrawal or reduction shall be irrevocable and, after making such withdrawal or reduction, such Holder shall no longer have any right to include Registrable Securities in the registration as to which such withdrawal or reduction was made to the extent of the Registrable Securities so withdrawn or reduced.

 

2.4.           Registration Procedures. If and whenever the Company is required by the provisions of this Agreement to effect or cause the registration of and/or participate in any offering or sale of any Registrable Securities under the Securities Act as provided in this Agreement (or use reasonable best efforts to accomplish the same), the Company shall, as expeditiously as possible:

 

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(a)           prepare and file all filings with the SEC and FINRA required for the consummation of the offering, including preparing and filing with the SEC a registration statement on an appropriate registration form of the SEC for the disposition of such Registrable Securities in accordance with the intended method of disposition thereof (including a Partner Distribution), which registration form (i) shall be selected by the Company (except as provided for in a Demand Registration Request) and (ii) shall, in the case of a shelf registration, be available for the sale of the Registrable Securities by the selling Holders thereof and such registration statement shall comply as to form in all material respects with the requirements of the applicable registration form and include all financial statements required by the SEC to be filed therewith, and the Company shall use its reasonable best efforts to cause such registration statement to become effective and remain continuously effective for such period as required by this Agreement (provided, however, that as far in advance as reasonably practicable before filing a registration statement or prospectus or any amendments or supplements thereto, or comparable statements under securities or state “blue sky” laws of any jurisdiction, or any free writing prospectus related thereto, the Company will furnish to the Holders participating in the planned offering and to the Manager, if any, copies of all such documents proposed to be filed (including all exhibits thereto), which documents will be subject to their reasonable review and reasonable comment and the Company shall not file any registration statement or amendment thereto, any prospectus or supplement thereto or any free writing prospectus related thereto to which the Initiating Holders, the Majority Participating Holders or the underwriters, if any, shall reasonably object); provided, however, that, notwithstanding the foregoing, in no event shall the Company be required to file any document with the SEC which in the view of the Company or its counsel contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make any statement therein not misleading;

 

(b)           (i) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith and such free writing prospectuses and Exchange Act reports as may be necessary to keep such registration statement continuously effective for such period as required by this Agreement and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities covered by such registration statement, and any prospectus so supplemented to be filed pursuant to Rule 424 under the Securities Act, in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement and (ii) provide notice to such sellers of Registrable Securities and the Manager, if any, of the Company’s reasonable determination that a post-effective amendment to a registration statement would be appropriate;

 

(c)           furnish, without charge, to each Participating Holder and each underwriter, if any, of the securities covered by such registration statement such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits), the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, each free writing prospectus utilized in connection therewith, in each case, in conformity with the requirements of the Securities Act, and other documents, as such seller and underwriter may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such seller (the Company hereby consenting to the use in accordance with all applicable laws of each such registration statement (or amendment or post-effective amendment thereto) and each such prospectus (or preliminary prospectus or supplement thereto) or free writing prospectus by each such Participating Holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such registration statement or prospectus);

 

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(d)              use its reasonable best efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or state “blue sky” laws of such jurisdictions as any sellers of Registrable Securities or any managing underwriter, if any, shall reasonably request in writing, and do any and all other acts and things which may be reasonably necessary or advisable to enable such sellers or underwriter, if any, to consummate the disposition of the Registrable Securities in such jurisdictions (including keeping such registration or qualification in effect for so long as such registration statement remains in effect), except that in no event shall the Company be required to qualify to do business as a foreign corporation in any jurisdiction where it would not, but for the requirements of this paragraph (d), be required to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction;

 

(e)              promptly notify each Participating Holder and each managing underwriter, if any: (i) when the registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto, any post-effective amendment to the registration statement or any free writing prospectus has been filed with the SEC and, with respect to the registration statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC or state securities authority for amendments or supplements to the registration statement or the prospectus related thereto or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or state “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose; (v) of the existence of any fact of which the Company becomes aware which results in the registration statement or any amendment thereto, the prospectus related thereto or any supplement thereto, any document incorporated therein by reference, any free writing prospectus or the information conveyed at the time of sale to any purchaser containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statement therein not misleading; and (vi) if at any time the representations and warranties contemplated by any underwriting agreement, securities sale agreement, or other similar agreement, relating to the offering shall cease to be true and correct in all material respects (unless otherwise qualified by materiality in which case such representations and warranties shall cease to be true and correct in all respects); and, if the notification relates to an event described in clause (v), unless the Company has declared that a Postponement Period exists, the Company shall promptly prepare and furnish to each such seller and each underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include 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 in the light of the circumstances under which they were made not misleading;

 

(f)               comply (and continue to comply) with all applicable rules and regulations of the SEC (including maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) in accordance with the Exchange Act), and make generally available to its security holders (including by way of filings with the SEC), as soon as reasonably practicable after the effective date of the registration statement (and in any event within forty-five (45) days, or ninety (90) days if it is a fiscal year, after the end of such twelve month period described hereafter), an earnings statement (which need not be audited) covering the period of at least twelve (12) consecutive months beginning with the first day of the Company’s first calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

 

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(g)               (i) (A) use its reasonable best efforts to cause all such Registrable Securities covered by such registration statement to be listed on the principal securities exchange on which similar securities issued by the Company are then listed, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (B) if no similar securities are then so listed, use its reasonable best efforts to either cause all such Registrable Securities to be listed on a national securities exchange or to secure designation of all such Registrable Securities as a Nasdaq National Market “national market system security” within the meaning of Rule 11Aa2-1 of the Exchange Act or, failing that, secure Nasdaq National Market authorization for such shares and, without limiting the generality of the foregoing, take all actions that may be required by the Company as the issuer of such Registrable Securities in order to facilitate the managing underwriter’s arranging for the registration of at least two market makers as such with respect to such shares with FINRA, and (ii) comply (and continue to comply) with the requirements of any self-regulatory organization applicable to the Company, including all corporate governance requirements;

 

(h)              cause its senior management, officers and employees to participate in, and to otherwise facilitate and cooperate with the preparation of the registration statement and prospectus and any amendments or supplements thereto (including participating in meetings, drafting sessions, due diligence sessions and rating agency presentations) taking into account the Company’s reasonable business needs;

 

(i)                provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such registration statement not later than the effective date of such registration statement and, in the case of any secondary equity offering, provide and enter into any reasonable agreements with a custodian for the Registrable Securities;

 

(j)                enter into such customary agreements (including, if applicable, an underwriting agreement) and take such other actions as the Initiating Holder or the Majority Participating Holders or the underwriters shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (it being understood that the Holders of the Registrable Securities which are to be distributed by any underwriters shall be parties to any such underwriting agreement and may, at their option, require that the Company make for the benefit of such Holders the representations, warranties and covenants of the Company which are being made to and for the benefit of such underwriters);

 

(k)               use its reasonable best efforts (i) to obtain opinions from the Company’s counsel, including local and/or regulatory counsel, and a “comfort” letter and updates thereof from the independent public accountants who have certified the financial statements of the Company (and/or any other financial statements) included or incorporated by reference in such registration statement, in each case, in customary form and covering such matters as are customarily covered by such opinions and “comfort” letters (including, in the case of such “comfort” letter, events subsequent to the date of such financial statements) delivered to underwriters in underwritten public offerings, which opinions and letters shall be dated the dates such opinions and “comfort” letters are customarily dated and otherwise reasonably satisfactory to the underwriters, if any, and (ii) furnish to each Participating Holder and to each underwriter, if any, a copy of such opinions and letters addressed to such underwriter;

 

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(l)               deliver promptly to counsel for the Majority Participating Holders and to each managing underwriter, if any, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the registration statement, and, upon receipt of such confidentiality agreements as the Company may reasonably request, make reasonably available for inspection by counsel for the Majority Participating Holders, by counsel for any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by the Majority Participating Holders or any such underwriter, during regular business hours, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees to supply all information reasonably requested by any such counsel for the Majority Participating Holders, counsel for an underwriter, attorney, accountant or agent in connection with such registration statement;

 

(m)             use its reasonable best efforts to prevent the issuance or obtain the prompt withdrawal of any order suspending the effectiveness of the registration statement, or the prompt lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, in each case, as promptly as reasonably practicable;

 

(n)              provide a CUSIP number for all Registrable Securities, not later than the effective date of the registration statement;

 

(o)               use its reasonable best efforts to make available its senior management for participation in “road shows” and other marketing efforts and otherwise provide reasonable assistance to the underwriters (taking into account the Company’s reasonable business needs and the requirements of the marketing process) in the marketing of Registrable Securities in any underwritten offering;

 

(p)              promptly prior to the filing of any document which is to be incorporated by reference into the registration statement or the prospectus (after the initial filing or confidential submission of such registration statement), and prior to the filing or use of any free writing prospectus, provide copies of such document to counsel for the Majority Participating Holders and to each managing underwriter, if any, and make the Company’s representatives reasonably available for discussion of such document and make such changes in such document concerning the information regarding the Participating Holders contained therein prior to the filing thereof as counsel for the Majority Participating Holders or underwriters may reasonably request (provided, however, that, notwithstanding the foregoing, in no event shall the Company be required to file or confidentially submit any document with the SEC which in the view of the Company or its counsel contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make any statement therein not misleading);

 

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(q)               furnish to counsel for the Majority Participating Holders and to each managing underwriter, without charge, upon request, at least one conformed copy of the registration statement and any post-effective amendments or supplements thereto, including financial statements and schedules, all documents incorporated therein by reference, the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus), any other prospectus and prospectus supplement filed under Rule 424 under the Securities Act and all exhibits (including those incorporated by reference) and any free writing prospectus utilized in connection therewith;

 

(r)               cooperate with the Participating Holders and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement at least two (2) Business Days prior to any sale of Registrable Securities to the underwriters or, if not an underwritten offering, in accordance with the instructions of the Participating Holders at least two (2) Business Days prior to any sale of Registrable Securities and instruct any transfer agent and registrar of Registrable Securities to release any stop transfer orders in respect thereof (and, in the case of Registrable Securities registered on a Shelf Registration Statement, at the request of any Holder, prepare and deliver certificates representing such Registrable Securities not bearing any restrictive legends and deliver or cause to be delivered an opinion or instructions to the transfer agent in order to allow such Registrable Securities to be sold from time to time);

 

(s)               include in any prospectus or prospectus supplement if requested by any managing underwriter updated financial or business information for the Company’s most recent period or current quarterly period (including estimated results or ranges of results) if required for purposes of marketing the offering in the view of the managing underwriter;

 

(t)               take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, however, that to the extent that any prohibition is applicable to the Company, the Company will use its reasonable best efforts to make any such prohibition inapplicable;

 

(u)               use its reasonable best efforts to cause the Registrable Securities covered by the applicable registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Participating Holders or the underwriters, if any, to consummate the disposition of such Registrable Securities;

 

(v)              take all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities;

 

(w)             take all reasonable action to ensure that any free writing prospectus utilized in connection with any registration covered by Section 2.1 or 2.2 complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, prospectus supplement and related documents, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

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(x)               in connection with any underwritten offering, if at any time the information conveyed to a purchaser at the time of sale includes any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, promptly file with the SEC such amendments or supplements to such information as may be necessary so that the statements as so amended or supplemented will not, in the light of the circumstances, be misleading;

 

(y)              to the extent required by the rules and regulations of FINRA, retain a Qualified Independent Underwriter acceptable to the managing underwriter; and

 

(z)               use reasonable best efforts to cooperate with the managing underwriters, Participating Holders, any indemnitee of the Company and their respective counsel in connection with the preparation and filing of any applications, notices, registrations and responses to requests for additional information with FINRA, Nasdaq, or any other national securities exchange on which the shares of Class A Common Stock are listed.

 

To the extent the Company is a WKSI at the time any Demand Registration Request is submitted to the Company, the Company shall file an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “automatic shelf registration statement”) on Form S-3 which covers those Registrable Securities which are requested to be registered. The Company shall not take any action that would result in it not remaining a WKSI or would result in it becoming an ineligible issuer (as defined in Rule 405 under the Securities Act) during the period during which such automatic shelf registration statement is required to remain effective. If the Company does not pay the filing fee covering the Registrable Securities at the time the automatic shelf registration statement is filed, the Company agrees to pay such fee at such time or times as the Registrable Securities are to be sold in compliance with the SEC rules. If the automatic shelf registration statement has been outstanding for at least three (3) years, at or prior to the end of the third year the Company shall refile a new automatic shelf registration statement covering the Registrable Securities. If at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, the Company shall use its reasonable best efforts to refile the shelf registration statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period which such registration statement is required to be kept effective.

 

If the Company files any shelf registration statement for the benefit of the holders of any of its securities other than the Holders, and the Holders do not request that their Registrable Securities be included in such Shelf Registration Statement, the Company agrees that it shall include in such registration statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added to such shelf registration statement at a later time through the filing of a prospectus supplement rather than a post-effective amendment.

 

The Company may require as a condition precedent to the Company’s obligations under this Section 2.4 that each Participating Holder as to which any registration is being effected (i) furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request (including as required under state securities laws), provided that such information is necessary for the Company to consummate such registration and shall be used only in connection with such registration and (ii) provide any underwriters participating in the distribution of such securities such information as the underwriters may request and execute and deliver any agreements, certificates or other documents as the underwriters may request.

 

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Each Holder of Registrable Securities agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in clause (v) of paragraph (e) of this Section 2.4, such Holder will discontinue such Holder’s disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by paragraph (e) of this Section 2.4 and, if so directed by the Company, will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession of the prospectus covering such Registrable Securities that was in effect at the time of receipt of such notice. In the event the Company shall give any such notice, the applicable period mentioned in paragraph (b) of this Section 2.4 shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each Participating Holder covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by paragraph (e) of this Section 2.4.

 

The Company agrees not to file or make any amendment to any registration statement with respect to any Registrable Securities, or any amendment of or supplement to the prospectus, or any free writing prospectus, which amendment refers to any Holder covered thereby by name, or otherwise identifies such Holder, without the consent of such Holder, such consent not to be unreasonably withheld or delayed, unless such disclosure is required by law, in which case the Company shall provide written notice to such Holders no less than five (5) Business Days prior to the filing.

 

To the extent that any of the LLR Investors, Minority Investors or Additional Investors is or may be deemed to be an “underwriter” of Registrable Securities pursuant to any SEC comments or policies, the Company agrees that (1) the indemnification and contribution provisions contained in Section 2.9 shall be applicable for the benefit of the LLR Investors, Minority Investors and Additional Investors, as applicable, in their role as an underwriter or deemed underwriter in addition to their capacity as a Holder and (2) the LLR Investors, Minority Investors and any Additional Investors, as applicable, shall be entitled to conduct the due diligence which an underwriter would normally conduct in connection with an offering of securities registered under the Securities Act, including receipt of customary opinions and comfort letters addressed to the LLR Investors, Minority Investors and Additional Investors, as applicable.

 

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2.5.          Registration Expenses.

 

(a)               The Company shall pay all Expenses with respect to any registration or offering of Registrable Securities pursuant to Section 2, whether or not a registration statement becomes effective or the offering is consummated.

 

(b)               Notwithstanding the foregoing, (x) the provisions of this Section 2.5 shall be deemed amended to the extent necessary to cause these expense provisions to comply with state “blue sky” laws of each state in which the offering is made and (y) in connection with any underwritten offering hereunder, each Participating Holder shall pay all underwriting discounts and commissions and any transfer taxes, if any, attributable to the sale of such Registrable Securities, pro rata with respect to payments of discounts and commissions in accordance with the number of shares sold in the offering by such Participating Holder.

 

2.6.          Certain Limitations on Registration Rights. In the case of any registration under Section 2.1 involving an underwritten offering, or, in the case of a registration under Section 2.2, if the Company has determined to enter into an underwriting agreement in connection therewith, all securities to be included in such underwritten offering shall be subject to such underwriting agreement and no Person may participate in such underwritten offering unless such Person (i) agrees to sell such Person’s securities on the basis provided therein and completes and executes all reasonable questionnaires, and other documents (including custody agreements and powers of attorney) which must be executed in connection therewith; provided, however, that all such documents shall be consistent with the provisions hereof and (ii) provides such other information to the Company or the underwriter as may be necessary to register such Person’s securities.

 

2.7.          Limitations on Sale or Distribution of Other Securities. The Company hereby agrees that, in connection with an offering pursuant to Section 2.1 (including any Shelf Underwriting pursuant to Section 2.1(e)) or 2.2, the Company shall not sell, transfer, or otherwise dispose of, any Class A Common Stock or Class A Common Stock Equivalent (other than as part of such underwritten public offering, a registration on Form S-4 or Form S-8 or any successor or similar form which is (x) then in effect or (y) shall become effective upon the conversion, exchange or exercise of any then outstanding Class A Common Stock Equivalent), until a period from seven days prior to the pricing date of such offering until (A) ninety (90) days after the pricing date of the first such offering and (B) seventy-five (75) days after the pricing date of any subsequent such offering or, in each case, such shorter period as the managing underwriter, the Company or any executive officer or director of the Company shall agree to; provided that the time period may be longer than ninety (90) days or seventy-five (75) days, as applicable, if required by the managing underwriter, as long as all Holders, directors and officers are subject to the same lock-up; and the Company shall (i) so provide in any registration rights agreements hereafter entered into with respect to any of its securities and (ii) use its reasonable best efforts to cause each holder of 1% or more of the then-outstanding Class A Common Stock and Class A Common Stock Equivalents, purchased or otherwise acquired from the Company (other than in a public offering) at any time after the date of this Agreement to so agree, and shall use its reasonable best efforts to cause each of its officers, directors and beneficial holders of 5% or more of the Class A Common Stock to so agree.

 

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2.8.          No Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any Holder to sell any Registrable Securities pursuant to any effective registration statement. A Holder is not required to include any of its Registrable Securities in any registration statement, is not required to sell any of its Registrable Securities which are included in any effective registration statement, and may sell any of its Registrable Securities in any manner in compliance with applicable law (subject to the restrictions set forth in the Shareholders Agreement) even if such shares are already included on an effective registration statement.

 

2.9.          Indemnification.

 

(a)               In the event of any registration or offer and sale of any securities of the Company under the Securities Act pursuant to this Section 2, the Company will (without limitation as to time), and hereby agrees to, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Participating Holder, its directors, officers, employees, stockholders, members, general and limited partners, agents, affiliates, representatives, successors and assigns (and the directors, officers, employees, stockholders, members, general and limited partners, agents, affiliates, representatives, successors and assigns thereof), each other Person who participates as a seller (and its directors, officers, employees, stockholders, members, general and limited partners, agents, affiliates, representatives, successors and assigns), underwriter or Qualified Independent Underwriter, if any, in the offering or sale of such securities, each officer, director, employee, stockholder, managing director, agent, affiliate, representative, successor, assign or partner of such underwriter or Qualified Independent Underwriter, and each other Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such seller or any such underwriter or Qualified Independent Underwriter and each director, officer, employee, stockholder, managing director, agent, affiliate, representative, successor, assign or partner of such controlling Person, from and against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) and expenses (including reasonable fees of counsel and any amounts paid in any settlement effected with the Company’s consent, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act or otherwise in respect thereof (collectively, “Claims”), insofar as such Claims arise out of, are based upon, relate to or are in connection with (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such securities were registered under the Securities Act or 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, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary, final or summary prospectus or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) any untrue statement or alleged untrue statement of a material fact in the information conveyed by the Company or any underwriter to any purchaser at the time of the sale to such purchaser, or the omission or alleged omission to state therein a material fact required to be stated therein, or (iv) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to any action required of or inaction by the Company in connection with any such offering of Registrable Securities, and the Company will reimburse any such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim as such expenses are incurred; provided, however, that the Company shall not be liable to any such indemnified party in any such case to the extent such Claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in such registration statement or amendment thereof or supplement thereto or in any such prospectus or any preliminary, final or summary prospectus or free writing prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of such indemnified party specifically for use therein. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such seller.

 

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(b)               Each Participating Holder (and, if the Company requires as a condition to including any Registrable Securities in any registration statement filed in accordance with Section 2.1 or 2.2, any underwriter and Qualified Independent Underwriter, if any) shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 2.9) to the extent permitted by law the Company, its officers and its directors, each Person controlling the Company within the meaning of the Securities Act and all other prospective sellers and their directors, officers, stockholders, fiduciaries, managing directors, agents, affiliates, representatives, successors, assigns or general and limited partners and respective controlling Persons with respect to any untrue statement or alleged untrue statement of any material fact in, or omission or alleged omission of any material fact from, such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, or any free writing prospectus utilized in connection therewith, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such Participating Holder or underwriter or Qualified Independent Underwriter, if any, specifically for use therein, and each such Participating Holder, underwriter or Qualified Independent Underwriter, if any, shall reimburse such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim as such expenses are incurred; provided, however, that the aggregate amount which any such Participating Holder shall be required to pay pursuant to this Section 2.9 (including pursuant to indemnity, contribution or otherwise) shall in no case be greater than the amount of the net proceeds received by such Participating Holder upon the sale of the Registrable Securities pursuant to the registration statement giving rise to such Claim; provided, further, that such Participating Holder shall not be liable in any such case to the extent that prior to the filing or confidential submission of any such registration statement or prospectus or amendment thereof or supplement thereto, or any free writing prospectus utilized in connection therewith, such Participating Holder has furnished in writing to the Company information expressly for use in such registration statement or prospectus or any amendment thereof or supplement thereto or free writing prospectus which corrected or made not misleading information previously furnished to the Company. The Company and each Participating Holder hereby acknowledge and agree that, unless otherwise expressly agreed to in writing by such Participating Holders to the contrary, for all purposes of this Agreement, the only information furnished or to be furnished to the Company for use in any such registration statement, preliminary, final or summary prospectus or amendment or supplement thereto, or any free writing prospectus, are statements specifically relating to (i) the beneficial ownership of shares of Class A Common Stock by such Participating Holder and its Affiliates as disclosed in the section of such document entitled “Selling Stockholders” or “Principal and Selling Stockholders” and (ii) the name and address of such Participating Holder. If any additional information about such Holder or the plan of distribution (other than for an underwritten offering) is required by law to be disclosed in any such document, then such Holder shall not unreasonably withhold its agreement referred to in the immediately preceding sentence. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such Holder.

 

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(c)               Indemnification similar to that specified in the preceding paragraphs (a) and (b) of this Section 2.9 (with appropriate modifications) shall be given by the Company and each Participating Holder with respect to any required registration or other qualification of securities under any applicable securities and state “blue sky” laws.

 

(d)               Any Person entitled to indemnification under this Agreement shall notify promptly the indemnifying party in writing of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 2.9, but the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 2.9, except to the extent the indemnifying party is materially and actually prejudiced thereby and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Section 2. In case any action or proceeding is brought against an indemnified party and such indemnified party shall have notified the indemnifying party of the commencement thereof (as required above), the indemnifying party shall be entitled to participate therein and, unless in the reasonable opinion of outside counsel to the indemnified party a conflict of interest between such indemnified and indemnifying parties exists in respect of such Claim, to assume the defense thereof jointly with any other indemnifying party similarly notified, to the extent that it chooses, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party that it so chooses, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that (i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the action or proceeding within twenty (20) days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so; or (ii) if such indemnified party who is a defendant in any action or proceeding which is also brought against the indemnifying party reasonably shall have concluded that there may be one or more legal or equitable defenses available to such indemnified party which are not available to the indemnifying party or which may conflict with or be different from those available to another indemnified party with respect to such Claim; or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified parties in each jurisdiction, except to the extent any indemnified party or parties reasonably shall have made a conclusion described in clause (ii) or (iii) above) and the indemnifying party shall be liable for any expenses therefor. No indemnifying party shall be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final judgment for the plaintiff, such indemnifying party agrees to indemnify each indemnified party from and against any loss, claim, damage, liability or expense by reason of such settlement or judgment. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (A) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (B) does not include a statement as to or an admission of fault or culpability, by or on behalf of any indemnified party.

 

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(e)             If for any reason the foregoing indemnity is unavailable, unenforceable or is insufficient to hold harmless an indemnified party under Sections 2.9(a), (b) or (c), then each applicable indemnifying party shall contribute to the amount paid or payable to such indemnified party as a result of any Claim 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 hand, with respect to such Claim. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. If, however, the allocation provided in the second preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if any contribution pursuant to this Section 2.9(e) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences of this Section 2.9(e). The amount paid or payable in respect of any Claim shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim. 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. Notwithstanding anything in this Section 2.9(e) to the contrary, no indemnifying party (other than the Company) shall be required pursuant to this Section 2.9(e) to contribute any amount greater than the amount of the net proceeds received by such indemnifying party from the sale of Registrable Securities pursuant to the registration statement giving rise to such Claim, less the amount of any indemnification payment made by such indemnifying party pursuant to Sections 2.9(b) and (c). In addition, no Holder of Registrable Securities or any Affiliate thereof shall be required to pay any amount under this Section 2.9(e) unless such Person or entity would have been required to pay an amount pursuant to Section 2.9(b) if it had been applicable in accordance with its terms.

 

(f)                The indemnity and contribution agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made or omitted by or on behalf of any indemnified party and shall survive the transfer of the Registrable Securities by any such party.

 

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(g)               The indemnification and contribution required by this Section 2.9 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.

 

2.10.        Limitations on Registration of Other Securities; Representation. From and after the date of this Agreement, the Company shall not, without the prior written consent of the LLR Investors and the Founder Investors (in each case, not to be unreasonably withheld or delayed), enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or prospective holder any registration rights the terms of which are (i) more favorable taken as a whole than the registration rights granted to the Holders hereunder or (ii) on parity with the registration rights granted to the Holders hereunder.

 

2.11.        No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities that is inconsistent in any material respects with the rights granted to the Holders in this Agreement.

 

2.12.        Partner Distributions. Notwithstanding anything contained herein to the contrary, the Company shall, at the request of any Holder (including to effect a Partner Distribution) pursuant to Section 2.1 or Section 2.2, file any prospectus supplement or post-effective amendments, or include in the initial registration statement any disclosure or language, or include in any prospectus supplement or post-effective amendment any disclosure or language, and otherwise take any action, deemed necessary or advisable by such Holder or its counsel (including to effect such Partner Distribution).

 

Section 3.               Underwritten Offerings.

 

3.1.          Requested Underwritten Offerings. If requested by the underwriters for any underwritten offering pursuant to a registration requested under Section 2.1, the Company shall enter into a customary underwriting agreement with the underwriters. Such underwriting agreement shall (i) be satisfactory in form and substance to the Initiating Holders and the Majority Participating Holders, (ii) contain terms not inconsistent with the provisions of this Agreement and (iii) contain such representations and warranties by, and such other agreements on the part of, the Company and such other terms as are generally prevailing in agreements of that type, including indemnities and contribution agreements on substantially the same terms as those contained herein or as otherwise customary for the lead underwriter. Every Participating Holder shall be a party to such underwriting agreement. Each Participating Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than customary representations of a selling shareholder, including representations, warranties or agreements regarding its ownership of and title to the Registrable Securities, any written information specifically provided by such Participating Holder for inclusion in the registration statement and its intended method of distribution; and any liability of such Participating Holder to any underwriter or other Person under such underwriting agreement for indemnity, contribution or otherwise shall in no case be greater than the amount of the net proceeds received by such Participating Holder upon the sale of Registrable Securities pursuant to such registration statement and in no event shall relate to anything other than information about such Holder specifically provided by such Holder for use in the registration statement and prospectus.

 

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3.2.          Piggyback Underwritten Offerings. In the case of a registration pursuant to Section 2.2, if the Company shall have determined to enter into an underwriting agreement in connection therewith, all of the Participating Holders’ Registrable Securities to be included in such registration shall be subject to such underwriting agreement. Each such Participating Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than customary representations of a selling shareholder, including representations, warranties or agreements regarding its ownership of and title to the Registrable Securities, any written information specifically provided by such Participating Holder for inclusion in the registration statement and its intended method of distribution; and any liability of such Participating Holder to any underwriter or other Person under such underwriting agreement shall in no case be greater than the amount of the net proceeds received by such Participating Holder upon the sale of Registrable Securities pursuant to such registration statement and in no event shall relate to anything other than information about such Holder specifically provided by such Holder for use in the registration statement and prospectus.

 

Section 4.               General.

 

4.1.          Adjustments Affecting Registrable Securities. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Registrable Securities, to any and all shares of capital stock of the Company, any successor or assign of the Company (whether by merger, share exchange, consolidation, sale of assets or otherwise) or any Subsidiary or parent company of the Company which may be issued in respect of, in exchange for or in substitution of, Registrable Securities and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof.

 

4.2.          Rule 144 and Rule 144A. If the Company shall have filed a registration statement pursuant to the requirements of Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act in respect of the Class A Common Stock or Class A Common Stock Equivalents, the Company covenants that (i) so long as it remains subject to the reporting provisions of the Exchange Act, it will timely file the reports required to be filed by it under the Securities Act or the Exchange Act (including, but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1)(i) of Rule 144 under the Securities Act, as such Rule may be amended (“Rule 144”)) or, if the Company is not required to file such reports, it will, upon the request of any Holder, make publicly available other information so long as necessary to permit sales by such Holder under Rule 144, Rule 144A under the Securities Act, as such Rule may be amended (“Rule 144A”), or any similar rules or regulations hereafter adopted by the SEC, and (ii) it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (A) Rule 144, (B) Rule 144A, (C) Regulation S under the Securities Act or (D) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will promptly deliver to such Holder a written statement as to whether it has complied with such requirements.

 

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4.3.          Nominees for Beneficial Owners. If Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its option, be treated as the Holder of such Registrable Securities for purposes of any request or other action by any Holder or Holders of Registrable Securities pursuant to this Agreement (or any determination of any number or percentage of shares constituting Registrable Securities held by any Holder or Holders of Registrable Securities contemplated by this Agreement); provided, however, that the Company shall have received evidence reasonably satisfactory to it of such beneficial ownership.

 

4.4.          Amendments and Waivers. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective against the Company or any Holder unless such modification, amendment or waiver is approved in writing by the Company, the Holders holding a majority of the Registrable Securities then held by all Holders, and the Founder; provided that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a Holder of Registrable Securities, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provision hereof (whether or not similar). No failure or delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof or of any other or future exercise of any such right, power or privilege.

 

4.5.          Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) if personally delivered, on the date of delivery, (ii) if delivered by express courier service of national standing (with charges prepaid), on the Business Day following the date of delivery to such courier service, (iii) if deposited in the United States mail, first-class postage prepaid, on the fifth (5th) Business Day following the date of such deposit, (iv) if delivered by facsimile transmission, upon confirmation of successful transmission, (x) on the date of such transmission, if such transmission is completed at or prior to 5:00 p.m., local time of the recipient party on a Business Day, and (y) on the next Business Day following the date of transmission, if such transmission is completed after 5:00 p.m., local time of the recipient party, or is transmitted on a day that is not a Business Day, or (v) if via e-mail communication, on the date of delivery. All notices, demands and other communications hereunder shall be delivered as set forth below and to any other recipient at the address indicated on Schedule 4.5 hereto and to any subsequent holder of Stock subject to this Agreement at such address as indicated by the Company’s records, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

 

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  if to the Company, to:

 

  CompoSecure, Inc.
  309 Pierce Street
  Somerset, NJ 08873
  Attention: Jonathan C. Wilk, President and CEO
  Phone: (908) 518-0500, ext. 2220
  Email: jwilk@composecure.com

 

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

 

  Morgan, Lewis & Bockius LLP
  1701 Market Street
  Philadelphia, PA 19103
  Attention: Kevin S. Shmelzer; Howard A. Kenny
  Phone: (215) 963-5000; (212) 309-6000
  Email: kevin.shmelzer@morganlewis.com; howard.kenny@morganlewis.com

 

  if to the LLR Investors, to:

 

  c/o [●]
  [Address]
  Attention: [●]
  Phone: [●]
  Email: [●]

 

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

 

  [Address]
  Attention: [●]
  Phone: [●]
  Email: [●]

 

if to the Additional Investors, the Founder Investors or the CompoSecure Investors, to the address set forth opposite the name of such Additional Investor, Founder Investor or the CompoSecure Investor on the signature pages hereto or such other address indicated in the records of the Company.

 

4.6.          Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and the respective successors, permitted assigns, heirs and personal representatives of the parties hereto, whether so expressed or not. This Agreement may not be assigned by the Company without the prior written consent of the LLR Investors, the Founder Investors and the CompoSecure Investors. No Holder shall have the right to assign all or part of its or his rights and obligations under this Agreement to any Person, unless (i) such transferee duly executes and delivers to the Company a Joinder Agreement and (ii) with respect to Holders that are also party to the Shareholders Agreement, during the Lock-Up Period (as defined in the Shareholders Agreement), such assignment is made in connection with the transfer of Registrable Securities to a Permitted Transferee (as defined in the Shareholders Agreement) in accordance with and made in compliance with the Shareholders Agreement. Upon any such assignment, such assignee shall have and be able to exercise and enforce all rights of the assigning Holder which are assigned to it and, to the extent such rights are assigned, any reference to the assigning Holder shall be treated as a reference to the assignee. If any Holder shall acquire additional Registrable Securities, such Registrable Securities shall be subject to all of the terms, and entitled to all the benefits, of this Agreement. Additional Persons may become parties to this Agreement as “Minority Investors” with the consent of the Company, the LLR Investors and the Founder Investors (not to be unreasonably withheld or delayed), by executing and delivering to the Company the Joinder Agreement.

 

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4.7.          Termination.

 

(a)               The obligations of the Company and a Holder under this Agreement, in each case solely with respect to such Holder, will terminate upon the earlier of:

 

(i)                 the date on which such Holder no longer holds any Registrable Securities; or (ii) the later of (A) the date on which such Holder no longer beneficially owns at least 1% of the then outstanding Class A Common Stock or Class A Common Stock Equivalents, and such Holder (notwithstanding any beneficial ownership of Class A Common Stock or Class A Common Stock Equivalents by such Holder) is not an Affiliate of the Company and (B) the date on which such the Holder is eligible to sell its Registrable Securities pursuant to Rule 144.

 

(b)               This Agreement shall terminate on the date that is seven (7) years from date hereof.

 

(c)               Notwithstanding clauses (a) and (b) above, Section 2.5, Section 2.9, Section 4.9 and Section 4.13 shall survive termination of this Agreement.

 

4.8.          Entire Agreement. This Agreement and the other documents referred to herein or delivered pursuant hereto which form part hereof constitute the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof.

 

4.9.          Governing Law; Jurisdiction; WAIVER OF JURY TRIAL.

 

(a)               This Agreement will be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.

 

(b)               Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement may be brought against any of the parties in the United States District Court for the Southern District of New York or any New York state court located in New York, New York, and each of the parties hereby consents to the exclusive jurisdiction of such court (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid therein. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

4.10.        Interpretation; Construction.

 

(a)               The table of contents and headings in this Agreement are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

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(b)               The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

4.11.        Counterparts. This Agreement may be executed and delivered in any number of separate counterparts (including by facsimile or electronic mail), each of which shall be an original, but all of which together shall constitute one and the same agreement.

 

4.12.        Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

 

4.13.        Specific Enforcement. It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any party hereto and, accordingly, that this Agreement shall be specifically enforceable, in addition to any other remedy to which such injured party is entitled at law or in equity, and that any breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach or an award of specific performance is not an appropriate remedy for any reason at law or equity and agrees that a party’s rights would be materially and adversely affected if the obligations of the other parties under this Agreement were not carried out in accordance with the terms and conditions hereof. Each party further agrees that no party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtain any remedy referred to in this Section 4.13, and each party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

4.14.        Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

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4.15.        Confidentiality. Each Holder agrees that any non-public information which they may receive relating to the Company and its Subsidiaries (the “Confidential Information”) will be held strictly confidential and will not be disclosed by it to any Person without the express written permission of the Company; provided, however, that the Confidential Information may be disclosed (i) in the event of any compulsory legal process or compliance with any applicable law, subpoena or other legal process, as required by an administrative requirement, order, decree or the rules of any relevant stock exchange or in connection with any filings that the Holder may be required to make with any regulatory authority; provided, however, that in the event of compulsory legal process, unless prohibited by applicable law or that process, each Holder agrees (A) to give the LLR Investors and the Company prompt notice thereof and to cooperate with the Company and the LLR Investors in securing a protective order in the event of compulsory disclosure and (B) that any disclosure made pursuant to public filings will be subject to the prior reasonable review of the Company and the LLR Investors, (ii) to any foreign or domestic governmental or quasi-governmental regulatory authority, including any stock exchange or other self-regulatory organization having jurisdiction over such party, (iii) to each Holder’s or its Affiliate’s, officers, directors, employees, partners, accountants, lawyers and other professional advisors for use relating solely to management of the investment or administrative purposes with respect to such Holder and (iv) to a proposed transferee of securities of the Company held by a Holder; provided, however, that the Holder informs the proposed transferee of the confidential nature of the information and the proposed transferee agrees in writing to comply with the restrictions in this Section 4.15 and delivers a copy of such writing to the Company.

 

4.16.        Opt-Out Requests. Each Holder shall have the right, at any time and from time to time (including after receiving information regarding any potential public offering), to elect to not receive any notice that the Company or any other Holders otherwise are required to deliver pursuant to this Agreement by delivering to the Company a written statement signed by such Holder that it does not want to receive any notices hereunder (an “Opt-Out Request”); in which case and notwithstanding anything to the contrary in this Agreement the Company and other Holders shall not be required to, and shall not, deliver any notice or other information required to be provided to Holders hereunder to the extent that the Company or such other Holders reasonably expect would result in a Holder acquiring material non-public information within the meaning of Regulation FD promulgated under the Exchange Act. An Opt-Out Request may state a date on which it expires or, if no such date is specified, shall remain in effect indefinitely. A Holder who previously has given the Company an Opt-Out Request may revoke such request at any time, and there shall be no limit on the ability of a Holder to issue and revoke subsequent Opt-Out Requests; provided that each Holder shall use commercially reasonable efforts to minimize the administrative burden on the Company arising in connection with any such Opt-Out Requests.

 

4.17.        Founder Registration Rights Agreement. The Founder Investors hereby agree that upon execution of this Agreement by such Founder Investors, the Founder Registration Rights Agreement shall be automatically terminated and superseded in its entirety by this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

35 

 

 

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

 

  THE COMPANY:
   
  [●]
   
  By:  
    Name:
    Title:

  

[Signature Page to Amended and Registration Rights Agreement]

 

 

 

 

  LLR INVESTORS
   
  [●]
   
  By:  
    Name:
    Title:

 

[Signature Page to Amended and Registration Rights Agreement]

 

 

 

 

Exhibit A

 

JOINDER AGREEMENT

 

This Joinder Agreement (this “Joinder Agreement”) is made as of [            ], by [and among [            ] (the “Transferring Holder”) and] [          ] (the “New Holder”), in accordance with that certain Amended and Restated Registration Rights Agreement, dated as of [●], 2021 (as amended from time to time, the “Agreement”), by and among CompoSecure, Inc., a Delaware corporation formerly known as Roman DBDR Tech Acquisition Corp. (the “Company”) and the other Holders party thereto.

 

WHEREAS, the Agreement requires the New Holder to become a party to the Agreement by executing this Joinder Agreement, and upon the New Holder signing this Joinder Agreement, the Agreement will be deemed to be amended to include the New Holder as a [(x) LLR Investor, (y) Minority Investor or (z) Additional Investor] thereunder;

 

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

 

Section 1.               Party to the Agreement. By execution of this Joinder Agreement, as of the date hereof the New Holder is hereby made a party to the Agreement as a [(x) LLR Investor, (y) Minority Investor or (z) Additional Investor]. The New Holder hereby agrees to become a party to the Agreement and to be bound by, and subject to, all of the representations, covenants, terms and conditions of the Agreement [that are applicable to, and assignable under the Agreement by, the Transferring Holder,] in the same manner as if the New Holder were an original signatory to the Agreement. Execution and delivery of this Joinder Agreement by the New Holder shall also constitute execution and delivery by the New Holder of the Agreement, without further action of any party.

 

Section 2.               Defined Terms. Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement unless otherwise noted.

 

Section 3.                Representations and Warranties of the New Holder.

 

3.1.           Authorization. The New Holder has all requisite power and authority and has taken all action necessary in order to duly and validly approve the New Holder’s execution and delivery of, and performance of its obligations under, this Joinder Agreement. This Joinder Agreement has been duly executed and delivered by the New Holder and constitutes a legal, valid and binding agreement of the New Holder, enforceable against the New Holder in accordance with its terms.

 

3.2.           No Conflict. The New Holder is not under any obligation or restriction, nor shall it assume any such obligation or restriction, that does or would materially interfere or conflict with the performance of its obligations under this Joinder Agreement.

 

Exhibit A-1

 

 

Section 4.               Further Assurances. The parties agree to execute and deliver any further instruments or perform any acts which are or may become necessary to effectuate the purposes of this Joinder Agreement.

 

Section 5.               Governing Law. This Joinder Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof.

 

Section 6.               Counterparts. This Joinder Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument.

 

Section 7.               Entire Agreement. This Joinder Agreement and the Agreement contain the entire understanding, whether oral or written, of the parties hereto with respect to the matters covered hereby. Any amendment or change in this Joinder Agreement shall not be valid unless made in writing and signed by each of the parties hereto.

 

[Signature pages follow]

 

Exhibit A-2

 

 

Exhibit A

 

IN WITNESS WHEREOF, intending to be legally bound hereby, the undersigned parties have executed this Joinder Agreement as of the date first above written.

 

  [TRANSFERRING HOLDER]
   
  [ _____]
   
  By:  
    Name:
    Title:
   
  NEW HOLDER
   
  [ _____]
   
  By:  
    Name:
    Title:
   
  Notice Address: [                                             ]
  [ _____]
  [ _____]
  Attn: [                         ]
  Facsimile: [       ]


Accepted and Agreed to as of
the date first written above:

 

COMPANY

 

[●]

 

By:    
  Name:  
  Title:  

 

Exhibit A-3

 

 

ANNEX B

 

TAX RECEIVABLE AGREEMENT
 
by and among
 

COMPOSECURE, INC.,

 

COMPOSECURE HOLDINGS, L.L.C.

 
and
 
THE PERSONS NAMED HEREIN
 
 
Dated as of [_], 2021

 

 

 

Table of Contents

 

Page

 

ARTICLE I DEFINITIONS 2
SECTION 1.1 Definitions 2
ARTICLE II DETERMINATION OF CERTAIN REALIZED TAX BENEFIT 12
SECTION 2.1 Basis Schedule 12
SECTION 2.2 Tax Benefit Schedule. 12
SECTION 2.3 Procedures, Amendments. 13
ARTICLE III TAX BENEFIT PAYMENTS 14
SECTION 3.1 Payments. 14
SECTION 3.2 No Duplicative Payments 15
SECTION 3.3 Pro Rata Payments 15
SECTION 3.4 Payment Ordering 15
SECTION 3.5 Excess Payments 15
ARTICLE IV TERMINATION 16
SECTION 4.1 Early Termination of Agreement; Breach of Agreement. 16
SECTION 4.2 Early Termination Notice 17
SECTION 4.3 Payment upon Early Termination. 17
ARTICLE V SUBORDINATION AND LATE PAYMENTS 18
SECTION 5.1 Subordination 18
SECTION 5.2 Late Payments by the Corporate Taxpayer 18
ARTICLE VI NO DISPUTES; CONSISTENCY; COOPERATION 18
SECTION 6.1 Participation in the Corporate Taxpayer’s and the Company’s Tax Matters 18
SECTION 6.2 Consistency 18
SECTION 6.3 Cooperation 18
ARTICLE VII MISCELLANEOUS 19
SECTION 7.1 Notices 19
SECTION 7.2 Counterparts 19
SECTION 7.3 Entire Agreement; No Third Party Beneficiaries 20
SECTION 7.4 Governing Law 20

 

-i-

 

 

Table of Contents

(continued)

 

Page

 

SECTION 7.5 Severability 22
SECTION 7.6 Successors; Assignment; Amendments; Waivers. 22
SECTION 7.7 Titles and Subtitles 23
SECTION 7.8 Resolution of Disputes. 23
SECTION 7.9 Reconciliation 24
SECTION 7.10 Withholding 25
SECTION 7.11 Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets. 26
SECTION 7.12 Confidentiality. 27
SECTION 7.13 Change in Law 28
SECTION 7.14 LLC Agreement 28

 

-ii-

 

 

TAX RECEIVABLE AGREEMENT

 

This TAX RECEIVABLE AGREEMENT (this “Agreement”), is dated as of [_], 2021, by and among CompoSecure, Inc., a Delaware corporation formerly known as Roman DBDR Tech Acquisition Corp. (including any successor corporation, the “Corporate Taxpayer”), each of the undersigned parties, and each of the other persons from time to time that becomes a party hereto (each, excluding CompoSecure Holdings, L.L.C., a Delaware limited liability company (“Company”), a “TRA Party” and together the “TRA Parties”).

 

RECITALS

 

WHEREAS, the TRA Parties directly or indirectly hold units (the “Units”) in the Company, which is classified as a partnership for United States federal income tax purposes;

 

WHEREAS, pursuant to the Agreement and Plan of Merger (as the same may be amended from time to time) (the “Merger Agreement”), dated as of April 19, 2021, by and among the Corporate Taxpayer, the Company, Roman Parent Merger Sub, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of the Corporate Taxpayer (the “Merger Sub”), and LLR Equity Partners IV, L.P., a Delaware limited partnership, Merger Sub will be merged with and into the Company, and the Company will be the surviving entity following the merger (the “Merger”);

 

WHEREAS, after the consummation of the Merger, the Corporate Taxpayer will be the sole managing member of the Company, and holds and will hold, directly and/or indirectly, Units;

 

WHEREAS, the Units held by the TRA Parties may be exchanged for shares of Class A common stock (the “Class A Shares”) of the Corporate Taxpayer, in accordance with and subject to the provisions of that certain Exchange Agreement, dated as of [_], 2021, by and among the Company and the holders of Units of the Company party thereto (the “Exchange Agreement”);

 

WHEREAS, the Company and each of its direct and indirect Subsidiaries (as defined below) treated as a partnership for United States federal income tax purposes currently have and will have in effect an election under Section 754 of the Code (as defined below), for each Taxable Year (as defined below) that includes the Merger Date (as defined below) and for each Taxable Year in which a taxable acquisition (including a deemed taxable acquisition under Section 707(a) of the Code) or non-taxable acquisition of Units by the Corporate Taxpayer from any of the TRA Parties (an “Exchanging Holder”) for Class A Shares and/or other consideration (an “Exchange”) occurs;

 

WHEREAS, the income, gain, loss, expense and other Tax items of the Corporate Taxpayer may be affected by the (i) Common Basis, (ii) Basis Adjustments and (iii) Imputed Interest (each as defined below) (collectively, the “Tax Attributes”); and

 

WHEREAS, the parties to this Agreement desire to provide for certain payments and make certain arrangements with respect to the effect of the Tax Attributes on the liability for Taxes (as defined below) of the Corporate Taxpayer.

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

 

 

ARTICLE I
DEFINITIONS

 

SECTION 1.1 Definitions. As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

 

Actual Tax Liability” means, with respect to any Taxable Year, the sum of (i) the actual liability for U.S. federal income Taxes of the Corporate Taxpayer as reported on its IRS Form 1120 (or any successor form) for such Taxable Year, and, without duplication, the portion of any liability for U.S. federal income taxes imposed directly on the Company (and the Company’s applicable Subsidiaries) under Section 6225 or any similar provision of the Code that is allocable to the Corporate Taxpayer under Section 704 of the Code (provided, that such amount will be calculated by excluding deductions of (and other impacts of) state and local income taxes) and (ii) the product of the amount of the United States federal taxable income or gain for such Taxable Year (provided, that such amount will be calculated by excluding deductions of (and other impacts of) state and local income taxes) reported on the Corporate Taxpayer’s IRS Form 1120 (or any successor form) and the Assumed Rate.

 

Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

 

Agreed Rate” means a per annum rate of the lesser of (i) 6.5% and (ii) LIBOR plus 100 basis points.

 

Agreement” has the meaning set forth in the Preamble to this Agreement.

 

Amended Schedule” has the meaning set forth in Section 2.3(b) of this Agreement.

 

Assumed Rate” means, with respect to any Taxable Year, the product of (a) the excess of (i) one hundred percent (100%) over (ii) the highest U.S. federal corporate income tax rate for such Taxable Year and (b) the sum, with respect to each state and local jurisdiction in which the Corporate Taxpayer files Tax Returns, of the products of (i) the Corporate Taxpayer’s tax apportionment rate(s) for such jurisdiction for such Taxable Year and (ii) the highest corporate tax rate(s) for such jurisdiction for such Taxable Year.

 

Attributable” means the portion of any Tax Attribute of the Corporate Taxpayer that is “Attributable” to any present or former holder of Units, other than the Corporate Taxpayer, and shall be determined by reference to the Tax Attributes, under the following principles:

 

(i)any Common Basis and the Basis Adjustments shall be determined separately with respect to each Exchanging Holder, using reasonable methods for tracking such Common Basis or Basis Adjustments, and are Attributable to each Exchanging Holder in an amount equal to the total Common Basis and Basis Adjustments relating to such Units Exchanged by such Exchanging Holder (determined without regard to any dilutive or antidilutive effect of any contribution to or distribution from the Company after the date of an applicable Exchange, and taking into account (i) Section 704(c) of the Code and (ii) any adjustment under Section 743(b) of the Code); and

 

2

 

 

(ii)any deduction to the Corporate Taxpayer with respect to a Taxable Year in respect of Imputed Interest is Attributable to the Person that is required to include the Imputed Interest in income (without regard to whether such Person is actually subject to Tax thereon).

 

Basis Adjustment” means the adjustment to the Tax basis of a Reference Asset under Sections 732, 734(b) and/or 1012 of the Code (in situations where, as a result of one or more Exchanges, the Company becomes an entity that is disregarded as separate from its owner for United States federal income tax purposes) or under Sections 734(b), 743(b) and/or 754 of the Code (in situations where, following an Exchange, the Company remains in existence as an entity treated as a partnership for United States federal income tax purposes) as a result of an Exchange and the payments made pursuant to this Agreement in respect of such Exchange. For the avoidance of doubt, the amount of any Basis Adjustment resulting from an Exchange of one or more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had not occurred. The amount of any Basis Adjustment shall be determined using the Market Value at the time of the Exchange.

 

Basis Schedule” has the meaning set forth in Section 2.1 of this Agreement.

 

Beneficial Owner” means, with respect to any security, a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power, which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power, which includes the power to dispose of, or to direct the disposition of, such security. The term “Beneficial Ownership” has a correlative meaning.

 

Board” means the Board of Directors of the Corporate Taxpayer.

 

Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close.

 

Change of Control” means the occurrence of any of the following events or series of events after the closing of the transactions contemplated by the Merger Agreement:

 

(i)any Person or any group of Persons acting together that would constitute a “group” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended or any successor provisions thereto (excluding (a) a corporation or other entity owned, directly or indirectly, by the shareholders of the Corporate Taxpayer in substantially the same proportions as their ownership of stock of the Corporate Taxpayer or (b) a group of Persons in which one or more Affiliates of Permitted Investors, directly or indirectly hold Beneficial Ownership of securities representing more than 50% of the total voting power held by such group) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporate Taxpayer representing more than 50% of the combined voting power of the Corporate Taxpayer’s then outstanding voting securities; or

 

3

 

 

(ii)the following individuals cease for any reason to constitute a majority of the number of directors of the Corporate Taxpayer then serving: individuals who, on the Merger Date, constitute the Board and any new director whose appointment or election by the Board or nomination for election by the Corporate Taxpayer’s shareholders was approved or recommended by a vote of at least fifty percent (50%) of the directors then still in office who either were directors on the Merger Date or whose appointment, election or nomination for election was previously so approved or recommended by the directors referred to in this clause (ii); or

 

(iii)there is consummated a merger or consolidation of the Corporate Taxpayer with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (x) the Board immediately prior to the merger or consolidation does not constitute at least a majority of the board of directors of the company surviving the merger or, if the surviving company is a Subsidiary, the ultimate parent thereof, or (y) the voting securities of the Corporate Taxpayer immediately prior to such merger or consolidation do not continue to represent or are not converted into more than 50% of the combined voting power of the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof; or

 

(iv)the shareholders of the Corporate Taxpayer approve a plan of complete liquidation or dissolution of the Corporate Taxpayer or there is consummated an agreement or series of related agreements for the sale, lease or other disposition, directly or indirectly, by the Corporate Taxpayer of all or substantially all of the Corporate Taxpayer’s assets, other than such sale or other disposition by the Corporate Taxpayer of all or substantially all of the Corporate Taxpayer’s assets to an entity at least 50% of the combined voting power of the voting securities of which are owned by shareholders of the Corporate Taxpayer in substantially the same proportions as their ownership of the Corporate Taxpayer immediately prior to such sale.

 

Notwithstanding the foregoing, except with respect to clause (ii) and clause (iii)(x) above, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of the Corporate Taxpayer immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in, and voting control over, and own substantially all of the shares of, an entity which owns, directly or indirectly, all or substantially all of the assets of the Corporate Taxpayer immediately following such transaction or series of transactions.

 

4

 

 

Class A Shares” has the meaning set forth in the Recitals of this Agreement.

 

Code” means the United States Internal Revenue Code of 1986, as amended.

 

Common Basis” means the Tax basis of the Reference Assets that are depreciable or amortizable for United States federal income tax purposes Attributable to Units acquired by the Corporate Taxpayer upon an Exchange. For the avoidance of doubt, Common Basis shall not include any Basis Adjustments.

 

Company” has the meaning set forth in the Preamble of this Agreement.

 

Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

Corporate Taxpayer” has the meaning set forth in the Preamble to this Agreement; provided that the term “Corporate Taxpayer” shall include any company that is a member of any consolidated Tax Return of which CompoSecure, Inc., formerly known as Roman DBDR Tech Acquisition Corp., is a member.

 

Corporate Taxpayer Return” means the United States federal income Tax Return of the Corporate Taxpayer filed with respect to Taxes of any Taxable Year, including any consolidated Tax Return.

 

Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amount of Realized Tax Benefits for all Taxable Years of the Corporate Taxpayer, up to and including such Taxable Year net of the Realized Tax Detriment for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedules or Amended Schedules, if any, in existence at the time of such determination; provided, that, for the avoidance of doubt, the computation of the Cumulative Net Realized Tax Benefit shall be adjusted to reflect any applicable Determination with respect to any Realized Tax Benefits and/or Realized Tax Detriments.

 

Default Rate” means a per annum rate of LIBOR plus 500 basis points.

 

Determination” has the meaning ascribed to such term in Section 1313(a) of the Code or any other event (including the execution of IRS Form 870-AD), including a settlement with the applicable Taxing Authority, that establishes the amount of any liability for Tax.

 

Dispute” has the meaning set forth in Section 7.8(a) of this Agreement.

 

Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

 

5

 

 

Early Termination Effective Date” means the date on which an Early Termination Schedule becomes binding pursuant to Section 4.2.

 

Early Termination Notice” has the meaning set forth in Section 4.2 of this Agreement.

 

Early Termination Payment” has the meaning set forth in Section 4.3(b) of this Agreement.

 

Early Termination Rate” means the lesser of (i) 6.5% and (ii) LIBOR plus 100 basis points.

 

Early Termination Schedule” has the meaning set forth in Section 4.2 of this Agreement.

 

Exchange” has the meaning set forth in the Recitals of this Agreement.

 

Exchange Agreement” has the meaning set forth in the Recitals of this Agreement.

 

Exchange Date” means the date of any Exchange.

 

Exchanging Holder” has the meaning set forth in the Recitals of this Agreement.

 

Expert” has the meaning set forth in Section 7.9 of this Agreement.

 

Future TRAs” has the meaning set forth in Section 5.1 of this Agreement.

 

Hypothetical Tax Liability” means, with respect to any Taxable Year, the liability for Taxes of (i) the Corporate Taxpayer and (ii) without duplication, the portion of any liability for U.S. federal income taxes imposed directly on the Company (and the Company’s applicable subsidiaries) under Section 6225 or any similar provision of the Code that is allocable to the Corporate Taxpayer under Section 704 of the Code (provided, that such amount will be calculated by excluding deductions of (and other impacts of) state and local income taxes), in each case using the same methods, elections, conventions and similar practices used on the relevant Corporate Taxpayer Return, but (a) using the Non-Stepped Up Tax Basis as reflected on the Basis Schedule including amendments thereto for the Taxable Year and (b) excluding any deduction attributable to Imputed Interest attributable to any payment made under this Agreement for the Taxable Year; provided, that Hypothetical Tax Liability shall be calculated assuming the liability for state and local Taxes (but not, for the avoidance of doubt, United States federal taxes) shall be equal to the product of (i) the amount of the U.S. federal taxable income or gain calculated for purposes of this definition of Hypothetical Tax Liability for such Taxable Year (provided, that such amount shall be calculated by excluding deductions of (and other impacts of) state and local income taxes) multiplied by (ii) the Assumed Rate. For the avoidance of doubt, Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to a Tax Attribute as applicable.

 

Imputed Interest” in respect of a TRA Party shall mean any interest imputed under Section 1272, 1274, 7872 or 483 or other provision of the Code with respect to the Corporate Taxpayer’s payment obligations in respect of such TRA Party under this Agreement.

 

6

 

 

Interest Amount” has the meaning set forth in Section 3.1(b) of this Agreement.

 

IRS” means the United States Internal Revenue Service.

 

Joinder” has the meaning set forth in Section 7.6(a) of this Agreement.

 

LIBOR” means during any period, the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by the Corporate Taxpayer as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the first day of such period as the London interbank offered rate for U.S. dollars having a borrowing date and a maturity comparable to such period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any LIBOR Alternate Source, a comparable replacement rate determined by the Corporate Taxpayer at such time, which determination shall be conclusive absent manifest error); provided, that at no time shall LIBOR be less than 0%. If the Corporate Taxpayer has made the determination (such determination to be conclusive absent manifest error) that (i) LIBOR is no longer a widely recognized benchmark rate for newly originated loans in the U.S. loan market in U.S. dollars or (ii) the applicable supervisor or administrator (if any) of LIBOR has made a public statement identifying a specific date after which LIBOR shall no longer be used for determining interest rates for loans in the U.S. loan market in U.S. dollars, then the Corporate Taxpayer shall (as determined by the Corporate Taxpayer to be consistent with market practice generally), establish a replacement interest rate (the “Replacement Rate”), in which case, the Replacement Rate shall, subject to the next two sentences, replace LIBOR for all purposes under this Agreement. In connection with the establishment and application of the Replacement Rate, this Agreement shall be amended solely with the consent of the Corporate Taxpayer and the Company, as may be necessary or appropriate, in the reasonable judgment of the Corporate Taxpayer, to effect the provisions of this section. The Replacement Rate shall be applied in a manner consistent with market practice; provided that, in each case, to the extent such market practice is not administratively feasible for the Corporate Taxpayer, such Replacement Rate shall be applied as otherwise reasonably determined by the Corporate Taxpayer.

 

LLC Agreement” means, with respect to the Company, the Second Amended and Restated Limited Liability Company Agreement of the Company, dated on or about the date hereof, as such agreement may be further amended, restated, supplemented and/or otherwise modified from time to time.

 

LLC Unit Holder” means a holder of Units other than the Corporate Taxpayer.

 

LLR Assignee” means any Permitted Transferee (as such term is defined in the Joinder) of an LLR Party.

 

7

 

 

LLR Funds” means, individually or collectively, any investment fund, co-investment vehicles and/or other similar vehicles or accounts, in each case managed by LLR Equity Partners IV, L.P. or LLR Equity Partners Parallel IV, L.P., or any of their respective successors.

 

LLR Party” means any LLR Fund that is a TRA Party or becomes a TRA Party for purposes of this Agreement pursuant to Section 7.6(a).

 

LLR Representative” means [        ] or such other Person designated, from time to time, by the LLR Parties.

 

Logan Assignee” means any Permitted Transferee (as such term is defined in the Joinder) of a Logan Party.

 

Logan Entities” means, individually or collectively, Michele D. Logan and any trust, entity or other similar vehicle or account, in each case affiliated with Michele D. Logan and her Affiliates, or any of their respective successors, which as of the date hereof includes Ephesians Holdings 3:16 LLC[, the Carol D. Herslow Credit Shelter Trust B] and the Michele D. Logan 2017 Charitable Remainder Unitrust.

 

Logan Party” means any Logan Entity that is a TRA Party or becomes a TRA Party for purposes of this Agreement pursuant to Section 7.6(a).

 

Logan Representative” means [       ] or such other Person designated, from time to time, by the Logan Parties.

 

Market Value” shall mean, with respect to an Exchange, the value of the Class A Shares on the applicable Exchange Date used by the Corporate Taxpayer in its U.S. federal income tax reporting with respect to such Exchange.

 

Material Objection Notice” has the meaning set forth in Section 4.2 of this Agreement.

 

Merger” has the meaning set forth in the Recitals of this Agreement.

 

Merger Agreement” has the meaning set forth in the Recitals of this Agreement.

 

Merger Date” means the closing date of the Merger.

 

Merger Sub” has the meaning set forth in the Recitals of this Agreement.

 

Net Tax Benefit” has the meaning set forth in Section 3.1(b) of this Agreement.

 

Non-Stepped Up Tax Basis” means, with respect to any Reference Asset, the Tax basis that such asset would have had at such time if no Basis Adjustments had been made and if the Common Basis was equal to zero.

 

Objection Notice” has the meaning set forth in Section 2.3(a) of this Agreement.

 

8

 

 

Permitted Investors” means any of (i) the Logan Entities and any of their Affiliates and (ii) the LLR Funds and any of their Affiliates.

 

Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

 

Pre-Adjustment Net Tax Benefit” has the meaning set forth in Section 3.1(b) of this Agreement.

 

Pre-Exchange Transfer” means any transfer (including upon the death of an LLC Unit Holder) or distribution in respect of one or more Units (i) that occurs prior to an Exchange of such Units, and (ii) to which Section 734(b) or 743(b) of the Code applies.

 

Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the Actual Tax Liability of (i) the Corporate Taxpayer and (ii) without duplication, the Company (and the Company’s applicable subsidiaries), but only with respect to Taxes imposed on the Company (and the Company’s applicable subsidiaries) that are allocable to the Corporate Taxpayer under Section 704 of the Code. If all or a portion of the Actual Tax Liability for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

 

Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the Actual Tax Liability over the Hypothetical Tax Liability of (i) the Corporate Taxpayer and (ii) without duplication, the Company (and the Company’s applicable subsidiaries), but only with respect to Taxes imposed on the Company (and the Company’s applicable subsidiaries) that are allocable to the Corporate Taxpayer under Section 704 of the Code. If all or a portion of the Actual Tax Liability for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

 

Reconciliation Dispute” has the meaning set forth in Section 7.9 of this Agreement.

 

Reconciliation Procedures” has the meaning set forth in Section 2.3(a) of this Agreement.

 

Reference Asset” means an asset that is held by the Company, or by any of its direct or indirect Subsidiaries treated as a partnership or disregarded entity (but only to the extent such indirect Subsidiaries are held through Subsidiaries treated as partnerships or disregarded entities) for purposes of the applicable Tax, at the time of an Exchange. A Reference Asset also includes any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to a Reference Asset. For the avoidance of doubt, a Reference Asset does not include an asset held directly or indirectly by a Subsidiary treated as a corporation for U.S. federal income tax purposes.

 

Schedule” means any of the following: (i) a Basis Schedule; (ii) a Tax Benefit Schedule; or (iii) the Early Termination Schedule.

 

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Section 734(b) Exchange” means any Exchange that results in a Basis Adjustment under Section 734(b) of the Code.

 

Senior Obligations” has the meaning set forth in Section 5.1 of this Agreement.

 

Subsidiaries” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than 50% of the voting power or other similar interests or the sole general partner interest or managing member or similar interest of such Person.

 

Subsidiary Stock” means stock or other equity interest in a Subsidiary of the Company that is treated as a corporation for U.S. federal income tax purposes.

 

Tax Attributes” has the meaning set forth in the Recitals of this Agreement.

 

Tax Benefit Payment” has the meaning set forth in Section 3.1(b) of this Agreement.

 

Tax Benefit Schedule” has the meaning set forth in Section 2.2 of this Agreement.

 

Tax Return” means any return, declaration, report or similar statement filed or required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.

 

Taxable Year” means a taxable year of the Corporate Taxpayer as defined in Section 441(b) of the Code or comparable section of state or local Tax law, as applicable (and, therefore, for the avoidance of doubt, may include a period of less than twelve (12) months for which a Tax Return is made), ending on or after the Merger Date.

 

Taxes” means any and all United States federal, state, local and foreign taxes, assessments or similar charges that are based on or measured with respect to net income or profits, and any interest related to such Tax.

 

Taxing Authority” means any domestic, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

 

TRA Party” has the meaning set forth in the Preamble to this Agreement.

 

TRA Party Representative” means:

 

(a)with respect to each LLR Fund, LLR Representative;

 

(b)with respect to each Logan Entity, Logan Representative; and

 

(c)with respect to all other TRA Parties, if applicable, [__________] or such other Person designated as such; provided, however, that any change to such Person shall be selected by a majority in voting interest of such other TRA Parties (based on the number of Units then held by such TRA Parties).

 

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