AGREEMENT AND PLAN OF MERGER DATED AS OF APRIL 30, 2019 by and among INGERSOLL- RAND PLC, INGERSOLL-RAND U.S. HOLDCO, INC., GARDNER DENVER HOLDINGS, INC., and CHARM MERGER SUB INC.

EXHIBIT 2.1

EXECUTION VERSION

 

AGREEMENT AND PLAN OF MERGER

DATED AS OF APRIL 30, 2019

by and among

▇▇▇▇▇▇▇▇▇-▇▇▇▇ PLC,

▇▇▇▇▇▇▇▇▇-▇▇▇▇ U.S. HOLDCO, INC.,

▇▇▇▇▇▇▇ DENVER HOLDINGS, INC.,

and

CHARM MERGER SUB INC.

 

 

TABLE OF CONTENTS

ARTICLE I DEFINITIONS			3
	SECTION 1.1.	Definitions	3
	SECTION 1.2.	Cross References	15
	SECTION 1.3.	Interpretation	17
ARTICLE II THE MERGER			19
	SECTION 2.1.	The Merger	19
	SECTION 2.2.	Closing	19
	SECTION 2.3.	Effective Time	20
	SECTION 2.4.	Certificate of Incorporation and Bylaws of the Surviving Corporation	20
	SECTION 2.5.	Governance Matters	20
ARTICLE III CONVERSION OF SHARES			22
	SECTION 3.1.	Effect on Capital Stock	22
	SECTION 3.2.	Distribution of Clover Common Stock	23
	SECTION 3.3.	Fractional Shares	25
	SECTION 3.4.	Moon Equity Awards	26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MOON RELATING TO MOON			27
	SECTION 4.1.	Organization, Good Standing	27
	SECTION 4.2.	Corporate Authority	27
	SECTION 4.3.	Governmental Filings; No Violations	28
	SECTION 4.4.	Litigation.	29
	SECTION 4.5.	Brokers and Finders	29
	SECTION 4.6.	No Other Clover or Merger Sub Representation or Warranties	29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MOON RELATING TO SPINCO			30
	SECTION 5.1.	Organization of SpinCo	30
	SECTION 5.2.	Capital Structure	31
	SECTION 5.3.	Corporate Authority; Approval	32
	SECTION 5.4.	Governmental Filings; No Violations; Certain Contracts	32
	SECTION 5.5.	SpinCo Reports; Financial Statements	34
	SECTION 5.6.	Absence of Certain Changes	35
	SECTION 5.7.	Litigation and Liabilities	35
	SECTION 5.8.	Compliance with Laws; Licenses; Anti-Corruption Laws; Import and Export Laws	36
	SECTION 5.9.	SpinCo Material Contracts.	38
	SECTION 5.10.	Real Property	39
	SECTION 5.11.	Employee Benefits	40
	SECTION 5.12.	Labor Matters	43

	SECTION 5.13.	Environmental Matters	44
	SECTION 5.14.	Taxes	45
	SECTION 5.15.	Intellectual Property	46
	SECTION 5.16.	Insurance.	47
	SECTION 5.17.	Takeover Statutes	47
	SECTION 5.18.	Brokers and Finders	47
	SECTION 5.19.	Sufficiency of the SpinCo Assets	47
	SECTION 5.20.	Affiliate Matters	48
	SECTION 5.21.	Proxy Statement; Registration Statements	48
	SECTION 5.22.	Clover Common Stock	48
	SECTION 5.23.	Financing	48
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF CLOVER			49
	SECTION 6.1.	Organization, Good Standing and Qualification	49
	SECTION 6.2.	Capital Structure	50
	SECTION 6.3.	Corporate Authority; Approval and Fairness	51
	SECTION 6.4.	Governmental Filings; No Violations; Certain Contracts	52
	SECTION 6.5.	Clover Reports; Financial Statements	53
	SECTION 6.6.	Absence of Certain Changes	54
	SECTION 6.7.	Litigation and Liabilities	55
	SECTION 6.8.	Compliance with Laws; Licenses; Anti-Corruption Laws; Import and Export Laws.	55
	SECTION 6.9.	Clover Material Contracts	57
	SECTION 6.10.	Real Property	59
	SECTION 6.11.	Employee Benefits	59
	SECTION 6.12.	Labor Matters	62
	SECTION 6.13.	Environmental Matters	63
	SECTION 6.14.	Taxes	64
	SECTION 6.15.	Intellectual Property	65
	SECTION 6.16.	Insurance	66
	SECTION 6.17.	Takeover Statutes	66
	SECTION 6.18.	Brokers and Finders	66
	SECTION 6.19.	Proxy Statement; Registration Statements	66
	SECTION 6.20.	No Other Moon or SpinCo Representations or Warranties	67
	SECTION 6.21.	Financing	67
ARTICLE VII COVENANTS			68
	SECTION 7.1.	Conduct of Business by Clover and Merger Sub Pending the Merger	68
	SECTION 7.2.	Conduct of Business by Moon and SpinCo Pending the Merger	71
	SECTION 7.3.	Tax Matters	75
	SECTION 7.4.	Preparation of the Registration Statements, Proxy Statement and Schedule TO; Clover Stockholders Meeting	76
	SECTION 7.5.	Listing	78
	SECTION 7.6.	Reasonable Best Efforts	78
	SECTION 7.7.	Financing	81
	SECTION 7.8.	Access to Information.	87
	SECTION 7.9.	D&O Indemnification and Insurance	87

	SECTION 7.10.	No Solicitation	88
	SECTION 7.11.	Public Announcements	91
	SECTION 7.12.	Expenses	92
	SECTION 7.13.	Section 16 Matters	92
	SECTION 7.14.	Control of Other Party’s Business	92
	SECTION 7.15.	SpinCo Share Issuance	92
	SECTION 7.16.	Exchange Offer	92
	SECTION 7.17.	Financials	93
	SECTION 7.18.	Transaction Documents	95
	SECTION 7.19.	Confidentiality.	95
	SECTION 7.20.	Further Actions.	95
	SECTION 7.21.	Transition Services Agreement; Headquarters Lease; Supply Agreements; Employee Matters Agreement	96
	SECTION 7.22.	Transaction Litigation	98
	SECTION 7.24.	Separation and Distribution Agreement Release	100
	SECTION 7.25.	Updates to Disclosure Schedules	100
	SECTION 7.26.	Moon Name Change	101
	SECTION 7.27.	Transfer Taxes	101
ARTICLE VIII CONDITIONS TO THE MERGER			101
	SECTION 8.1.	Conditions to the Obligations of SpinCo, Moon, Clover and Merger Sub to Effect the Merger	101
	SECTION 8.2.	Additional Conditions to the Obligations of Moon and SpinCo	102
	SECTION 8.3.	Additional Conditions to the Obligations of Clover and Merger Sub	103
ARTICLE IX TERMINATION			104
	SECTION 9.1.	Termination by Mutual Consent	104
	SECTION 9.2.	Termination by Either Moon or Clover	104
	SECTION 9.3.	Termination by Clover	104
	SECTION 9.4.	Termination by Moon	105
	SECTION 9.5.	Effect of Termination and Abandonment	105
ARTICLE X MISCELLANEOUS			107
	SECTION 10.1.	Non‑Survival of Representations, Warranties and Agreements	107
	SECTION 10.2.	Notices	107
	SECTION 10.3.	Amendments and Waivers	108
	SECTION 10.4.	Governing Law; Jurisdiction; WAIVER OF JURY TRIAL	109
	SECTION 10.5.	Assignment; Parties in Interest; Non‑Parties	110
	SECTION 10.6.	Captions; Counterparts	110
	SECTION 10.7.	Entire Agreement	110
	SECTION 10.8.	Severability	111
	SECTION 10.9.	Specific Performance	111
	SECTION 10.10.	Financing Sources.	111

EXHIBITS

Exhibit A

Separation and Distribution Agreement

Exhibit B	Certificate of Incorporation of the Surviving Corporation
Exhibit C	Voting Agreement
Exhibit D	Supply Agreement Term Sheet
Exhibit E	Tender Agreement Term Sheet

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2019 is entered into by and among ▇▇▇▇▇▇▇▇▇-▇▇▇▇ plc, a Republic of Ireland public limited company (“Moon”), ▇▇▇▇▇▇▇▇▇-▇▇▇▇ U.S. HoldCo, Inc., a Delaware corporation and wholly owned Subsidiary of Moon (“SpinCo”), ▇▇▇▇▇▇▇ Denver Holdings, Inc., a Delaware corporation (“Clover”), and Charm Merger Sub Inc., a Delaware corporation and newly formed, wholly owned Subsidiary of Clover (“Merger Sub”).  Each of the foregoing parties is referred to herein as a “Party” and collectively as the “Parties”.

WHEREAS:

(1)          SpinCo is a newly formed, wholly owned, indirect Subsidiary of Moon;

(2)          on or prior to the Distribution Date, and subject to the terms and conditions set forth in the Separation and Distribution Agreement, Moon will consummate the Reorganization;

(3)          upon the terms and subject to the conditions set forth in the Separation and Distribution Agreement, on the Distribution Date, Moon will either (a) cause Moon shareholders to receive on a pro rata basis for no consideration all the shares of SpinCo Common Stock, or (b) consummate an offer to exchange (the “Exchange Offer”) shares of SpinCo Common Stock for outstanding shares of Moon Common Stock and, in the event that Moon’s shareholders subscribe for less than all of the SpinCo Common Stock in the Exchange Offer, Moon will distribute, pro rata to its shareholders, any unsubscribed SpinCo Common Stock on the Distribution Date immediately following the consummation of the Exchange Offer (the “Clean‑Up Spin‑Off”);

(4)          the disposition by Moon, and receipt by Moon shareholders, of 100% of the SpinCo Common Stock is referred to as the “Distribution”, and the Distribution together with the Reorganization is referred to as the “Separation”;

(5)          following the Distribution, at the Effective Time, the Parties will effect the merger of Merger Sub with and into SpinCo, with SpinCo continuing as the surviving corporation, all upon the terms and subject to the conditions set forth herein;

(6)          the board of directors of Clover (the “Clover Board”) (a) has determined that the Merger and this Agreement are advisable, fair to, and in the best interests of, Clover and the holders of Clover Common Stock and has approved this Agreement and the transactions contemplated hereby, including the Merger, the Voting Agreement and the issuance of shares of Clover Common Stock pursuant to the Merger (the “Clover Share Issuance”), and (b) has unanimously resolved to recommend the approval by the stockholders of Clover of the Clover Share Issuance;

(7)          the board of directors of Merger Sub (a) has determined that the Merger and this Agreement are advisable and has approved this Agreement and the transactions contemplated hereby, including the Merger and (b) has resolved to recommend the adoption of this Agreement by the sole stockholder of Merger Sub;

(8)          the board of directors of SpinCo (the “SpinCo Board”) (a) has determined that the Merger and this Agreement are advisable and has approved this Agreement and the Separation and Distribution Agreement and the transactions contemplated hereby and thereby, including the Merger, the Reorganization and the Distribution and (b) has resolved to recommend the adoption of this Agreement by the sole stockholder of SpinCo;

(9)          the board of directors of Moon (the “Moon Board”), or a duly authorized committee thereof, has approved this Agreement and the Separation and Distribution Agreement and the transactions contemplated hereby and thereby, including the Merger, the Reorganization and the Distribution;

(10)          concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Moon’s and SpinCo’s willingness to enter into this Agreement, certain stockholders of Clover are entering into a voting agreement in the form attached as Exhibit C hereto (the “Voting Agreement”) pursuant to which such stockholders, among other things, will agree, on the terms and subject to the conditions contained in such agreements, to vote such stockholders’ shares of Clover Common Stock in favor of the Clover Share Issuance; and

(11)          it is the intention of the Parties that, (a) for U.S. federal income Tax purposes: (i) the Contribution and Distribution qualify as tax‑free under Sections 368(a), 361 and 355 of the Code; (ii) each of the transactions described on Schedule 7.3(b) qualify as either a “distribution” under Section 355 of the Code or as a “reorganization” under Sections 368(a), 361 and 355 of the Code; (iii) the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Code; (iv) no income, gain or loss be recognized as a result of such transactions described in clauses (i), (ii) and (iii) by any of Moon, SpinCo, Clover, their respective Subsidiaries, the holders of SpinCo Common Stock (except with respect to the receipt of cash in lieu of fractional shares of Clover Common Stock pursuant to Section 3.3) or the holders of Moon Common Stock (except with respect to the receipt of cash in lieu of fractional shares of SpinCo Common Stock, if any); and (v) each of this Agreement and the Separation and Distribution Agreement constitute a “plan of reorganization” within the meaning of Sections 1.368‑2(g) and 1.368‑3(a) of the Treasury Regulations; and (b) for Irish tax purposes that (i) no liability for dividend withholding Tax arises for Moon; (ii) no Tax on chargeable gains arises for any of Moon, SpinCo, Clover, their respective Subsidiaries, the holders of SpinCo Common Stock (except with respect to the receipt of cash in lieu of fractional shares of Clover Common Stock pursuant to Section 3.3) or the holders of Moon Common Stock (except with respect to the receipt of cash in lieu of fractional shares of SpinCo Common Stock, if any); and (iii) no stamp duty arises for any of Moon, SpinCo, Clover or any of their respective Subsidiaries or shareholders.

NOW, THEREFORE:

In consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

 

SECTION 1.1.          Definitions

As used herein, the following terms have the following meanings:

“Acceptable Confidentiality Agreement” means a confidentiality agreement that contains provisions that are at least as restrictive in all material respects as those contained in the Confidentiality Agreement; provided that such confidentiality agreement need not contain any “standstill” or similar provisions or otherwise prohibit the making, or amendment, of a Competing Proposal.

“Action” means any claim, action, suit, arbitration, investigation or other Proceeding, in each case, by any Person or Governmental Authority before any Governmental Authority.

“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, through one or more intermediaries or otherwise. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by Contract or otherwise. For the avoidance of doubt, following the Effective Time, Affiliates of Clover shall include the SpinCo Entities.

“Agreement” means this Agreement and Plan of Merger, including all Annexes, Exhibits and Schedules hereto (including the SpinCo Disclosure Letter and Clover Disclosure Letter).

“Anti‑corruption Laws” means Laws relating to anti‑bribery or anti‑corruption (governmental or commercial) that apply to SpinCo, Clover or their respective Subsidiaries, including Laws that prohibit the corrupt payment, offer, promise or authorization of the payment or transfer of anything of value (including gifts or entertainment), directly or indirectly, to any foreign Government Official or other Person to obtain a business advantage, including the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”), the U.K. Bribery Act of 2010 and all national and international Laws enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions.

“Applicable Date” means January 1, 2017.

“Benefit Plan” means any benefit and compensation plan, program, policy, practice, agreement, contract, arrangement (including employment agreements) or other obligation, whether or not in writing and whether or not funded, in each case, which is sponsored or maintained by, or required to be contributed to, or with respect to which any potential liability is borne by (i) Clover or any of its Subsidiaries or (ii) a SpinCo Entity (as the context requires), in each case, including any “employee benefit plans” within the meaning of Section 3(3) of ERISA, employment, consulting, retirement, severance, termination or change-in-control agreements, deferred compensation, stock based, incentive bonus, supplemental retirement, profit sharing,

 

insurance, medical, welfare, fringe or other benefits or remuneration of any kind (other than any Multiemployer Plan).

“Business Day” means any day that is not a Saturday, a Sunday or other day on which the Federal Reserve Bank of New York is closed.

“Citi” shall mean Citigroup Global Markets Inc., Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc. or any of their affiliates.

“Clover Common Stock” means the common stock, par value $0.01 per share, of Clover.

“Clover Datasite” means the datasite established by Clover for purposes of due diligence of Clover and the Clover Subsidiaries and their respective businesses.

“Clover Disclosure Letter” means the Disclosure Letter delivered by Clover to Moon and SpinCo on the date hereof and attached hereto.

“Clover Equity Award” means an equity award granted pursuant to a Clover Stock Plan.

“Clover Leased Real Property” means all Leased Real Property of Clover or any of its Subsidiaries.

“Clover Material Adverse Effect” means any change, event, occurrence, state of facts, condition, circumstance, development or effect that, individually or in the aggregate with such other changes, events, occurrences, states of facts, conditions, circumstances, developments or effects has, or would reasonably be expected to have, a material adverse effect on the properties, assets, liabilities, business, operations, results of operations or financial condition of Clover and the Clover Subsidiaries, taken as a whole; provided, however, that, for purposes of the foregoing, none of the following, in and of itself or themselves shall be deemed to constitute or be taken into account in determining whether there has occurred or would reasonably be expected to occur a Clover Material Adverse Effect:  (a) changes in the economy, commodity, credit or financial markets or political, regulatory or business conditions in the United States or any other countries in which Clover or any of the Clover Subsidiaries has any material operations; (b) changes that are the result of factors generally affecting the industries in which Clover and the Clover Subsidiaries operate; (c) changes in GAAP or in any Law, including the repeal thereof, or in the interpretation or enforcement thereof, after the date hereof; (d) any failure by Clover to meet any internal or public projections or forecasts or estimates of revenues or earnings for any period ending on or after the date hereof and prior to the Closing; provided that the exception in this clause (d) shall not prevent or otherwise affect a determination that any change, event, occurrence, state of facts, condition, circumstance, development or effect (not otherwise excluded under this definition) underlying such failure has resulted in or contributed to, or would reasonably be expected to result in or contribute to, a Clover Material Adverse Effect; (e) any change, event, occurrence, state of facts, condition, circumstance, development or effect resulting from acts of war (whether or not declared), civil disobedience, hostilities, sabotage (other than cyberattacks), terrorism, military actions or the escalation of any of the foregoing, any hurricane, flood, tornado, earthquake or other catastrophic weather or natural disaster, or any outbreak of illness or other public health event or any other force majeure event, whether or not

 

caused by any Person (other than Clover, its Subsidiaries or any of their respective Affiliates or Representatives), or any national or international calamity or crisis; (f) any actions taken or omitted to be taken by Moon, Clover or any of their Subsidiaries that are expressly required to be taken by this Agreement or any actions taken or omitted to be taken with Moon’s prior written consent or at Moon’s written request (except for any obligation to operate in the ordinary course or similar obligation) after disclosure to Moon of all material and relevant facts and information; (g) the public announcement or pendency or consummation of the transactions contemplated by this Agreement, including the impact thereof on the relationship of Clover or any of its Subsidiaries, contractual or otherwise, with customers, employees, unions, suppliers, distributors, financing sources, partners or similar relationship; provided, however, that the exceptions in this clause (g) shall not apply with respect to references to Clover Material Adverse Effect in the representations and warranties contained in Section 6.4 (or in Section 8.2(b) or Section 9.4(b), in each case to the extent related to such portions of such representations and warranties in Section 6.4); or (h) a decline in the market price, or change in trading volume, of the shares of Clover Common Stock on the NYSE; provided that the exception in this clause (h) shall not prevent or otherwise affect a determination that any change, event, occurrence, state of facts, condition, circumstance, development or effect (not otherwise excluded under this definition) underlying such decline or change has resulted in, or contributed to, or would reasonably be expected to result in, or contribute to, a Clover Material Adverse Effect; provided further, that, with respect to clauses (a), (b), (c) and (e), such change, event, occurrence, state of facts, conditions, circumstance, development or effect shall be taken into account in determining whether a “Clover Material Adverse Effect” has occurred if and only to the extent it materially and disproportionately adversely affects Clover and its Subsidiaries compared to other companies of similar size operating in the industries in which Clover and its Subsidiaries conduct their business.

 “Clover Owned Intellectual Property” means all Intellectual Property Rights owned by Clover or any of the Clover Subsidiaries.

“Clover Owned Real Property” means all Owned Real Property of Clover or any of the Clover Subsidiaries.

“Clover Registration Statement” means the registration statement on Form S‑4 to be filed by Clover with the SEC to effect the registration under the Securities Act of the issuance of the shares of Clover Common Stock that will be issued to holders of SpinCo Common Stock pursuant to the Merger.

 “Clover Stock Plans” means collectively, the Clover 2013 Stock Incentive Plan for Key Employees of Renaissance Parent Corp. and its Subsidiaries and the Clover 2017 Omnibus Incentive Plan, each as amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

“Clover Subsidiaries” means all direct and indirect Subsidiaries of Clover. For the avoidance of doubt, following the Effective Time, the Clover Subsidiaries shall include the SpinCo Entities.

“Clover Tax Counsel” means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, or, in the event ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP is unable or unwilling to provide the Clover Tax Opinion, such other counsel reasonably satisfactory to Clover.

“Code” means the U.S. Internal Revenue Code of 1986.

“Competition Laws” means applicable supranational, national, federal, state, provincial or local Laws designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolizing or restraining trade or lessening competition of any other country or jurisdiction, to the extent applicable to the Merger and the other transactions contemplated by this Agreement, including the HSR Act and other similar competition or antitrust laws of any jurisdiction other than the United States.

“Confidentiality Agreement” means that certain Confidentiality Agreement by and between Clover and Moon dated December 21, 2018.

“Contract” means any written or oral legally binding contract, agreement, understanding, arrangement, subcontract, loan or credit agreement, note, bond, indenture, mortgage, purchase order, insurance policy, benefit plan, deed of trust, lease, sublease, franchise, permit, authorization, license, instrument, binding commitment, obligation or other undertaking.

“Contribution” has the meaning set forth in the Separation and Distribution Agreement.

“DGCL” means the Delaware General Corporation Law.

“Distribution Date” has the meaning set forth in the Separation and Distribution Agreement.

“Distribution Time” has the meaning set forth in the Separation and Distribution Agreement.

“Employee Matters Agreement” means the Employee Matters Agreement to be entered into at or prior to the Effective Time among Moon, Clover and SpinCo, substantially in the form attached as Exhibit C to the Separation and Distribution Agreement.

“Environmental Laws” means any and all applicable Laws, including the common law, relating to the protection of the environment, natural resources or human health and safety (to the extent related to exposure to harmful or deleterious substances).

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Plans” means Benefit Plans that are “employee benefit plans” within the meaning of Section 3(3) of ERISA.

“Exchange Act” means the Securities Exchange Act of 1934.

“Exchange Ratio” means the New Issuance divided by the number of shares of SpinCo Common Stock issued and outstanding immediately prior to the Effective Time, subject to adjustment as set forth herein.

“Excluded Assets” has the meaning set forth in the Separation and Distribution Agreement.

“Excluded Liabilities” has the meaning set forth in the Separation and Distribution Agreement.

“Expenses” means, with respect to any Person, all reasonable and documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, financial advisors and investment bankers of such Person and its Affiliates), incurred by such Person and its Subsidiaries or on their behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the Transaction Documents and the transactions contemplated hereby and thereby (including the Reorganization, the Separation and the Financing), any litigation with respect thereto, the preparation, printing, filing and mailing of the Registration Statements, the Proxy Statement and, if applicable, the Schedule TO, the filing of any required notices under the HSR Act or other Competition Law, or in connection with other regulatory approvals, and all other matters related to the Merger or the other transactions contemplated by this Agreement or the other Transaction Documents.

“Fully Diluted Clover Shares” means the number of outstanding shares of Clover Common Stock as of immediately before the Effective Time on a fully-diluted, as converted and as exercised basis in accordance with the treasury stock method, calculated by reference to the closing price per share of Clover Common Stock on the trading day immediately prior to the Distribution, including shares of Clover Common Stock underlying outstanding Clover Equity Awards and any other outstanding securities convertible into or exercisable for shares of Clover Common Stock.

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

“Governmental Authority” means any federal, state, local, foreign or supranational government, any entity exercising executive, legislative, judicial, regulatory or administrative function of or pertaining to government, and any arbitral body or tribunal of competent jurisdiction.

 “Governmental Order” means any order, award, judgment, injunction, writ, decree (including any consent decree or similar agreed order or judgment), directive, settlement, stipulation, ruling, determination or verdict, whether civil, criminal or administrative, in each case, that is entered, issued, made or rendered by any Governmental Authority.

“Government Official” means (a) any official, officer, employee, representative or any Person acting in an official capacity for or on behalf of any Governmental Authority; (b) any political party or party official or candidate for political office; (c) any public international organization, any department or agency thereof, or any officer, employee or representative thereof; or (d) any Person or other entity owned in whole or in part, or controlled by any Person described in the foregoing clauses (a), (b) or (c) of this definition.

 “Hazardous Material” means (a) any substance that is listed, classified or regulated pursuant to any Environmental Law; (b) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, toxic mold, radioactive material or radon; and (c) any other substance or waste which may be the subject of regulatory action by any Governmental Authority in connection with any Environmental Law.

“HSR Act” means the ▇▇▇▇‑▇▇▇▇▇‑▇▇▇▇▇▇ Antitrust Improvements Act of 1976.

“Import and Export Laws” means (a) all sanctions, export and re-export Laws of the United States, including the U.S. International Traffic in Arms Regulation, the Export Administration Regulations and U.S. sanctions Laws and regulations administered by OFAC, as applicable, and (b) all other applicable import and export control Laws in any countries in which (x) Clover and its Subsidiaries or (y) the SpinCo Entities (as applicable) conduct business.

“Intellectual Property Matters Agreement” means the Intellectual Property Matters Agreement to be entered into at or prior to the Effective Time between Moon, SpinCo and Clover, substantially in the form attached as Exhibit E to the Separation and Distribution Agreement.

 “Intellectual Property Rights” has the meaning set forth in the Intellectual Property Matters Agreement.

 “Interests” means shares, partnership interests, limited liability company interests or any other equity interest in any Person.

“Intervening Event” means a material event, fact, development or occurrence with respect to Clover and its Subsidiaries or the business of Clover and its Subsidiaries, in each case taken as a whole, that is neither known, nor reasonably foreseeable by the Clover Board as of or prior to the date hereof or, if known and reasonably foreseeable by the Clover Board as of the date hereof, the material consequences of which were neither known nor reasonably foreseeable by the Clover Board as of the date hereof; provided that any event, fact, development or occurrence that involves or relates to a Competing Proposal or a Superior Proposal will not be deemed to constitute an Intervening Event.

 “IRS” means the U.S. Internal Revenue Service.

“IT Assets” means computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology and related equipment, and all data stored therein or processed thereby.

“Knowledge” means (a) with respect to Moon, the actual knowledge of the Persons set forth in Section 1.1(a)(i) of the SpinCo Disclosure Letter, (b) with respect to SpinCo, the actual knowledge of the Persons set forth in Section 1.1(a)(ii) of the SpinCo Disclosure Letter and (c) with respect to Clover, the actual knowledge of the Persons set forth in Section 1.1(a) of the Clover Disclosure Letter.

“Law” means, with respect to any Person, any United States or foreign federal, state or local law, constitution, treaty, convention, ordinance, code, rule, regulation, statute, order,

executive order, writ, injunction, judgment, decree, ruling, award or other similar requirement enacted, issued, adopted or promulgated by a Governmental Authority that is binding upon or applicable to such Person.

“Leased Real Property” means, with respect to any Person, all interests in real property leased, licensed or subleased to, or used pursuant to any written agreement by any such Person.

“Lender Related Parties” means the Lenders and their respective Affiliates, and the respective current and former directors, officers, employees, agents, advisors, representative and successors of each of the foregoing.

“Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether direct or indirect, and whether due or to become due).

“Lien” means any mortgage, deed of trust, pledge, hypothecation, encumbrance, license, security interest, adverse ownership interest or other lien of any kind.

“Moon Common Stock” means the ordinary shares, par value $1.00 per share, of Moon.

“Moon Entities” means Moon and its Subsidiaries, after giving effect to the Reorganization.

“Moon Equity Awards” has the meaning set forth in the Employee Matters Agreement.

“Moon Name Change” means the change of the name of Moon, after Moon takes all actions and receives all approvals that are necessary for such name change to occur, to a name that shall not be the same or confusingly similar to (i) the Moon Trademarks (as defined in the Intellectual Property Matters Agreement) or (ii) any Trademarks (as defined in the Intellectual Property Matters Agreement) owned by Clover or its Subsidiaries (including the SpinCo Entities) (such name, a “Permitted Moon Name”).

“Moon Reports” means the forms, statements, certifications, reports and other documents filed or furnished to the SEC, including any amendments thereto.

“Moon Stock Plans” has the meaning set forth in the Employee Matters Agreement.

“Moon Tax Counsel” means, with respect to U.S. federal income Tax matters, ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and, with respect to Irish Tax matters, ▇▇▇▇▇▇ ▇▇▇ or, in the event ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or ▇▇▇▇▇▇ ▇▇▇, as applicable, is unable or unwilling to provide the Moon Tax Opinion, such other counsel reasonably satisfactory to Moon.

“New Issuance” means (i) the Fully Diluted Clover Shares multiplied by (ii) the quotient of 50.1 divided by 49.9.

“NYSE” means the New York Stock Exchange.

“Organizational Documents” means (a) with respect to any corporation, its articles or certificate of incorporation and bylaws; (b) with respect to any limited liability company, its articles or certificate of organization or formation and its operating agreement or limited liability company agreement or documents of similar substance; (c) with respect to any limited partnership, its certificate of limited partnership and partnership agreement or governing or organizational documents of similar substance; and (d) with respect to any other entity, governing or organizational documents of similar substance to any of the foregoing, in the case of each of clauses (a) through (d), as may be in effect from time to time.

“Owned Real Property” means, with respect to any Person, all real property owned in fee by such Person together with all buildings, structures, fixtures and improvements of any kind located thereon, and all easements, covenants and other rights appurtenant thereto and all right, title and interest of such Person, if any, in and to any land lying on the bed of any street, road, avenue or alley, open or closed, in front of or adjoining the applicable real property and to the center line thereof.

“Permits” means licenses, franchises, permits, certificates, approvals and authorizations from Governmental Authorities.

“Permitted Liens” means (a) mechanics’, materialmen’s and similar Liens with respect to any amounts not yet due and payable or which are being contested in good faith and for which adequate reserves have been established in accordance with GAAP; (b) Liens for Taxes (i) not yet due and payable or (ii) which are being contested in good faith and for which adequate reserves have been established in accordance with GAAP; (c) purchase money Liens and Liens securing rental payments under capital lease agreements; (d) pledges or deposits under workers’ compensation legislation, unemployment insurance Laws or similar Laws; (e) good faith deposits in connection with bids, tenders, leases, contracts or other agreements, including rent security deposits; (f) pledges or deposits to secure public or statutory obligations or appeal bonds; (g) easements, covenants, conditions, rights of way and similar restrictions on real property that (i) are matters of record or (ii) would be disclosed by a current, accurate survey and, in the case of both (i) and (ii), which do not materially interfere with the present uses of such real property and that are not violated by the current occupation or use of such real property; to the extent released or terminated at or prior to the Effective Time; (h) Liens securing payment, or any other obligations, of any Person with respect to indebtedness that have been disclosed to the Parties in writing; (i) Liens arising under or created by any SpinCo Material Contract, Clover Material Contract, this Agreement or any Transaction Document (other than as a result of a breach or default under such Contracts); (j) Liens constituting a lease, sublease or occupancy agreement that gives any third party any right to occupy any real property; (k) other Liens arising in the ordinary course of business and not incurred in connection with the borrowing of money; (l) non-exclusive licenses of Intellectual Property Rights in the ordinary course of business; (m) Liens expressly referred to in the Moon SEC Documents or the Clover SEC Documents; (n) zoning, building codes and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Authority that are not violated by the current occupation or use of such real property; (o) Liens arising under the SpinCo Debt (as defined in the Separation and Distribution Agreement) and (p) Liens described on Section 1.1(b) of the SpinCo Disclosure Letter or Section 1.1(b) of the Clover Disclosure Letter.

“Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind.

“PFS Acquisition” has the meaning set forth in the Separation and Distribution Agreement.

“PFS Business” has the meaning set forth in the Separation and Distribution Agreement.

“Plan of Reorganization” has the meaning set forth in the Separation and Distribution Agreement.

“Privacy Policy” means all policies and procedures relating to personal, personally identifiable, sensitive or information governed or regulated by any applicable Law (collectively, “Personal Data”) or the security, operation, backup or redundancy of any IT Assets.

“Proceeding” means any action, cause of action, claim, demand, litigation, suit, investigation, grievance, citation, summons, subpoena, inquiry, audit, hearing, originating application to a tribunal, arbitration or other similar proceeding of any nature, civil, criminal, regulatory, administrative or otherwise, whether in equity or at law, in contract, in tort or otherwise.

“Proxy Statement” means a proxy statement or similar disclosure document or circular relating to the Clover Stockholders Meeting.

“Real Estate Matters Agreement” means the Real Estate Matters Agreement to be entered into at or prior to the Effective Time between Moon and SpinCo, substantially in the form attached as Exhibit D to the Separation and Distribution Agreement.

“Record Date” means the close of business on the date to be determined by the Moon Board, or a duly authorized committee thereof, as the record date for determining stockholders of Moon entitled to receive shares of SpinCo Common Stock in the Distribution, to the extent the Distribution is effected through a One‑Step Spin‑Off, or in connection with any Clean‑Up Spin‑Off.

“Reorganization” has the meaning set forth in the Separation and Distribution Agreement.

“Representative” means, with respect to any Person, such Person’s directors, managers, members, officers, employees, agents, partners, attorneys, accountants, financial advisors, financing sources, consultants, advisors or other Persons acting on behalf of such Person.

“SEC” means the United States Securities and Exchange Commission.

 “Securities Act” means the Securities Act of 1933.

 “Separation and Distribution Agreement” means that Separation and Distribution Agreement dated as of the date hereof between Moon and SpinCo, attached hereto as Exhibit A.

 “SpinCo Affiliate Contract” means any Contract, whether or not in writing, between any SpinCo Entity, on the one hand, and Moon or any of its Subsidiaries (other than any SpinCo Entity), on the other hand.

“SpinCo Assets” has the meaning set forth in the Separation and Distribution Agreement.

“SpinCo Business” has the meaning set forth in the Separation and Distribution Agreement.

“SpinCo Common Stock” means the common stock, par value $0.01 per share, of SpinCo.

“SpinCo Datasite” means the datasite established by Moon for purposes of due diligence of the SpinCo Entities and the SpinCo Business.

“SpinCo Disclosure Letter” means the Disclosure Letter delivered by Moon and SpinCo to Clover on the date hereof and attached hereto.

“SpinCo Employee” has the meaning set forth in the Employee Matters Agreement.

“SpinCo Entities” means SpinCo and the SpinCo Subsidiaries, after giving effect to the Reorganization.

“SpinCo IP” has the meaning set forth in the Intellectual Property Matters Agreement.

“SpinCo Leased Real Property” means all Leased Real Property of the SpinCo Entities.

“SpinCo Liabilities” has the meaning set forth in the Separation and Distribution Agreement.

“SpinCo Material Adverse Effect” means any change, event, occurrence, state of facts, condition, circumstance, development or effect that, individually or in the aggregate with such other changes, events, occurrences, states of facts, conditions, circumstances, developments or effects has, or would reasonably be expected to have, a material adverse effect on the properties, assets, liabilities, business, operations, results of operations or financial condition of SpinCo and the SpinCo Subsidiaries, taken as a whole; provided, however, that for purposes of the foregoing, none of the following, in and of itself or themselves shall be deemed to constitute or be taken into account in determining whether there has occurred or would reasonably be expected to occur a SpinCo Material Adverse Effect:  (a) changes in the economy, commodity, credit or financial markets or political, regulatory or business conditions in the United States or any other countries in which SpinCo or any of the SpinCo Subsidiaries has any material operations; (b) changes that are the result of factors generally affecting industries in which the SpinCo Entities operate; (c) changes in GAAP or in any Law, including the repeal thereof, or in the interpretation or enforcement thereof, after the date hereof; (d) any failure by SpinCo to meet any internal or public projections or forecasts or estimates of revenues or earnings for any period ending on or after the date hereof and prior to the Closing; provided that the exception in this clause (d) shall not prevent or otherwise affect a determination that any change, event, occurrence, state of facts,

condition, circumstance, development or effect (not otherwise excluded under this definition) underlying such failure has resulted in or contributed to, or would reasonably be expected to result in or contribute to, a SpinCo Material Adverse Effect; (e) any change, event, occurrence, state of facts, condition, circumstance, development or effect resulting from acts of war (whether or not declared), civil disobedience, hostilities, sabotage (other than cyberattacks), terrorism, military actions or the escalation of any of the foregoing, any hurricane, flood, tornado, earthquake or other catastrophic weather or natural disaster, or any outbreak of illness or other public health event or any other force majeure event, whether or not caused by any Person (other than SpinCo, its Subsidiaries or any of their respective Affiliates or Representatives), or any national or international calamity or crisis; (f) any actions taken or omitted to be taken by Moon, SpinCo or any of their Subsidiaries that are expressly required to be taken by this Agreement or any actions taken or omitted to be taken with Clover’s prior written consent or at Clover’s written request (except for any obligation to operate in the ordinary course or similar obligation) after disclosure to Clover of all material and relevant facts and information; (g) the public announcement or pendency or consummation of the transactions contemplated by this Agreement, including the impact thereof on any changes in the relationship of SpinCo or any of its Subsidiaries, contractual or otherwise, with customers, employees, unions, suppliers, distributors, financing sources, partners or similar relationship; provided, however, that the exceptions in this clause (g) shall not apply with respect to references to SpinCo Material Adverse Effect in the representations and warranties contained in Section 5.4 (or in Section 8.3(b) or Section 9.3(b), in each case to the extent related to such portions of such representations and warranties in Section 5.4); or (h) a decline in the market price, or change in trading volume, of the shares of Moon Common Stock on the NYSE; provided that the exception in this clause (h) shall not prevent or otherwise affect a determination that any change, event, occurrence, state of facts, condition, circumstance, development or effect (not otherwise excluded under this definition) underlying such decline or change has resulted in, or contributed to, or would reasonably be expected to result in, or contribute to, a SpinCo Material Adverse Effect; provided further, that, with respect to clauses (a), (b), (c), and (e), such change, event, occurrence, state of facts, conditions, circumstance, development or effect shall be taken into account in determining whether a “SpinCo Material Adverse Effect” has occurred if and only to the extent it materially and disproportionately adversely affects SpinCo and its Subsidiaries compared to other companies of similar size operating in the industries in which SpinCo and its Subsidiaries conduct their business.

“SpinCo Owned Real Property” means all Owned Real Property of the SpinCo Entities.

“SpinCo Payment” has the meaning set forth in the Separation and Distribution Agreement.

“SpinCo Registration Statement” means the registration statement to be filed by SpinCo with the SEC to effect the registration of shares of SpinCo Common Stock in connection with the Distribution.

“SpinCo Subsidiaries” means all direct and indirect Subsidiaries of SpinCo, after giving effect to the Reorganization.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities or ownership interests of such Person, (ii) the total combined equity or ownership interests or (iii) the capital or profit interests, in the case of a partnership, or (b) otherwise has the power to vote or direct the vote of, either directly or indirectly, sufficient securities or interests to elect a majority of the board of directors or similar governing body.

 “Tax Matters Agreement” means the Tax Matters Agreement to be entered into at or prior to the Distribution Time among Moon, SpinCo and Clover, substantially in the form attached as Exhibit B to the Separation and Distribution Agreement.

“Tax Representation Letters” means tax representation letters containing normal and customary representations and covenants, and representations and covenants from Clover with respect to any planned compensatory equity issuances, in all cases substantially in compliance with relevant regulatory guidance and with IRS published advance ruling guidelines, and with customary assumptions, exceptions and modifications thereto, reasonably satisfactory in form and substance to Moon Tax Counsel and Clover Tax Counsel in light of the facts and the conclusions to be reached in the Moon Tax Opinion and the Clover Tax Opinion, executed by Clover, SpinCo and Moon, and other parties, if required.

“Tax Returns” has the meaning set forth in the Tax Matters Agreement.

 “Tax‑Free Status of the External Transactions” means (a) the following U.S. federal income Tax consequences in connection with the Separation and the Merger: (i) the qualification of the Contribution and Distribution as a “reorganization” under Sections 368(a), 361 and 355 of the Code; (ii) the nonrecognition of income, gain or loss by Moon and the holders of Moon Common Stock upon the distribution of SpinCo Common Stock in the Distribution (except with respect to the receipt of cash in lieu of fractional shares of SpinCo Common Stock, if any); and (iii) the qualification of the Merger as a “reorganization” (within the meaning of Section 368(a) of the Code) in which no income, gain or loss is recognized by any of Clover, Merger Sub, SpinCo or the holders of SpinCo Common Stock (except with respect to the receipt of cash in lieu of fractional shares of Clover Common Stock); and (b) for Irish Tax purposes, Moon, SpinCo and holders of Moon Common Stock (other than holders of Moon Common Stock who are resident or ordinarily resident in Ireland or holders of Moon Common Stock that hold their shares in connection with a trade or business carried on by such holders in Ireland through a branch or agency) not having any liability for Irish Tax on chargeable gains, stamp duty or withholding as a result of the Separation.

 “Taxes” has the meaning set forth in the Tax Matters Agreement.

 “Trademark License Agreement” means the Trademark License Agreement to be entered into at or prior to the Effective Time between Moon and SpinCo, substantially in the form attached as Exhibit F to the Separation and Distribution Agreement.

“Transaction Documents” means the Separation and Distribution Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the Transition Services Agreement,

the Real Estate Matters Agreement, the Intellectual Property Matters Agreement, the Trademark License Agreement, Tender Agreement, the Supply Agreement, the Headquarters Lease, and including all annexes, Exhibits, Schedules, attachments and appendices thereto, and any certificate, document or other instrument delivered by any Party to any other Party pursuant to this Agreement or any of the foregoing.

“Transition Services Agreement” means the Transition Services Agreement to be entered into at or prior to the Effective Time between Moon and SpinCo, substantially in the form attached as Exhibit A to the Separation and Distribution Agreement, subject to the provisions of Section 7.21.

“Treasury Regulations” means the regulations promulgated by the U.S. Treasury Department under the Code.

“Willful Breach” means, with respect to any covenant of a Party made in this Agreement, an action or omission taken or omitted to be taken by such Party in material breach of such covenant that the breaching party intentionally takes (or intentionally fails to take) with actual knowledge that such action or omission would, or would reasonably be expected to, cause such material breach of such covenant.

SECTION 1.2.          Cross References

Each of the following terms is defined in the Section set forth opposite such term:

 

 

 

 

 

 

SECTION 1.3.          Interpretation

(a)          Unless the context of this Agreement otherwise requires:

(i)          (a) words of any gender include each other gender and neuter form; (b) words using the singular or plural number also include the plural or singular number,

respectively; (c) derivative forms of defined terms will have correlative meanings; (d) the terms “hereof,” “herein,” “hereby,” “hereto,” “herewith,” “hereunder” and derivative or similar words refer to this entire Agreement; (e) the terms “Article,” “Section,” “Annex,” “Exhibit,” “Schedule,” and “Disclosure Letter” refer to the specified Article, Section, Annex, Exhibit, Schedule or Disclosure Letter of this Agreement and references to “paragraphs” or “clauses” shall be to separate paragraphs or clauses of the Section or subsection in which the reference occurs; (f) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” and (g) the word “or” shall be disjunctive but not exclusive;

(ii)          references to Contracts (including this Agreement) and other documents or Laws shall be deemed to include references to such Contract, document or Law as amended, supplemented or modified from time to time in accordance with its terms and the terms hereof, as applicable, and in effect at any given time (and, in the case of any Law, to any successor provisions);

(iii)          references to any federal, state, local, foreign or supranational statute or other Law shall include all regulations promulgated thereunder; and

(iv)          references to any Person include references to such Person’s successors and permitted assigns, and in the case of any Governmental Authority, to any Person succeeding to its functions and capacities.

(b)          The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent. The Parties acknowledge that each Party and its attorney has reviewed and participated in the drafting of this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party, or any similar rule operating against the drafter of an agreement, shall not be applicable to the construction or interpretation of this Agreement.

(c)          Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.

(d)          The phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”

(e)          The term “writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.

(f)          All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP unless the context otherwise requires.

(g)          All monetary figures shall be in United States dollars unless otherwise specified.

 

(h)          No reference in this Agreement to dollar amount thresholds shall be deemed to be evidence of a SpinCo Material Adverse Effect or Clover Material Adverse Effect, as applicable, or materiality.

(i)          Unless otherwise appropriate, specified or necessary for a representation or warranty to be true, each of the representations and warranties of the Parties set forth herein shall be deemed to be made as if the Reorganization has been consummated as of the date such representation and warranty is made hereunder.

(j)          Unless otherwise expressly set forth herein, each of the representations and warranties of the Parties set forth herein (other than the representation set forth in Section 5.6(b)) shall be deemed to be made as if the acquisition set forth on Section 7.2(a)(xviii) of the SpinCo Disclosure Letter has not been consummated as of the date such representation and warranty is made hereunder.  For the avoidance of doubt, with respect to Section 5.6(b) or Section 8.2(b) (to the extent relating to Section 5.6(b)), following completion of such acquisition such acquisition will be taken into account for purposes of the definition of SpinCo Material Adverse Effect.

(k)          The phrases “furnished,” “provided,” “delivered” or “made available” when used with respect to information or documents means that such information or documents have been physically or electronically delivered to the relevant Party (and includes that such information or documents have been furnished to its Representatives acting on its behalf or posted to the Clover Datasite or the SpinCo Datasite, as applicable, or are otherwise publicly available on the SEC website and thereby provided to such Party).

SECTION 2.1.          The Merger

At the Effective Time and upon the terms and subject to the conditions of this Agreement, Merger Sub shall be merged with and into SpinCo (the “Merger”) in accordance with the applicable provisions of the DGCL, the separate existence of Merger Sub shall cease and SpinCo shall continue as the surviving corporation of the Merger (sometimes referred to herein as the “Surviving Corporation”) and shall succeed to and assume all the rights, powers and privileges and be subject to all of the obligations of Merger Sub in accordance with the DGCL. As a result of the Merger, SpinCo shall become a wholly owned Subsidiary of Clover. References herein to “SpinCo” with respect to the period from and after the Effective Time shall be deemed to be references to the Surviving Corporation. At the Effective Time, the effects of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL.

SECTION 2.2.          Closing

Unless the transactions herein contemplated shall have been abandoned and this Agreement terminated pursuant to Section 9.1, the closing of the Merger and the other transactions contemplated hereby (the “Closing”) shall take place at 9 a.m., Eastern time, on the last Business Day of the month in which the conditions set forth in Article VIII (other than those

 

conditions, including the consummation of the Reorganization and the Distribution, that are to be satisfied or by their nature may only be satisfied at the Closing, but subject to the satisfaction of all such conditions by or at the Closing) have been satisfied or, to the extent permitted by applicable Law, waived; provided, that if the date such conditions are satisfied is less than three Business Days prior to the last Business Day of such month, then the Closing shall occur on the last Business Day of the following month (subject to the satisfaction of the conditions in Article VIII (other than those conditions, including the consummation of the Reorganization and the Distribution, that are to be satisfied or by their nature may only be satisfied at the Closing, but subject to the satisfaction of all such conditions by or at the Closing)); provided, further, that without Clover’s consent, in the event Moon obtains the Moon Name Change Approval, in no event shall the Closing occur prior to 21 days following the date of the Moon Name Change Approval (but in any event no later than the Outside Date) (it being understood and agreed that the foregoing shall not effect or be deemed to be a condition to the Closing or either Party’s obligations in connection therewith), in each case at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another date, time or place is agreed to in writing by Moon and Clover. The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date.”

SECTION 2.3.          Effective Time

On the Closing Date, SpinCo and Merger Sub shall file a certificate of merger relating to the Merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at the time the Certificate of Merger shall have been duly filed with the Secretary of State of the State of Delaware, or such later time as Clover and SpinCo shall agree and specify in the Certificate of Merger (such time as the Merger becomes effective being the “Effective Time”).

SECTION 2.4.          Certificate of Incorporation and Bylaws of the Surviving Corporation

(a)          The certificate of incorporation of SpinCo shall, by virtue of the Merger, be amended and restated in its entirety to read as set forth in Exhibit B to this Agreement and, as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation until thereafter duly amended in accordance with such certificate of incorporation, this Agreement and applicable Law.

(b)          The Parties shall take all actions necessary so that the bylaws of Merger Sub in effect immediately prior to the Effective Time shall be the bylaws of the SpinCo, until thereafter amended, restated or amended and restated in accordance therewith or by applicable Law

SECTION 2.5.          Governance Matters

(a)          The Clover Board shall take all action necessary such that, effective as of the Effective Time, the Clover Board shall consist of ten (10) members, comprised of seven (7)

 

current Clover directors selected by the Clover Board in accordance with Section 2.5(a) of the Clover Disclosure Letter and three (3) individuals selected by Moon prior to the Effective Time.

(b)          The Clover Board shall take all action necessary such that immediately following the Effective Time, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be the Chief Executive Officer of Clover; provided that in the event that, as of the Effective Time, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is no longer serving as, or is unwilling or unable to serve as, Chief Executive Officer of Clover, Clover and Moon shall in good faith agree upon a mutually acceptable replacement.

(c)          The other members of management of Clover immediately following the Closing shall be determined as set forth on Section 2.5(c) of the Clover Disclosure Letter.

(d)          The Clover Board shall take all action necessary such that immediately following the Effective Time, ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be the Chairman of the Clover Board; provided that in the event that, as of the Effective Time, ▇▇▇▇▇ ▇▇▇▇▇▇▇ is no longer serving as, or is unwilling or unable to serve as, Chairman of the Clover Board, Clover and Moon shall in good faith agree upon a mutually acceptable replacement.

(e)          Clover shall take all action necessary such that from and after the Effective Time, the directors of Merger Sub as of immediately prior to the Effective Time shall be the directors of the Surviving Corporation and the officers of Merger Sub as of immediately prior to the Effective Time shall be the officers of the Surviving Corporation. Such directors and officers shall serve until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws.

(f)          The name of the Surviving Corporation at the Effective Time shall be “▇▇▇▇▇▇▇▇▇-▇▇▇▇ U.S. HoldCo, Inc.”

(g)          If and only if the Moon Name Change occurs prior to (or concurrently with) the Effective Time, (i) from and after the Effective Time, the name of Clover shall be “▇▇▇▇▇▇▇▇▇-▇▇▇▇, Inc.”, (ii) the Clover Board shall take all action necessary such that at the Effective Time, Article 1 of the Certificate of Incorporation of Clover (the “Clover Certificate”) shall be amended to change the name of Clover from ▇▇▇▇▇▇▇ Denver Holdings, Inc. to “▇▇▇▇▇▇▇▇▇-▇▇▇▇, Inc.” and such Clover Certificate as so amended shall be the Certificate of Incorporation of Clover until thereafter amended in accordance with applicable Law and (iii) Clover shall take all action necessary such that at the Effective Time, the trading symbol for Clover Common Stock shall be “IR”.

(h)          From and after the Effective Time, the name of Moon shall be determined by Moon in its sole discretion; provided that such name shall be a Permitted Moon Name.

(i)          As of the Closing, Clover will have its North American headquarters at the present Moon campus in Davidson, North Carolina.

 

SECTION 3.1.          Effect on Capital Stock

At the Effective Time, by virtue of the Merger and without any action on the part of SpinCo, Merger Sub or any holder of the capital stock of Moon, SpinCo, Merger Sub or Clover:

(a)          Conversion of SpinCo Capital Stock

(i)           Each share of SpinCo Common Stock issued and outstanding as of the Effective Time (other than shares canceled in accordance with Section 3.1(a)(ii)) shall be automatically converted into the right to receive a number of shares or, subject to Section 3.3, a fraction of a share of Clover Common Stock equal to the Exchange Ratio, subject to adjustment in accordance with Section 3.1(a)(iv).

(ii)          Each share of SpinCo Common Stock held by SpinCo as treasury stock or by Clover, in each case, immediately prior to the Effective Time shall be canceled and shall cease to exist and no stock or other consideration shall be issued or delivered in exchange therefor.

(iii)         Each share of SpinCo Common Stock issued and outstanding immediately prior to the Effective Time, when converted in accordance with this Section 3.1, shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of such shares shall cease to have any rights with respect thereto, except the right to receive the shares of Clover Common Stock as provided in Section 3.1(a)(i) and any dividends or distributions and other amounts payable in accordance with Section 3.2(c).

(iv)          The Exchange Ratio and any other similarly dependent items shall be adjusted to reflect fully the appropriate effect of any stock split, split‑up, reverse stock split, stock dividend or distribution of Clover Common Stock or SpinCo Common Stock, or securities convertible into any such securities, reorganization, recapitalization, reclassification or other like change with respect to Clover Common Stock or SpinCo Common Stock having a record date occurring on or after the date of this Agreement and prior to the Effective Time, other than the Reorganization; provided that nothing in this Section 3.1(a)(iv) shall be construed to permit Moon, SpinCo or Clover to take any action with respect to its securities that is prohibited by the terms of this Agreement.

(b)          Merger Sub Common Stock

At the Effective Time, each share of common stock, par value $0.01 per share, of Merger Sub (“Merger Sub Common Stock”) issued and outstanding immediately prior to the Effective Time shall be automatically converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

(c)          Clover Common Stock

 

Each share of Clover Common Stock that is issued and outstanding immediately prior to and at the Effective Time shall remain outstanding following the Effective Time.

(d)          Exchange Ratio True-Up

If the condition set forth in Section 7.3(b)(ii) would be unable to be satisfied because immediately after the Effective Time, the percentage of outstanding shares of Clover Common Stock to be received by the former holders of SpinCo Common Stock with respect to SpinCo Common Stock would be less than 50.1% (the “Threshold Percentage”) of all the stock of Clover (including (i) any instruments that are treated as stock for U.S. federal income Tax purposes; and (ii) any stock that may be issued after the Effective Time, pursuant to the exercise or settlement of an option or other Contract acquired or entered into on or before the Effective Time, but excluding (A) for purposes of clause (i), any employee stock option that, at the time of grant, was not in-the-money and, unless an election has been made under Section 83(b) of the Code with respect thereto, any stock or stock rights granted as compensation before the Effective Time that is not vested at the Effective Time; (B) for purposes of clause (ii), any stock that may be issued after the Effective Time, pursuant to the exercise or settlement of any rights pursuant to a Clover Stock Plan with respect to which stock Clover demonstrates to the reasonable satisfaction of Moon and Moon Tax Counsel, in response to Moon Tax Counsel’s requests for relevant information and appropriate representations, qualifies for Safe Harbor VIII under Treasury Regulation Section 1.355-7(d) and (C) any stock that may be issued after the Effective Time, pursuant to the exercise or settlement of any stock option or other equity award that prior to the Effective time was a Moon Equity Award, except in the case of (C) to the extent that it is reasonably determined by Moon Tax Counsel that issuances of such stock would not qualify for Safe Harbor VIII under Treasury Regulation Section 1.355-7(d), determined without regard to any adjustment pursuant to this Section 3.1(d), then (w) Moon shall promptly provide notice to Clover setting forth in detail the reasons the condition set forth in Section 7.3(b)(ii) would be unable to be satisfied, (x) Moon shall consider in good faith any comments provided by Clover, (y) the aggregate number of shares of Clover Common Stock into which the shares of SpinCo Common Stock are converted pursuant to Section 3.1(a) shall be increased such that the number of shares of Clover Common Stock to be received by the former holders of SpinCo Common Stock with respect to Qualified SpinCo Common Stock equals the Threshold Percentage, if and to the extent necessary after considering Clover’s comments pursuant to clause (x) of this Section 3.1(d), and (z) except if the condition set forth in Section 7.3(b)(ii) would be unable to be satisfied as a result of (1) a breach by Clover of its obligations under this Agreement, or (2) solely any actions taken by Clover or any of its Subsidiaries after the signing hereof pursuant to a plan (or series of related transactions) that includes the Distribution (within the meaning of Section 355(e) of the Code) other than the Merger, the SpinCo Payment shall be decreased by an amount equal to the product of (1) an amount equal to the closing price per share of Clover Common Stock on the trading day immediately prior to the Distribution, multiplied by (2) the number of additional shares of Clover Common Stock required to be issued pursuant to the true-up set forth in clause (y) of this Section 3.1(d).

SECTION 3.2.          Distribution of Clover Common Stock

(a)          Agent

Prior to the Effective Time, Moon will appoint a bank or trust company reasonably acceptable to Clover as distribution agent (the “Agent”). Prior to or at the Effective Time, Clover shall deposit or cause to be deposited with the Agent, for the benefit of Persons who received shares of SpinCo Common Stock in the Distribution and for distribution in accordance with this Article III, through the Agent, book‑entry authorizations representing the shares of Clover Common Stock (such shares of Clover Common Stock, together with any dividends or distributions and other amounts payable in accordance with Section 3.2(c), being hereinafter referred to as the “Distribution Fund”) issuable pursuant to Section 3.1 upon conversion of outstanding shares of SpinCo Common Stock. The Agent shall, pursuant to irrevocable instructions, deliver the Clover Common Stock contemplated to be issued pursuant to Section 3.1 from the shares of Clover Common Stock held in the Distribution Fund. If Clover deposits such shares into the Distribution Fund prior to the Effective Time and the Merger is not consummated, the Agent shall promptly return such shares to Clover. The Distribution Fund shall not be used for any other purpose.

(b)          Distribution Procedures

Promptly after the Effective Time, the Agent shall, and Clover shall cause the Agent to, deliver to each Person who was the record holder of shares of SpinCo Common Stock immediately prior to the Effective Time the number of whole shares of Clover Common Stock, from the Exchange Fund, that such holder has the right to receive pursuant to the provisions of Section 3.1(a)(i) (and cash in lieu of any fractional share of Clover Common Stock pursuant to Section 3.3 and any dividends or other distributions pursuant to Section 3.2(c)). The Agent shall not be entitled to vote or exercise any rights of ownership with respect to Clover Common Stock held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions paid or distributed with respect thereto for the account of the Persons entitled thereto.

(c)          Distributions with Respect to Undistributed Shares

No dividends or other distributions declared or made with respect to Clover Common Stock with a record date after the Effective Time shall be paid or otherwise delivered to the former holders of SpinCo Common Stock with respect to any shares of Clover Common Stock that are not able to be distributed by the Agent to such holder promptly after the Effective Time, whether due to a legal impediment to such distribution or otherwise. Subject to the effect of applicable Laws, following the distribution of any such previously undistributed shares of Clover Common Stock, there shall be paid to the record holder of such shares of Clover Common Stock, without interest, (i) at the time of the distribution, to the extent not previously paid, the amount of cash payable in lieu of fractional shares of Clover Common Stock to which such holder is entitled pursuant to Section 3.3 and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Clover Common Stock, and (ii) at the appropriate payment date therefor, the amount of dividends or other distributions with a record date after the Effective Time but prior to the distribution of such shares of Clover Common Stock and a payment date subsequent to the distribution of such shares of Clover Common Stock payable with respect to such whole shares of Clover Common Stock. Clover shall deposit in the Distribution Fund all such dividends and distributions.

 

(d)          No Further Ownership Rights in SpinCo Common Stock

All shares of Clover Common Stock issued in respect of shares of SpinCo Common Stock (including any cash paid in lieu of fractional shares pursuant to Section 3.3) shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of SpinCo Common Stock.

(e)          Termination of Distribution Fund

Any portion of the Distribution Fund made available to the Agent that remains undistributed to the former holders of SpinCo Common Stock on the one‑year anniversary of the Effective Time shall be delivered to Clover, and any former holders of SpinCo Common Stock who as of such time have not received shares of Clover Common Stock in accordance with this Article III shall thereafter look only to Clover for payment of their claim for shares of Clover Common Stock and any dividends, distributions or cash in lieu of fractional shares with respect to Clover Common Stock (subject to any applicable abandoned property, escheat or similar Law).

(f)          No Liability

Neither Moon, the Surviving Corporation, Clover, Merger Sub, the Agent nor any other Person shall be liable to any holder of SpinCo Common Stock or any holder of Moon Common Stock for shares of Clover Common Stock (or dividends or distributions with respect thereto or with respect to SpinCo Common Stock) or cash properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(g)          Closing of Transfer Books

From and after the Effective Time, the stock transfer books of SpinCo shall be closed and no transfer shall be made of any shares of capital stock of SpinCo that were outstanding immediately prior to the Effective Time.

(h)          Tax Withholding

Clover, the Surviving Corporation or the Agent shall be entitled to deduct and withhold, or cause to be deducted and withheld, from the consideration or amounts otherwise payable pursuant to this Agreement to any holder of SpinCo Common Stock such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax Law. To the extent that amounts are so withheld and timely paid over to the appropriate Governmental Authority, such withheld amounts will be treated for all purposes of this Agreement as having been paid to the recipient.

(i)           No Appraisal Rights

In accordance with Section 262 of the DGCL, no appraisal rights shall be available to holders of SpinCo Common Stock in connection with the Merger.

SECTION 3.3.          Fractional Shares

 

(a)          No fractional shares of Clover Common Stock shall be issued in connection with the Merger, and no certificates or scrip for any such fractional shares shall be issued. Any holder of SpinCo Common Stock who would otherwise be entitled to a fractional share of Clover Common Stock shall, in lieu of such fraction of a share, be entitled to receive, from the Agent in accordance with the provisions of this Section 3.3, a cash payment representing such holder’s proportionate interest, if any, in the proceeds from the sale by the Agent (reduced by any fees of the Agent attributable to such sale) in one or more transactions of shares of Clover Common Stock equal to the excess of (i) the aggregate number of shares of Clover Common Stock to be delivered to the Agent by Clover pursuant to Section 3.2(a) over (ii) the aggregate number of whole shares of Clover Common Stock to be distributed to the holders of shares of SpinCo Common Stock pursuant to Section 3.2(b) (such excess, the “Excess Shares”). Moon, SpinCo, Clover and Merger Sub acknowledge that payment of the cash consideration in lieu of issuing fractional shares of Clover Common Stock was not separately bargained‑for consideration but merely represents a mechanical rounding off for purposes of avoiding the expense and inconvenience to Clover that would otherwise be caused by the issuance of fractional shares of Clover Common Stock. As soon as practicable after the Effective Time, the Agent, as agent for the holders of SpinCo Common Stock that would otherwise receive fractional shares of Clover Common Stock, shall sell the Excess Shares at then prevailing prices on the NYSE in the manner provided in the following paragraph.

(b)          The sale of the Excess Shares by the Agent, as agent for the holders of SpinCo Common Stock that would otherwise receive fractional shares of Clover Common Stock, shall be executed on the NYSE and shall be executed in round lots to the extent practicable. Until the proceeds of such sale or sales have been distributed to the holders of SpinCo Common Stock, the Agent shall hold such proceeds in trust for the holders of SpinCo Common Stock that would otherwise receive fractional shares of Clover Common Stock (the “Common Shares Trust”). The Agent shall determine the portion of the Common Shares Trust to which each holder of SpinCo Common Stock shall be entitled, if any, by multiplying the amount of the aggregate proceeds comprising the Common Shares Trust by a fraction, the numerator of which is the amount of the fractional share interest to which such holder of SpinCo Common Stock would otherwise be entitled and the denominator of which is the aggregate amount of fractional share interests to which all holders of SpinCo Common Stock would otherwise be entitled.

(c)          As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of SpinCo Common Stock in lieu of any fractional shares of Clover Common Stock, the Agent shall make available such amounts to such holders of shares of SpinCo Common Stock, without interest, subject to and in accordance with Section 3.2.

SECTION 3.4.          Moon Equity Awards

Each Moon Equity Award held by a SpinCo Employee as of the Effective Time shall be treated as set forth in the Employee Matters Agreement.

 

Except (i) as set forth in the publicly available Moon Reports filed with the SEC on or after January 1, 2018 and prior to the date hereof (excluding, in each case, any disclosures (other than statements of historical fact) contained or referenced therein under the captions “Risk Factors,” “Forward-Looking Statements,” “Quantitative and Qualitative Disclosures About Market Risk” and any other disclosures contained or referenced therein of information, factors or risks that are cautionary, predictive or forward-looking in nature); provided, this exception (i) shall apply only to the extent that the relevance of such disclosure to the applicable representation and warranty is readily apparent on its face, or (ii) as set forth in the corresponding sections or subsections of the SpinCo Disclosure Letter (it being agreed that, for purposes of the representations and warranties set forth in this Article IV, disclosure of any item in any section or subsection of the SpinCo Disclosure Letter shall be deemed disclosure with respect to any other section or subsection to which the relevance of such item is readily apparent on its face), Moon hereby represents and warrants to Clover and Merger Sub that:

              SECTION 4.1.          Organization, Good Standing.

Moon is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of its jurisdiction of organization.

              SECTION 4.2.          Corporate Authority.

Moon has all requisite corporate power and authority to execute and deliver this Agreement and the Transaction Documents to which it is or will be a party and to consummate the transactions contemplated hereby and thereby, except for (i) such further action of the Moon Board required, if applicable, to establish the Record Date and the Distribution Date, the effectiveness of the declaration of the Distribution by the Moon Board, or a duly authorized committee thereof (which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in the Separation and Distribution Agreement) and (ii) approval of the Moon Name Change by the affirmative vote of 75% of the votes cast by holders of Moon Common Stock entitled to vote on such matter at a stockholders’ meeting duly called and held for such purpose (the “Moon Name Change Approval”). The execution and delivery by Moon of this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time and the consummation of the transactions contemplated hereby or thereby have been duly authorized by all necessary and proper corporate action on its part, and no other corporate action on the part of Moon is necessary to authorize this Agreement or the Transaction Documents to which it is or will be a party as of the Effective Time, except for such further action of the Moon Board, or a duly authorized committee thereof, required, if applicable, to establish the Record Date and the Distribution Date, and the effectiveness of the declaration of the Distribution by the Moon Board or a duly authorized committee thereof (which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in the Separation and Distribution Agreement). Each of this Agreement and the Transaction Documents to which Moon is or will be a party as of the Effective Time has been or will be duly and validly executed and delivered by it and (assuming that each of this Agreement and the applicable Transaction Documents to which each of Clover and Merger Sub is or will be a party

 

as of the Effective Time constitutes a legal, valid and binding obligation of each of Clover and Merger Sub (as applicable)) constitutes or will constitute the legal, valid and binding obligation of Moon, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles (the “Bankruptcy and Equity Exception”).

              SECTION 4.3.          Governmental Filings; No Violations.

(a)          Other than the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations pursuant to, in compliance with or required to be made under, (i) the DGCL, (ii) the Exchange Act and the Securities Act, (iii) the HSR Act, (iv) those set forth in Section 4.3(a)(iv) of the SpinCo Disclosure Letter, (v) the rules and regulations of the NYSE, (vi) applicable provisions of Irish Law to the extent required to effect the Reorganization or the Distribution and (vii) the state securities, takeover and “blue sky” Laws (the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods and authorizations contemplated by the foregoing clauses (i) through (vii), the “Moon Approvals”), no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations are required to be obtained by Moon from or to be given by Moon to, or to be made by Moon with, any Governmental Authority in connection with the execution, delivery and performance by Moon of this Agreement and the Transaction Documents to which Moon is or will be a party as of the Effective Time and the consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents, except those the failure to make, give or obtain would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Moon to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

(b)          Other than  the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations pursuant to, or in connection, in compliance or required to be made with, (i) the Moon Name Change Approval, and (ii) except for those set forth in Section 4.3(b) of the SpinCo Disclosure Letter (the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods and authorizations set forth therein, the “Moon Third-Party Consents”), no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations that are related to or used in connection with the businesses or any of the operations of the SpinCo Business, as currently operated, are required to be obtained by Moon from, or to be given by Moon to, or to be made by Moon with, any Person that is not a Governmental Authority in connection with the execution, delivery and performance by Moon of this Agreement and the Transaction Documents to which it is or will be a party as of Effective Time and the consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents, or in connection with the continuing operation of the SpinCo Business after the Effective Time, except those the failure to make, give or obtain would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Moon to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

 

(c)          The execution, delivery and performance by Moon of this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time do not, and the consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents will not, constitute or result in (i) a breach or violation of, or a default under, the Organizational Documents of Moon, (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or a default under, the loss of any benefit under, the creation or acceleration of any obligations under or the creation of a Lien on any of the properties, rights or assets of the SpinCo Business pursuant to any Contract binding upon Moon or, assuming (solely with respect to performance of this Agreement and the Transaction Documents and consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents) compliance with the matters referred to in Section 4.3(a) and receipt of all Moon Third-Party Consents, under any applicable Law to which Moon is subject or (iii) any change in the rights or obligations of any party under any Contract legally binding upon Moon, except, in the case of clause (ii) or (iii) directly above, for any such breach, violation, termination, default, creation, acceleration or change that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Moon to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

SECTION 4.4.          Litigation.

As of the date hereof, there are no Actions pending or, to Moon’s Knowledge, threatened against Moon that seek to enjoin, or would reasonably be expected to have the effect of preventing, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement and the Transaction Documents, except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Moon to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

              SECTION 4.5.          Brokers and Finders.

Other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and Lazard Frères & Co. LLC (the fees and expenses of which will be paid by Moon), no agent, broker, finder, investment banker, financial advisor or other similar Person is entitled to any brokerage fee, finders’ fee or other similar fee or commission for which Clover, Merger Sub, the Surviving Corporation or any SpinCo Entity would be liable in connection with the transactions contemplated by this Agreement based on arrangements made by or on behalf of Moon or its Affiliates.

              SECTION 4.6.          No Other Clover or Merger Sub Representation or Warranties.

Moon acknowledges and agrees that, except for the representations and warranties of Clover and Merger Sub expressly set forth in this Agreement or any Transaction Document, neither Clover, Merger Sub nor any of their respective Subsidiaries nor any other Person acting on behalf of Clover, Merger Sub or any of their respective Subsidiaries makes any representation or warranty, express or implied and Moon is not relying on any representation or warranty, express or implied, other than the representations and warranties expressly set forth in Article VI.

 

Without limiting the generality of the foregoing, Moon acknowledges that no representations or warranties are made with respect to any projections, forecasts, estimates or budgets with respect to Clover and the Clover Subsidiaries that may have been made available to Moon, SpinCo or any of their Representatives by Clover, Merger Sub or their respective Representatives.

Except (i) as set forth in the publicly available Moon Reports filed with the SEC on or after January 1, 2018 and prior to the date hereof (excluding, in each case, any disclosures (other than statements of historical fact) contained or referenced therein under the captions “Risk Factors,” “Forward-Looking Statements,” “Quantitative and Qualitative Disclosures About Market Risk” and any other disclosures contained or referenced therein of information, factors or risks that are cautionary, predictive or forward-looking in nature); provided, this exception (i) shall apply only to the extent that the relevance of such disclosure to the applicable representation and warranty is readily apparent on its face, or (ii) as set forth in the corresponding sections or subsections of the SpinCo Disclosure Letter (it being agreed that, for purposes of the representations and warranties set forth in this Article V, disclosure of any item in any section or subsection of the SpinCo Disclosure Letter shall be deemed disclosure with respect to any other section or subsection to which the relevance of such item is readily apparent on its face), Moon hereby represents and warrants to Clover and Merger Sub that:

              SECTION 5.1.          Organization of SpinCo

(a)          SpinCo is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of its jurisdiction of organization. SpinCo is a wholly owned Subsidiary of Moon.

(b)          Each SpinCo Subsidiary is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of its respective jurisdiction of organization and each SpinCo Entity has all requisite corporate or similar power and authority to own, lease and operate the properties, rights and assets that will be contributed to such SpinCo Entity pursuant to the Separation and Distribution Agreement and to carry on its business as presently conducted and is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties that will be contributed to such SpinCo Entity pursuant to the Separation and Distribution Agreement or conduct of its business requires such qualification, except where the failure to be so organized, qualified or, to the extent such concept is applicable, in good standing, or to have such power or authority, individually or in the aggregate, have not resulted, and would not reasonably be expected to result, in a SpinCo Material Adverse Effect, or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole. Moon has made available to Clover prior to the date hereof (or, in case of each SpinCo Entity other than SpinCo, will make available to Clover prior to the Closing) complete and correct copies of the Organizational Documents, each as amended, restated or amended and restated to the date hereof or, in the case of a SpinCo Entity other than SpinCo, to the Closing

 

Date of SpinCo and each SpinCo Entity, and each as so delivered, is (or, with respect to SpinCo Entities other than SpinCo, will prior to the Closing be) in full force and effect.

(c)          Section 5.1(c) of the SpinCo Disclosure Letter contains a complete and correct list of each jurisdiction where each SpinCo Entity existing as of the date hereof is organized.

              SECTION 5.2.          Capital Structure

(a)          As of the date hereof, the authorized capital stock of SpinCo consists of 1,000 shares of SpinCo Common Stock and the issued and outstanding capital stock of SpinCo consists of 100 shares of SpinCo Common Stock, all of which are owned, and will be owned immediately prior to the Distribution, by Moon or an Affiliate of Moon.  All of the outstanding SpinCo Common Stock has been, and all of the shares of SpinCo Common Stock that may be issued prior to the Effective Time as contemplated by this Agreement and the Separation and Distribution Agreement will be when issued, duly authorized, validly issued, fully paid and nonassessable and not issued in violation of any preemptive right or other similar right.  As of the date hereof, SpinCo has no shares of SpinCo Common Stock reserved for issuance. Subject to Section 7.25, Section 5.2(a) of the SpinCo Disclosure Letter contains a complete and correct list of all outstanding Moon Equity Awards held by a SpinCo employee (identified as a SpinCo Employee as of the date hereof) under the Moon Stock Plan as of April 8, 2019, including the number of shares of Moon Common Stock subject to each Moon Equity Award and the date of grant, vesting schedule (including whether the vesting will be accelerated by the execution of this Agreement or consummation of the Merger or by termination of employment following consummation of the Merger) and, where applicable, exercise price with respect to each Moon Equity Award. Immediately prior to the Effective Time, there will be outstanding a number of shares of SpinCo Common Stock determined in accordance with Section 7.15.

(b)          Except as set forth in Section 5.2(b) of the SpinCo Disclosure Letter, each of the outstanding shares of capital stock or other equity securities of each of SpinCo’s Subsidiaries is (or as of the Closing, will be) duly authorized, validly issued, fully paid and nonassessable and owned by SpinCo or a SpinCo Subsidiary, free and clear of any Lien other than those arising under its Organizational Documents or applicable securities Laws.

(c)          There are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, performance units, phantom stock rights, profit participation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights, obligations or contracts of any kind that obligate any SpinCo Entity to issue or sell any shares of its capital stock or other securities or any securities or obligations convertible into or exchangeable or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of such SpinCo Entity, and no securities or obligations evidencing such rights are authorized, issued or outstanding.

(d)          Except as set forth in Section 5.2(d) of the SpinCo Disclosure Letter or as otherwise determined in accordance with the Separation and Distribution Agreement, each SpinCo Subsidiary will, as of the Distribution, be wholly owned, directly or indirectly, by SpinCo.

 

              SECTION 5.3.          Corporate Authority; Approval

(a)          SpinCo has all requisite corporate power and authority to execute and deliver this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time and to consummate the transactions contemplated hereby and thereby, subject, in the case of the Merger, to the adoption of this Agreement by the sole stockholder of SpinCo, which will occur within twenty‑four (24) hours after execution of this Agreement, and except for such further action of the Moon Board, or a duly authorized committee thereof, required, if applicable, to establish the Record Date and the Distribution Date, and the effectiveness of the declaration of the Distribution by the Moon Board, or a duly authorized committee thereof (which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in the Separation and Distribution Agreement). The execution and delivery by SpinCo of this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time and the consummation by SpinCo of the transactions contemplated hereby and thereby have been, or will be as of the Effective Time, duly and validly authorized and approved by all necessary and proper corporate action on its part. Each of this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time has been or will be duly and validly executed and delivered by SpinCo and (assuming that each of this Agreement and the applicable Transaction Documents to which it is or will be a party as of the Effective Time constitutes a legal, valid and binding obligation of each of Clover and Merger Sub (as applicable)) constitutes or will constitute a legal, valid and binding obligation of SpinCo, enforceable against SpinCo in accordance with its terms, subject to the Bankruptcy and Equity Exception.

(b)          Each of the Moon Board, or a duly authorized committee thereof, and the SpinCo Board, at meetings duly called, has unanimously approved and declared advisable this Agreement, the Separation and Distribution Agreement and the other Transaction Documents and the Merger and the other transactions contemplated by this Agreement and the Transaction Documents, upon the terms and conditions set forth in this Agreement and such Transaction Documents. As of the date hereof, the sole stockholder of SpinCo is a Subsidiary of Moon. No later than twenty four (24) hours after the execution of this Agreement, the sole stockholder of SpinCo will approve and adopt this Agreement and the transactions contemplated hereby (the “SpinCo Stockholder Approval”). Neither the approval of Moon’s shareholders or SpinCo’s stockholders after the consummation of the Distribution or any other Person (other than the SpinCo Stockholder Approval and the Moon Name Change Approval) is required to effect the transactions contemplated by this Agreement, the Separation and Distribution Agreement or the other Transaction Documents. Upon obtaining the SpinCo Stockholder Approval, the approval of SpinCo’s stockholders after the Distribution Date will not be required to effect the transactions contemplated by this Agreement, including the Merger, unless this Agreement is amended on or after the Distribution Date and stockholder approval of such amendment is required under applicable Law.

              SECTION 5.4.          Governmental Filings; No Violations; Certain Contracts

(a)          Other than the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations pursuant to the Moon Approvals, no filings, notices, reports, consents, registrations, approvals, permits, waivers,

 

expirations of waiting periods or authorizations are required to be obtained by SpinCo from, or to be given by SpinCo to, or be made by SpinCo with, any Governmental Authority, in connection with the execution, delivery and performance by SpinCo of this Agreement and the Transaction Documents to which SpinCo will be a party to as of the Effective Time and the consummation of the Merger and the other transactions contemplated by hereby and thereby, or in connection with the continuing operation of the business of the SpinCo Entities after the Effective Time, except those the failure to make, give or obtain would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

(b)          Other than the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations set forth in Section 5.4(b) of the SpinCo Disclosure Letter (the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods and authorizations set forth therein, the “SpinCo Third-Party Consents”), no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations that are related to or used in connection with the businesses included in, or any of the operations of, the SpinCo Business, as currently conducted, are required to be obtained by any SpinCo Entity from, or to be given by any SpinCo Entity to, or to be made by any SpinCo Entity with, any Person that is not a Governmental Authority in connection with the execution, delivery and performance by SpinCo of this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time and the consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents, or in connection with the continuing operation of the business of the SpinCo Entities after the Effective Time, except those failure to make, give or obtain would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

(c)          The execution, delivery and performance by SpinCo of this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time do not, and the consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents will not, constitute or result in (i) a breach or violation of, or a default under, the Organizational Documents of any SpinCo Entity, (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or a default under, the loss of any benefit under, the creation or acceleration of any obligations under, or the creation of a Lien on any of the properties, rights or assets of any SpinCo Entity pursuant to any Contract binding upon any SpinCo Entity or, assuming (solely with respect to performance of this Agreement and the Transaction Documents and consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents) compliance with the matters referred to in Section 5.4(a) and receipt of all Moon Third-Party Consents, under any applicable Law to which a SpinCo Entity is subject, or (iii) any change in the rights or obligations of any party under any Contract legally binding upon any SpinCo Entity, except, in the case of clause (ii) or (iii) directly above, for any such breach, violation, termination, default, creation, acceleration or change that would not, individually or in

 

the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

              SECTION 5.5.          SpinCo Reports; Financial Statements

(a)          Set forth on Section 5.5(a) of the SpinCo Disclosure Letter are copies of the combined unaudited pre‑tax balance sheets of the SpinCo Business as of December 31, 2017 and December 31, 2018, and the unaudited combined management’s statement of income of the SpinCo Business for the fiscal years ended December 31, 2017 and December 31, 2018 (collectively, the “SpinCo Financial Statements”). The SpinCo Financial Statements were derived from the books and records of the Moon Entities and were prepared in accordance with GAAP, consistently applied, subject to normal year‑end adjustments and the absence of footnotes and income tax adjustments, as at the dates and for the periods presented, and, except as set forth on Section 5.5(a) of the SpinCo Disclosure Letter, present fairly in all material respects the financial position and results of operations of the SpinCo Business as at the dates and for the periods presented.

(b)          When delivered pursuant to Section 7.17, the Audited Financial Statements and the Interim Financial Statements, as applicable, shall have been prepared in accordance with GAAP, consistently applied, and shall present fairly in all material respects the financial position, results of operations and cash flows of the SpinCo Business as at the dates and for the periods presented (subject to year-end adjustments, in the case of the Interim Financial Statements) and have been prepared in conformity in all material respects to the rules and regulations of the SEC applicable to the annual and quarterly, as applicable, financial statements of the SpinCo Business required to be included in the Registration Statements, the Proxy Statement and, if applicable, the Schedule TO. When delivered pursuant to Section 7.17, the Rule 3-05 Audited Financial Statements and the Rule 3-05 Interim Financial Statements shall have been prepared in accordance with GAAP, consistently applied, and shall present fairly in all material respects the financial position, results of operations and cash flows of the Rule 3-05 Business as at the dates and for the periods presented (subject to year-end adjustments, in the case of the Rule 3-05 Financial Statements relating to any interim periods) and shall have been prepared in conformity in all material respects to the rules and regulations of the SEC applicable to the annual and quarterly, as applicable, financial statements of the Rule 3-05 Business required to be included in the SpinCo Registration Statement.  The Rule 3-05 Financial Statements and the Rule 3-05 Interim Financial Statements are the only financial statements required by Moon or its Subsidiaries to be included in the Proxy Statement pursuant to Rule 3-05 or Rule 3-09 of Regulation S-X promulgated pursuant to the Exchange Act.

(c)          As of the date hereof, no SpinCo Entity is required to file any form, report, registration statement, prospectus or other document with the SEC.

(d)          Moon maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act with respect to the SpinCo Business.  Such disclosure controls and procedures are effective to ensure that all information required to be disclosed by Moon is reported on a timely basis to the individuals responsible for the preparation of Moon’s

 

filings with the SEC and other public disclosure documents.  Moon’s management has completed an assessment of the effectiveness of Moon’s internal control over financial reporting in compliance with the requirements of Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act for the fiscal year ended December 31, 2018, and such assessment concluded that such internal control system was effective.  Moon’s independent registered public accountant has issued (and not subsequently withdrawn or qualified) an attestation report concluding that Moon maintained effective internal control over financial reporting as of December 31, 2018.  Moon’s internal control over financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable, under the Exchange Act) is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that (i) pertain to the maintenance of records that are in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Moon, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Moon are being made only in accordance with authorizations of management and directors of Moon and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Moon’s assets that could have a material effect on its financial statements.

(e)          Moon has disclosed, based on its most recent evaluation of internal controls prior to the date hereof, to Moon’s auditors and audit committee (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect Moon’s ability to record, process, summarize and report financial information with respect to the SpinCo Business and (ii) any fraud, whether or not material, that involves management other employees who have a significant role in Moon’s internal control over financial reporting with respect to the SpinCo Business.

              SECTION 5.6.          Absence of Certain Changes.

(a)          Except as expressly contemplated by this Agreement and the Transaction Documents, since December 31, 2018, the Moon Entities have conducted the SpinCo Business only in, and have not engaged in any material transaction other than in accordance with, the ordinary course of such businesses consistent with past practice.

(b)          Since December 31, 2018, there has not been any change, event, occurrence, state of facts, condition, circumstance or effect that, individually or in the aggregate with such other changes, events, occurrences, state of facts, conditions, circumstances or effects, has resulted in or would reasonably be expected to result in a SpinCo Material Adverse Effect or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

              SECTION 5.7.          Litigation and Liabilities.

(a)          There are no Actions pending or, to Moon’s or SpinCo’s Knowledge, threatened against Moon or its Subsidiaries (including any SpinCo Entity) relating to the SpinCo

 

Business, except for those that would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole. No SpinCo Entity is a party to or subject to the provisions of any Governmental Order that restricts in any material respect the manner in which the SpinCo Entities conduct the SpinCo Business, that otherwise is material to the SpinCo Business or that would, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

(b)          Except (i) as reflected or reserved against in the SpinCo Balance Sheet (as defined in the Separation and Distribution Agreement) (including the related notes and schedules) prior to the date hereof, (ii) for obligations or liabilities incurred in the ordinary course of business consistent with Moon’s past practice since the date of such consolidated balance sheet, (iii) liabilities and obligations arising out of or in connection with this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, (iv) Liabilities that would be Excluded Liabilities pursuant to the Separation and Distribution Agreement or (v) liabilities and obligations that would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect, no SpinCo Entity has any liabilities or obligations of any nature (whether accrued, absolute, matured, unmatured, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of Moon or SpinCo.

              SECTION 5.8.          Compliance with Laws; Licenses; Anti-Corruption Laws; Import and Export Laws.

(a)          Since the Applicable Date the SpinCo Business has not been, and the SpinCo Business is not being, conducted in violation of any Laws, Permits or any Privacy Policies, in each case, except for violations that, individually or in the aggregate, have not resulted and would not reasonably be expected to result in a SpinCo Material Adverse Effect or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

(b)          Each SpinCo Entity and with respect to the SpinCo Business, each Moon Entity has obtained and is in compliance with all Permits necessary to conduct the SpinCo Business as presently conducted (the “SpinCo Licenses”), except those the absence of which, individually or in the aggregate, have not resulted and would not reasonably be expected to result in a SpinCo Material Adverse Effect.  The operation of the SpinCo Business as presently conducted is not, and has not been since the Applicable Date, in violation of, nor is any SpinCo Entity or any Moon Entity in default or violation under, any SpinCo License, and, to Moon’s or SpinCo’s Knowledge, no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation of any material term, condition or provision of any SpinCo License, except where such default or violation of such SpinCo License, individually or in the aggregate, has not resulted and would not reasonably be expected to result in a SpinCo

 

Material Adverse Effect.  There are no Actions pending or, to Moon’s or SpinCo’s Knowledge, threatened, that seek the revocation, cancellation or adverse modification of any SpinCo License, except where such revocation, cancellation or adverse modification would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect.  Since the Applicable Date, neither Moon nor any of its Subsidiaries has received any notice or communication of any noncompliance or alleged noncompliance with any SpinCo Licenses, except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect.

(c)          Since the Applicable Date, (i) no SpinCo Entity or, to Moon’s or SpinCo’s Knowledge, any Person associated with or acting on behalf of the SpinCo Business (including a Moon Entity), including any officer, director, employee, agent and Affiliate thereof has granted, paid, offered or promised to grant, pay, or authorized or ratified the granting of payment, directly or indirectly, of any rebates, monies or anything of value to any Government Official or any political party or candidate for political office, or to any other Person under circumstances where any SpinCo Entity, or any Person associated with or acting on behalf of any SpinCo Entity or the SpinCo Business, including any officer, director, employee, agent and Affiliate thereof, knew or had reason to know that all or a portion of such rebates, monies or things of value would be offered, promised, or given, directly or indirectly, to any Government Official, for the purpose of (A) influencing any act or decision of such Government Official in his or her official capacity; (B) inducing such Government Official to do, or omit to do, any act in relation to his or her lawful duty; (C) securing any improper advantage or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Authority, in each case, in order to assist any SpinCo Entity or any Person associated with or acting on behalf of any SpinCo Entity or the SpinCo Business, including any officer, director, employee, agent and Affiliate thereof, in obtaining or retaining business for or with, or directing business to, any Person or to secure any other improper benefit or advantage, (ii) each SpinCo Entity and, to Moon’s or SpinCo’s Knowledge, each Person associated with or acting on behalf of a SpinCo Entity or the SpinCo Business, including any officer, director, employee, agent and Affiliate thereof, have complied with the Anti-Corruption Laws and (iii) the SpinCo Entities (A) have instituted policies and procedures reasonably designed to ensure compliance with the Anti-Corruption Laws in all material respects, (B) have maintained such policies and procedures in full force and effect, (C) have not been subject to any pending Action or, to Moon’s or SpinCo’s Knowledge, threatened with any Action that alleges any material violation of any of the Anti-Corruption Laws and (D) have not made a voluntary disclosure to a Governmental Authority in respect of any of the Anti-Corruption Laws.

(d)          Since the Applicable Date, the SpinCo Entities and, with respect to the SpinCo Business, the Moon Entities have at all times conducted their export and import and related transactions in material compliance with all applicable Import and Export Laws.

(e)          Since the Applicable Date, neither any SpinCo Entity nor with respect to the SpinCo Business, any Moon Entity has engaged in, nor is now knowingly engaging in, any unlawful dealings or transactions with (i) any Person that at the time of the dealing or transaction is or was the subject or the target of sanctions administered by United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) or (ii) any Person in Cuba, Iran, Syria, North Korea or the Crimea region of Ukraine.

 

(f)          Without limiting the foregoing subsections (d) and (e) directly above, there have been no Actions, there are no pending Actions and, to Moon’s or SpinCo’s Knowledge, there are no threatened Actions, by any Governmental Authority of potential violations with respect to compliance with Import and Export Laws against any SpinCo Entity or, with respect to the SpinCo Business, any Moon Entity.

SECTION 5.9.          SpinCo Material Contracts.

(a)          Except for this Agreement and the Transaction Documents and except for the Contracts set forth in Section 5.9 of the SpinCo Disclosure Letter, as of the date hereof, neither Moon nor any of its Subsidiaries is a party to or bound by any Contract primarily related to the SpinCo Business (or, in each case, any group of related Contracts with respect to a single transaction or series of related transactions):

(i)           for the purchase of products or for the receipt of services, which (A) involved consideration or payments by the SpinCo Entities in excess of $10,000,000 in the aggregate during the calendar year ended December 31, 2018 or (B) requires consideration or payments by the SpinCo Entities in excess of $10,000,000 in the aggregate over the remaining term of such Contract;

(ii)          that (A) purports to limit in any respect either the type of business in which the SpinCo Entities may engage or the manner or locations in which any of them may so engage in any business, (B) requires the disposition of any material assets or line of business of the SpinCo Entities or the SpinCo Business (taken as a whole), (C) grants “most favored nation” status or contains “exclusivity,” requirements obligations or similar provisions that would purport to apply to the SpinCo Entities or SpinCo Business, or (D) includes “take or pay” requirements or similar provisions obligating a Person to obtain a minimum quantity of goods or services from another Person, in each case of (A), (C) and (D), that are material to the SpinCo Business and other than distribution agreements;

(iii)         relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise) for total consideration (including assumption of debt and any earn-out, deferred or contingent payment obligations) in excess of $50,000,000 pursuant to which any potential earn-out, deferred or contingent payment obligations remain outstanding (excluding indemnification obligations in respect of representations and warranties) or otherwise survive as of the date hereof;

(iv)         relating to any material partnership, joint venture, strategic alliance or other similar agreement or arrangement;

(v)          between a SpinCo Entity, on the one hand, and any director or officer of Moon, SpinCo or any Person beneficially owning five percent or more of the outstanding shares of Moon Common Stock or any of their respective Affiliates (other than a Moon Entity or a SpinCo Entity), on the other hand, that would bind a SpinCo Entity following the Distribution Time;

 

(vi)         relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether or not incurred, assumed, guaranteed or secured by any asset), in either case, in excess of $50,000,000;

(vii)        that grants any right of first refusal or right of first offer or similar right or that limits or purports to limit the ability of any SpinCo Entity to sell, transfer, pledge or otherwise dispose of any assets material to the SpinCo Business;

(viii)      evidencing financial or commodity hedging or similar trading activities, including any interest rate swaps, financial derivatives master agreements or confirmations, or futures account opening agreements or brokerage statements or similar Contract, in each case that require payments in amounts in excess of $5,000,000;

(ix)         the primary purpose of which is to grant or receive any material license to, or right in or to use, material Intellectual Property Rights or material IT Assets, excluding non-exclusive licenses (i) to commercially available software or (ii) granted by a SpinCo Entity or in respect of the SpinCo Business in the ordinary course of business, which do not involve the payment or receipt of royalties or other amounts of more than $10,000,000 annually; or

(x)          that prohibits the payment of dividends or distributions in respect of the capital stock of any SpinCo Entity, the pledging of the capital stock of any SpinCo Entity or the incurrence of indebtedness for borrowed money or guarantees by any SpinCo Entity.

Each such Contract described in subsections (i) through (x) of this Section 5.9(a) and each Contract set forth in Section 5.9 of the SpinCo Disclosure Letter is referred to herein as a “SpinCo Material Contract.”

(b)          A complete and correct copy of each SpinCo Material Contract has been made available to Clover in an electronic data room prior to the date hereof.  Each of the SpinCo Material Contracts is valid and binding on the SpinCo Entity or SpinCo Entities (as applicable) and, to Moon’s and SpinCo’s Knowledge, each other party thereto, and is in full force and effect, except for such failures to be valid and binding or to be in full force and effect as would not, or would not reasonably be expected to, individually or in the aggregate, result in a SpinCo Material Adverse Effect.  There exists no breach or event of default with respect to any SpinCo Material Contracts on the part of any SpinCo Entity or, to Moon’s or SpinCo’s Knowledge, any other party thereto, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a breach or default thereunder by any SpinCo Entity or, to Moon’s or SpinCo’s Knowledge, any other party thereto, except in each case, for such invalidity, failure to be binding, unenforceability, ineffectiveness, breaches or defaults that would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect.

              SECTION 5.10.        Real Property.

(a)          Except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect, (i) SpinCo or one of the SpinCo Subsidiaries, as applicable, has good and marketable title to the SpinCo Owned Real Property, free and clear of any Lien other than Permitted Liens, and (ii) there are no outstanding options or

 

rights of first refusal to purchase the SpinCo Owned Real Property, or any portion of the SpinCo Owned Real Property or interest therein. There are no parties other than the SpinCo Entities in possession of the SpinCo Owned Real Property (other than the Moon Entities).  The SpinCo Owned Real Property and all buildings, structures, improvements, and fixtures located on the SpinCo Owned Real Property have been maintained in accordance with normal industry practice, are in good operating condition and repair, and are suitable for the purposes for which they are currently used, except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect.

(b)          With respect to the SpinCo Leased Real Property, the agreements for such property are valid, legally binding, enforceable and in full force and effect in accordance with their terms, and no SpinCo Entity, or to the Knowledge of SpinCo, any third party is in breach of or default under such agreement, and no event has occurred which, with notice, lapse of time or both, would constitute a breach or default by any SpinCo Entity, or to the Knowledge of Moon, any third party or permit termination, modification or acceleration by any third party thereunder, except as would not, individually or in the aggregate, reasonably be expected to result in a  SpinCo Material Adverse Effect or have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole. The SpinCo Leased Real Property and all buildings, structures, improvements, and fixtures located on the SpinCo Leased Real Property are suitable for the purposes for which they are currently used, except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect.  There are no Contracts or written or oral concessions granting to any Person other than a SpinCo Entity the right to use or occupy any material SpinCo Leased Real Property.

(c)          No SpinCo Entity has received any notice of any pending or threatened condemnation of any SpinCo Owned Real Property or any SpinCo Leased Real Property by any Governmental Authority, nor, to Moon’s or SpinCo’s Knowledge, are there any public improvements or re-zoning measures proposed or in progress that would reasonably be expected to result in a SpinCo Material Adverse Effect.

              SECTION 5.11.        Employee Benefits.

(a)          Section 5.11(a) of the SpinCo Disclosure Letter (which shall be true and complete within sixty (60) days following the date hereof subject to Section 7.25) sets forth a complete and correct list of each material Benefit Plan and separately identifies each material Benefit Plan that is maintained primarily for the benefit of employees outside of the United States (a “SpinCo Non-U.S. Benefit Plan”).

(b)          With respect to each material Benefit Plan, SpinCo will make available to Clover, to the extent applicable, within sixty (60) days following the date hereof (or with respect to a given SpinCo Employee designated thereafter, will make available to Clover as soon as practicable following the date on which such SpinCo Employee is designated in the manner contemplated by the Parties’ agreement for identifying SpinCo Employees as set forth on Schedule 3.01(a) of the Employee Matters Agreement) complete and correct copies of (i) the Benefit Plan document, including any amendments or supplements thereto, and all related trust

 

documents, insurance contracts or other funding vehicles, (ii) a written description of such Benefit Plan if such plan is not set forth in a written document, (iii) the most recently prepared actuarial report and (iv) all material correspondence to or from any Governmental Authority received in the last three years with respect to such Benefit Plan.

(c)          Except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect, (i) each Benefit Plan (including any related trusts), other than SpinCo Non-U.S. Benefit Plans, has been established, operated and administered in compliance with its terms and applicable Laws, including ERISA and the Code, (ii) all contributions or other amounts payable by any SpinCo Entity with respect to each Benefit Plan have been paid or accrued in accordance with GAAP and (iii) there are no pending or, to Moon’s or SpinCo’s Knowledge, threatened claims (other than routine claims for benefits) or Actions by a Governmental Authority by, on behalf of or against any Benefit Plan or any trust related thereto.

(d)          With respect to each ERISA Plan, SpinCo will make available to Clover, to the extent applicable, within sixty (60) days following the date hereof (and with respect to a given SpinCo Employee designated thereafter, will make available to Clover as soon as practicable following the date on which such SpinCo Employee is designated in the manner contemplated by the Parties’ agreement for identifying SpinCo Employees as set forth on Schedule 3.01(a) of the Employee Matters Agreement) hereof complete and correct copies of (i) the most recent summary plan description together with any summaries of all material modifications thereto, (ii) the most recent IRS determination or opinion letter and (iii) the two most recent annual reports (Form 5500 or 990 series and all schedules and financial statements attached thereto and any amendments or supplements thereto).

(e)          Each ERISA Plan that is intended to be qualified under Section 401(a) of the Code, has been determined by the IRS to be qualified under Section 401(a) of the Code and, to Moon’s or SpinCo’s Knowledge, nothing has occurred that would adversely affect the qualification or tax exemption of any such Benefit Plan.  With respect to any ERISA Plan, no SpinCo Entity has engaged in a transaction in connection with which any SpinCo Entity reasonably would be subject to either a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed by either Section 4975 or 4976 of the Code.

(f)          Neither SpinCo nor any Person that is a member of a “controlled group of corporations” (as defined in Section 414(b) of the Code), is under “common control” (as defined in Section 414(c) of the Code), or is a member of the same “affiliated service group” (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code) with SpinCo has maintained, established, participated in or contributed to, or is or has been obligated to contribute to, or has otherwise incurred any material obligation or liability (including any contingent liability) under, (i) a plan that is subject to Section 412 of the Code or Section 302 or title IV of ERISA or (ii) any “multiemployer plans” within the meaning of Section 3(37) of ERISA (a “Multiemployer Plan”), in each case, in the last six years.  No Benefit Plan is, and neither SpinCo nor any Person that is a member of a “controlled group of corporations” (as defined in Section 414(b) of the Code), is under “common control” (as defined in Section 414(c) of the Code), or is a member of the same “affiliated service group” (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code) with SpinCo has any

 

liability under, a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA) or a “single employer plan” (as defined in Section 4001(a)(15) of ERISA) that is maintained by two or more employers not related under Section 414(b), (c), or (m) of the Code (a “Multiple Employer Plan”).

(g)          With respect to any ERISA Plan subject to the minimum funding requirements of Section 412 of the Code or Title IV of ERISA, (i) no such plan is, or is expected to be, in “at-risk” status (within the meaning of Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of the Code), (ii) as of the last day of the most recent plan year ended prior to the date of this Agreement, the actuarially determined present value of all “benefit liabilities” within the meaning of Section 4001(a)(16) of ERISA did not exceed the then-current value of assets of such ERISA Plan or, if such liabilities did exceed such assets, the amount thereof was properly reflected on the financial statements of Moon or the SpinCo Entity, (iii) no unsatisfied liability (other than for premiums to the Pension Benefit Guaranty Corporation and ordinary claims for benefits) under Title IV of ERISA has been, or is expected to be, incurred by SpinCo, (iv) the Pension Benefit Guaranty Corporation has not instituted proceedings to terminate any such ERISA Plan and neither SpinCo nor Moon has received notice from the Pension Benefit Guaranty Corporation of its intent to terminate a plan or appoint a trustee, (v) no application for a waiver of premiums is pending with the Pension Benefit Guaranty Corporation, (vi) except as would not reasonably be expected to be material to the SpinCo Business, taken as a whole, no “reportable event” within the meaning of Section 4043 of ERISA (excluding any such event for which the thirty day notice requirement has been waived under the regulations to Section 4043 of ERISA) has occurred, nor has any event described in Sections 4062, 4063 or 4041 of ERISA occurred and (vii) neither SpinCo nor Moon has engaged in a transaction a principal purpose of which was to evade liability under ERISA as contemplated by Section 4069 of ERISA.

(h)          Except as required by applicable Law, no Benefit Plan provides retiree or post-employment medical, disability, life insurance or other welfare benefits to any Person, and no SpinCo Entity has any obligation to provide such benefits.

(i)          Each Benefit Plan that is a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the Code) is in documentary compliance with, and has been operated and administered in material compliance with, Section 409A of the Code and the guidance issued by the IRS provided thereunder.

(j)          Neither the execution, delivery or performance of this Agreement, stockholder adoption or other approval of this Agreement nor the consummation of the Merger or the other transactions contemplated hereby could, either alone or in combination with another event, (i) entitle any current or former employee, director, officer or independent contractor of any SpinCo Entity to severance pay or any material increase in severance pay, (ii) accelerate the time of payment or vesting or materially increase the amount of compensation due to any such employee, director, officer, or independent contractor or (iii) directly or indirectly require SpinCo to transfer or set aside any assets to fund any payments or benefits under any Benefit Plan.

(k)          Neither the execution, delivery or performance of this Agreement, stockholder adoption or other approval of this Agreement nor the consummation of the Merger

 

or the other transactions contemplated by this Agreement or the Transaction Documents could, either alone or in combination with another event, result in the payment of any amount to any current or former employee, director, officer or independent contract of any SpinCo Entity that could, individually or in combination with any other such payment, constitute an “excess parachute payment” as defined in Section 280G(b)(1) of the Code.

(l)           No SpinCo Entity has any obligation to provide, and no Benefit Plan or other agreement provides any current or former employee, director, officer or independent contract of any SpinCo Entity with the right to, a gross-up, indemnification, reimbursement, make-whole or other payment for any excise or additional Taxes, interest or penalties incurred pursuant to Section 409A or Section 4999 of the Code or due to the failure of any payment to be deductible under of Section 280G of the Code.

(m)         Except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect, (i) all SpinCo Non-U.S. Benefit Plans comply in all respects with applicable local Law, and all such plans that are intended to be funded or book-reserved are funded or book-reserved, as appropriate, based upon reasonable actuarial assumptions determined by qualified actuaries, and (ii) as of the date hereof, there is no pending or threatened litigation relating to SpinCo Non-U.S. Benefit Plans.

(n)          The individuals whose names are set forth on Schedule 3.06(c) to Employee Matters Agreement are the sole SpinCo Employees who participate in the Moon Key Management Supplemental Program and/or the Moon Elected Officer Supplemental Program (each as referenced in the Employee Matters Agreement), as applicable.

              SECTION 5.12.        Labor Matters.

(a)          Section 5.12(a) of the SpinCo Disclosure Letter (which shall be true and complete within sixty (60) days following the date hereof subject to Section 7.25) sets forth a complete and correct list of any collective bargaining agreement or other material agreement with a labor union, works council or like organization that a Moon Entity or SpinCo Entity is a party to or otherwise bound by in respect of SpinCo Employees (collectively, the “SpinCo Labor Agreements”), and, to Moon’s or SpinCo’s Knowledge, there are no activities or Proceedings by any individual or group of individuals, including representatives of any labor organizations, trade unions or labor unions, to organize any SpinCo Employees. SpinCo shall make available to Clover within sixty (60) days following the date hereof or concurrently with an update delivered in accordance with Section 7.25 complete and correct copies of each material SpinCo Labor Agreement listed in Section 5.12(a) of the SpinCo Disclosure Letter.

(b)          There are no labor unions, trade unions, works councils or like organizations that represent SpinCo Employees.  The execution, delivery and performance of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement or the Transaction Documents, either alone or in combination with another event, will not (i) entitle any third party (including any labor union, trade union, works council or like organization or Governmental Authority) to any payments under any of the SpinCo Labor Agreements or (ii) require the consent of, or advance notification to, or advance consultation with, any labor union, trade union, works council or like organization with respect to SpinCo

 

Employees. Subject to Section 7.25, Section 5.12(b) of the SpinCo Disclosure Letter shall be true and complete within sixty (60) days following the date hereof.

(c)          As of the date hereof, there is no material strike, lockout, slowdown, work stoppage, organizing activities, unfair labor practice or other material labor dispute, or Proceedings or grievance pending or, to Moon’s or SpinCo’s Knowledge, threatened against any Moon Entity involving the SpinCo Business or any SpinCo Entity.  Each of the SpinCo Entities and Moon Entities with respect to the SpinCo Employees is in compliance in all material respects with the SpinCo Labor Agreements.

(d)          No Moon Entity with respect to the SpinCo Business or SpinCo Entity has incurred any material liability or obligation under the Worker Adjustment and Retraining Notification Act and the regulations promulgated thereunder or any similar state or local Law that remains unsatisfied (collectively, the “WARN Act”).

(e)          The SpinCo Entities are, and since the Applicable Date, have been, in material compliance with all applicable Laws, rules and regulations, ordinances, Governmental Orders, Contracts, policies, plans and programs relating to employment, employment practices, compensation, the classification of employees as exempt/non-exempt, the classification of individuals as employees or independent contractors, immigration, employee leave, benefits, hours, terms and conditions of employment, and the termination of employment and unemployment insurance.

                                              SECTION 5.13.        Environmental Matters.

(a)          Except as disclosed on Section 5.13 of the SpinCo Disclosure Letter and except for such matters that, individually or in the aggregate, would not reasonably be expected to result in a SpinCo Material Adverse Effect or to have a material adverse effect on the ability of Moon and the SpinCo Entities to perform their respective obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole:  (i) the SpinCo Entities have at all times been in compliance with all, and have not violated any, Environmental Laws; (ii) no SpinCo Owned Real Property or SpinCo Leased Real Property or any other real property, currently or formerly owned, leased or operated by a SpinCo Entity or the SpinCo Business (including soils, groundwater, surface water, buildings or other structures) contain any Hazardous Material under conditions or circumstances that would reasonably be expected to result in liability to any of the SpinCo Entities; (iii) none of the SpinCo Entities is subject to liability for any Hazardous Material present at or on any third-party property or is otherwise subject to any liability regarding any failure to properly store or handle, or any release of or exposure to, any Hazardous Material; (iv) no SpinCo Entity has received any notice, demand, letter, claim or request for information or is a party to or the subject of any pending or, to Moon’s or SpinCo’s Knowledge, threatened Actions alleging that the SpinCo Business may be in violation of or subject to liability under any Environmental Law or regarding any Hazardous Material; (v) no SpinCo Entity is subject to any Governmental Order or other arrangement with any Governmental Authority or any indemnity or other agreement with any third party relating to liability or obligations relating to any Environmental Law or regarding any Hazardous Material; and (vi) there are no other circumstances or conditions involving the SpinCo Business or any SpinCo Entity that would reasonably be expected to result in any claim,

 

liability, investigation, cost or restriction on the ownership, use, or transfer of any property pursuant to any Environmental Law or regarding any Hazardous Material.

              SECTION 5.14.        Taxes.

(a)          The SpinCo Entities (i) have prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all material Tax Returns required to be filed by any of them and all such filed Tax Returns are true, complete and correct in all material respects, (ii) have paid all Taxes shown as due on such Tax Returns and all material amounts of Taxes that the SpinCo Entities are obligated to withhold from amounts owing to any employee, former employee, independent contractor, creditor, stockholder or third party, except with respect to matters contested in good faith by appropriate Actions and for which adequate reserves have been established in accordance with GAAP and (iii) have not waived any statute of limitations with respect to a material amount of Taxes or agreed to any extension of time with respect to an assessment or deficiency of a material amount of Taxes, in each case in writing, which waiver or extension is currently in effect.  There are no material Tax Liens upon any property or assets of any of the SpinCo Entities except Permitted Liens.

(b)          As of the date hereof, (i) no deficiencies for a material amount of Taxes have been proposed or assessed in writing against or with respect to any Taxes due by or Tax Returns of any of the SpinCo Entities, (ii) there are not pending or, to Moon’s or SpinCo’s Knowledge, threatened in writing, any audits, examinations, investigations or other Action in respect of any material Taxes or material Tax Returns of any SpinCo Entity and (iii) no claim has been made by a Governmental Authority in any jurisdiction where any of the SpinCo Entities does not file Tax Returns that any SpinCo Entity is or may be subject to material taxation by, or required to file Tax Returns in, such jurisdiction, which claim has not been fully resolved.

(c)          Except as set forth on Section 5.14(c) of the SpinCo Disclosure Letter, as of the date hereof, none of the SpinCo Entities (i) has been a member of an affiliated group filing an affiliated, combined, unitary, consolidated or similar income Tax Return (other than a group the common parent of which is Moon or any of its Subsidiaries), (ii) is a party to any Tax allocation, Tax sharing, Tax indemnity or similar agreement, other than commercial agreements entered into in the ordinary course of business, the principal purpose of which is not related to Taxes, and the Tax Matters Agreement or (iii) has liability for the Taxes of any Person (other than Moon or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law) or as transferee or successor.

(d)          Other than as part of the Separation, during the last two years, none of the SpinCo Entities has been either a “distributing corporation” or a “controlled corporation” in a transaction intended to qualify under Section 355 of the Code.

(e)          None of the SpinCo Entities has “participated” within the meaning of Treasury Regulation Section 1.6011-4(c)(3)(i)(A) in any “listed transaction” within the meaning of Section 6011 of the Code and the Treasury Regulations thereunder, as in effect and as amended by any guidance published by the IRS for the applicable period.

 

(f)          The SpinCo Entities have made adequate provision in accordance with GAAP for any material amounts of Taxes that are not yet due and payable for all taxable periods, or portions thereof, ending on or before the date hereof.

(g)          None of the SpinCo Entities has agreed to make or is required to make any adjustment for a taxable period ending after the Closing Date under Section 481(a) of the Code or any similar provision of state, local or foreign Tax Law by reason of a change in or incorrect accounting method.

(h)          Neither Moon nor any SpinCo Entity has taken any action or knows of any fact or circumstance that could reasonably be expected to prevent (i) the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, (ii) the Contribution and Distribution from qualifying as a “reorganization” under Sections 368(a), 361 and 355 of the Code or (iii) each of the transactions described on Schedule 7.3(b) from qualifying as either a “distribution” under Section 355 of the Code or as a “reorganization” under Sections 368(a), 361 and 355 of the Code.

              SECTION 5.15.        Intellectual Property.

Except as would not, individually or in the aggregate, reasonably be expected to be material to the SpinCo Business, taken as a whole:

(a)          All registrations and applications of Intellectual Property Rights included in the Transferred IP are subsisting and unexpired, and, to Moon’s or SpinCo’s Knowledge, valid and enforceable.

(b)          The SpinCo Entities exclusively own (the material SpinCo IP, free and clear of any and all Liens (other than Permitted Liens)), and no Moon Entity or SpinCo Entity has since the Applicable Date received any written claim from any other Person challenging the validity, enforceability or ownership of same.

(c)          Since the Applicable Date, the operation of the SpinCo Business has not infringed, misappropriated or otherwise violated the Intellectual Property Rights of any other Person, and no Moon Entity or SpinCo Entity has since the Applicable Date received any written claim from any other Person alleging the same, except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect.  To Moon’s or SpinCo’s Knowledge, no Person is infringing any Intellectual Property Rights of the SpinCo Entities, except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect.

(d)          Since the Applicable Date, Moon and its Subsidiaries have taken all commercially reasonable actions and have implemented all reasonable policies and procedures to protect (i) their material trade secrets and confidential information included in the SpinCo IP, (ii) any Personal Data collected, stored, used, disclosed, transmitted, processed or disposed of in connection with or by or on behalf of the SpinCo Business and (iii) the integrity, continuous operation and security of the IT Assets used in connection with the SpinCo Business and there has been no unauthorized access to, and no material breaches, outages, violations of , any of the

 

foregoing in clauses (i) – (iii), except as would not, individually or in the aggregate, reasonably be expected to result in a SpinCo Material Adverse Effect.

              SECTION 5.16.        Insurance.

The SpinCo Entities are covered by insurance policies and self-insurance programs and arrangements of Moon that (a) are in full force and effect and (b) are sufficient for compliance with all applicable Laws and Contracts to which a SpinCo Entity is a party or by which it is bound and as is customary in the industries in which the SpinCo Entities operate.  All premiums due under such insurance policies and self-insurance programs and arrangements have been paid.

              SECTION 5.17.        Takeover Statutes.

The SpinCo Board has taken all necessary action to exempt this Agreement, the other Transaction Documents and the transactions contemplated hereby (including the Merger) and thereby from the restrictions set forth in Section 203 of the DGCL. No “fair price,” “moratorium,” “control share acquisition” or other similar anti-takeover statute or regulation, including Section 203 of the DGCL (each, a “Takeover Statute”) or any anti-takeover provision in Moon’s or SpinCo’s Organizational Documents is applicable to the Merger or the other transactions contemplated by this Agreement, the Separation and Distribution Agreement and the other Transaction Documents.

                              SECTION 5.18.        Brokers and Finders.

Other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and Lazard Frères & Co. LLC (the fees and expenses of which will be paid by Moon), no agent, broker, finder, investment banker, financial advisor or other similar Person is entitled to any brokerage fee, finders’ fee or other similar fee or commission for which Clover, Merger Sub, the Surviving Corporation or any SpinCo Entity would be liable in connection with the transactions contemplated by this Agreement based on arrangements made by or on behalf of Moon or its Affiliates.

SECTION 5.19.        Sufficiency of the SpinCo Assets

(a)          On the Closing Date, after giving effect to the Reorganization and together with the services available under the Transition Services Agreement and the rights granted pursuant to the other Transaction Documents, the SpinCo Assets will constitute all of the assets, rights and properties necessary for the conduct of the SpinCo Business in all material respects as conducted as of immediately prior to the Closing by Moon and its Subsidiaries; provided, however, that nothing in this Section 5.19(a) shall be deemed to constitute a representation or warranty as to infringement or misappropriation of Intellectual Property Rights.

(b)          SpinCo and Moon collectively have, and at the Closing SpinCo and the SpinCo Subsidiaries shall have, good, valid and marketable title (free and clear of all Liens other than Permitted Liens or Liens created by or through Clover or any of its Subsidiaries) to, valid leasehold interests in or a valid legal right to use, as the case may be, all of the SpinCo Assets except as would not, individually or in the aggregate, reasonably be expected to be material to the SpinCo Business, taken as a whole.

 

SECTION 5.20.        Affiliate Matters

Except for (a) Contracts relating to employment and labor matters set forth on Section 5.11(a) of the SpinCo Disclosure Letter, (b) Contracts set forth on Section 5.20 of the SpinCo Disclosure Letter, (c) Contracts that by the terms of the Separation and Distribution Agreement or any other Transaction Document are contemplated to survive after the Distribution Time, (d) Contracts that would be Excluded Liabilities and (e) Contracts that will be solely between or among the SpinCo Entities upon completion of the Reorganization, no SpinCo Entity is party to any SpinCo Affiliate Contract that would be material to the SpinCo Business, taken as a whole.

                              SECTION 5.21.        Proxy Statement; Registration Statements.

None of the information regarding any of the Moon Entities (including the SpinCo Entities), the SpinCo Business, or the transactions contemplated by this Agreement or the Transaction Documents provided by Moon, SpinCo or any other Moon Entity (including the SpinCo Entities) specifically for inclusion in, or incorporation by reference into, the Proxy Statement, the Clover Registration Statement, the SpinCo Registration Statement or the documents relating to the Distribution that are filed with the SEC or distributed to Moon stockholders (the “Distribution Documents”) will, in the case of the definitive Proxy Statement and the Distribution Documents or any amendment or supplement thereto, at the time of the mailing of the definitive Proxy Statement and the Distribution Documents and any amendment or supplement thereto, or, in the case of the Clover Registration Statement and the SpinCo Registration Statement, at the time such registration statement becomes effective, at the Distribution Date and at the Effective Time, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The SpinCo Registration Statement will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act, as the case may be, except that no representation is made by Moon or SpinCo with respect to information provided by Clover specifically for inclusion in, or incorporation by reference into, the SpinCo Registration Statement.

                              SECTION 5.22.        Clover Common Stock.

Neither Moon nor SpinCo owns (directly or indirectly, beneficially or as of record) nor is a party to any Contract for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of Clover.

                              SECTION 5.23.        Financing.

(a)          As of the date hereof, the SpinCo Financing Commitment Letter has not been amended, waived or modified, by or with the consent of SpinCo and, to the Knowledge of SpinCo, the respective commitments contained in the SpinCo Financing Commitment Letter have not been withdrawn, modified or rescinded in any respect.  Except for the SpinCo Financing Commitment Letter, SpinCo has not entered into any side letters or other contracts, instruments or other commitments, obligations or arrangements (whether written or oral) related

 

to the funding of the full amount of the Financing, other than as expressly set forth in the SpinCo Financing Commitment Letter and delivered to Clover prior to the date of this Agreement.

(b)          The SpinCo Financing Commitment Letter is a legal, valid and binding obligation of SpinCo and, to the Knowledge of SpinCo, the other parties thereto (other than Clover). As of the date of this Agreement, no event has occurred and on the Closing Date, no event shall have occurred and be continuing, which, with or without notice, lapse of time or both, would constitute a default or breach on the part of SpinCo under any term or condition of the SpinCo Financing Commitment Letter. As of the date hereof, SpinCo has no reason to believe that any of the conditions to the Financing to be satisfied by it will not be satisfied on a timely basis.

Except (i) as set forth in the publicly available Clover Reports filed with the SEC on or after January 1, 2018 and prior to the date hereof (excluding, in each case, any disclosures (other than statements of historical fact) contained or referenced therein under the captions “Risk Factors,” “Forward-Looking Statements,” “Quantitative and Qualitative Disclosures About Market Risk” and any other disclosures contained or referenced therein of information, factors or risks that are cautionary, predictive or forward-looking in nature); provided, this exception (i) shall apply only to the extent that the relevance of such disclosure to the applicable representation and warranty is readily apparent on its face, or (ii) as set forth in the corresponding sections or subsections of the Clover Disclosure Letter (it being agreed that, for purposes of the representations and warranties set forth in this Article VI, disclosure of any item in any section or subsection of the Clover Disclosure Letter shall be deemed disclosure with respect to any other section or subsection to which the relevance of such item is readily apparent on its face), Clover hereby represents and warrants to Moon that:

SECTION 6.1.          Organization, Good Standing and Qualification

(a)          Each of Clover and Merger Sub is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of its respective jurisdiction of organization.

(b)          Each Subsidiary of Clover is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of its respective jurisdiction of organization and each of Clover and Merger Sub and each other Subsidiary of Clover has all requisite corporate or similar power and authority to own, lease and operate its properties, rights and assets and to carry on its business as presently conducted and is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or, to the extent such concept is applicable, in good standing, or to have such power or authority, individually or in the aggregate, have not resulted, and would

 

not reasonably be expected to result, in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.  Clover has made available to Moon prior to the date hereof complete and correct copies of the certificates of incorporation and bylaws or comparable governing documents, each as amended, restated or amended and restated to the date hereof of Clover and Merger Sub, and each as so delivered, is in full force and effect.

(c)          Section 6.1(c) of the Clover Disclosure Letter contains a complete and correct list of each jurisdiction where Clover and any of its Subsidiaries that would be a “significant subsidiary” within the meaning of Rule 1-02 of Regulation S-X promulgated pursuant to the Exchange Act are organized.

              SECTION 6.2.          Capital Structure.

(a)          The authorized capital stock of Clover consists of 1,000,000,000 shares of Clover Common Stock, of which 201,986,971 shares of Clover Common Stock were outstanding as of the close of business on April 26, 2019 and 100,000,000 shares of preferred stock, par value $0.01 per share, of which none are outstanding as of the date hereof.  No shares of Clover Common Stock are held by any Subsidiary of Clover.  All of the outstanding shares of Clover Common Stock have been, and all shares issued pursuant to the Clover Share Issuance will be, duly authorized, validly issued, fully paid and nonassessable. As of the date hereof, other than 11,916,155 shares of Clover Common Stock reserved for issuance under the Clover Stock Plans, Clover has no shares of Clover Common Stock reserved for issuance.  Each of the outstanding shares of capital stock or other securities of each of Clover’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned by Clover or by a direct or indirect wholly owned Subsidiary of Clover, free and clear of any Lien other than those arising under its Organizational Documents or applicable securities Laws.  Except as set forth above, there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, performance units, phantom stock rights, profit participation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights, obligations or contracts of any kind that obligate Clover or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of Clover or any of its Subsidiaries or any securities or obligations convertible into or exchangeable or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of Clover or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding.  Upon any issuance of any shares of Clover Common Stock in accordance with the terms of the Clover Stock Plans, such shares of Clover Common Stock will be duly authorized, validly issued, fully paid and nonassessable and free and clear of any Liens.  Clover does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of Clover on any matter.

(b)          Section 6.2(b) of the Clover Disclosure Letter sets forth (i) each of Clover’s Subsidiaries and the ownership interest of Clover in each such Subsidiary, as well as the ownership interest of any other Person or Persons in each such Subsidiary, and (ii) Clover’s or its

 

Subsidiaries’ capital stock, equity interest or other direct or indirect ownership interest in any other Person.

(c)          The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value $0.01 per share, 10 of which are validly issued and outstanding. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, owned by a wholly owned Subsidiary of Clover. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement.

              SECTION 6.3.          Corporate Authority; Approval and Fairness.

(a)          Each of Clover and Merger Sub has authority to execute and deliver this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time and to consummate the transactions contemplated hereby and thereby, subject, in the case of the Merger, only to the adoption of this Agreement by Clover, as sole stockholder of Merger Sub, which will occur within twenty-four (24) hours after execution of this Agreement and approval of the Clover Share Issuance by the affirmative vote of a majority of the votes cast by holders of Clover Common Stock entitled to vote on such matter at a stockholders’ meeting duly called and held for such purpose (the “Clover Stockholder Approval”).  The execution and delivery by Clover and Merger Sub of this Agreement and the Transaction Documents to which it is or will be a party at the Effective Time and the consummation by Clover and Merger Sub of the transactions contemplated hereby and thereby have been, or will be as of the Effective Time, duly and validly authorized and approved by all necessary and proper corporate action on their part. Each of this Agreement and the Transaction Documents to which Clover or Merger Sub is or will be a party at the Effective Time has been or will be duly and validly executed and delivered by them and (assuming that each of this Agreement and the applicable Transaction Documents to which Clover or Merger Sub is or will be a party as of the Effective Time constitutes a legal, valid and binding obligation of each of Moon and SpinCo (as applicable)) constitutes or will constitute a legal, valid and binding obligation of each of Clover and Merger Sub, enforceable against each of them in accordance with its terms, subject to the Bankruptcy and Equity Exception.

(b)          The Clover Board has (i) unanimously (A) approved and declared advisable this Agreement, the Transaction Documents (including the Voting Agreement) and the Merger and the other transactions contemplated by this Agreement and the Transaction Documents, upon the terms and conditions set forth in this Agreement and the Transaction Documents, (B) determined that this Agreement, the Transaction Documents and the Merger and the other transactions contemplated by this Agreement and the Transaction Documents, are fair to, and in the best interests of, Clover and the holders of Clover Common Stock and (C) resolved to recommend that the holders of shares of Clover Common Stock approve the Clover Share Issuance (the “Clover Recommendation”), (ii) directed that the Clover Share Issuance be submitted to the holders of shares of Clover Common Stock for their approval and (iii) received the opinion of its financial advisor, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated (“Baird”), to the effect that, based upon and subject to the various qualifications, assumptions and limitations set forth in the written opinion, as of the date of the opinion,  the Exchange Ratio is fair, from a financial point of view, as of the date of such opinion, to Clover,  a copy of which opinion will be

 

delivered to Moon.  It is understood and agreed that such opinion is for the benefit of the Clover Board and may not be relied upon by Moon or SpinCo or any other Person.

              SECTION 6.4.          Governmental Filings; No Violations; Certain Contracts.

(a)          Other than the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations pursuant to, in compliance with or required to be made under, (i) the DGCL, (ii) the Securities Act and the Exchange Act, (iii) the HSR Act, (iv) the rules and regulations of the NYSE, (v) the state securities, takeover and “blue sky” Laws and (vi) those set forth in Section 6.4(a)(vi) of the Clover Disclosure Letter, (the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods and authorizations contemplated by the foregoing clauses (i) through (vi), the “Clover Approvals”), no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations are required to be obtained by Clover or Merger Sub from, or to be given by Clover or Merger Sub to, or to be made by Clover or Merger Sub with, any Governmental Authority, in connection with the execution, delivery and performance by Clover and Merger Sub of this Agreement and the Transaction Documents to which it is, or will be a party to as of the Effective Time and the consummation of the Merger and the other transactions contemplated hereby and thereby, or in connection with the continuing operation of the business of Clover and its Subsidiaries after the Effective Time, except those the failure to make, give or obtain would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

(b)          Other than the filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations pursuant to, or in connection, in compliance or required to be made with, (i) the Clover Stockholder Approval, and (ii) except for those set forth in Section 6.4(b)(vi) of the Clover Disclosure Letter (such filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods and authorizations in clauses (i) and (ii), the “Clover Third-Party Consents”), no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations that are related to or used in connection with the businesses or any of the operations of Clover or its Subsidiaries, as currently operated, are required to be obtained by Clover or any of its Subsidiaries from, or to be given by Clover, Merger Sub or any of their Subsidiaries to, or to be made by Clover or any of its Subsidiaries with, any Person that is not a Governmental Authority in connection with the execution, delivery and performance by Clover and Merger Sub of this Agreement and the Transaction Documents to which Clover or Merger Sub is or will be party to as of the Effective Time and the consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents, or in connection with the continuing operation of the business of Clover and its Subsidiaries after the Effective Time, except those failure to make, give or obtain would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

 

(c)          The execution, delivery and performance by Clover and Merger Sub of this Agreement and the Transaction Documents to which each is or will be a party as of the Effective Time do not, and the consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents will not, constitute or result in (i) a breach or violation of, or a default under, the Organizational Documents of Clover or Merger Sub or any of Subsidiaries of Clover, (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or a default under, the loss of any benefit under, the creation or acceleration of any obligations under or the creation of a Lien on any of the properties, rights or assets of Clover, Merger Sub or any of their Subsidiaries pursuant to any Contract binding upon Clover, Merger Sub or any of such Subsidiaries or, assuming (solely with respect to performance of this Agreement and the Transaction Documents and consummation of the Merger and the other transactions contemplated by this Agreement and the Transaction Documents) compliance with the matters referred to in Section 6.4(a) and receipt of all Clover Third-Party Consents, under any applicable Law to which Clover or any of its Subsidiaries is subject or (iii) any change in the rights or obligations of any party under any Contract legally binding upon Clover, Merger Sub or any of their Subsidiaries, except, in the case of clause (ii) or (iii) directly above, for any such breach, violation, termination, default, creation, acceleration or change that would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

              SECTION 6.5.          Clover Reports; Financial Statements.

(a)          Clover has filed or furnished, as applicable, on a timely basis, all forms, statements, certifications, reports and documents required to be filed or furnished by it with the SEC pursuant to the Exchange Act or the Securities Act since May 12, 2017 (the forms, statements, certifications, reports and other documents filed or furnished to the SEC since May 12, 2017 and those filed or furnished to the SEC subsequent to the date hereof, including any amendments thereto, the “Clover Reports”).  Each of the Clover Reports, at the time of its filing or being furnished to the SEC complied or, if not yet filed or furnished, will comply in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) applicable to the Clover Reports.  As of their respective dates (or, if amended prior to the date hereof, as of the date of such amendment), the Clover Reports did not, and any Clover Reports filed with or furnished to the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading.  Since January 1, 2019, neither Clover nor any of its Subsidiaries has consummated any unregistered offering of securities that by the terms of such offering requires subsequent registration under the Securities Act.  None of the Subsidiaries of Clover are subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.

(b)          Clover is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the NYSE.  Except as permitted by the Exchange Act, including Sections 13(k)(2) and (3) or the rules of the SEC, since the enactment of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, neither Clover nor any of its Affiliates has made, arranged or

 

modified (in any material respect) any extensions of credit in the form of a personal loan to any executive officer or director of Clover.

(c)          Clover maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act.  Such disclosure controls and procedures are effective to ensure that all information required to be disclosed by Clover is reported on a timely basis to the individuals responsible for the preparation of Clover’s filings with the SEC and other public disclosure documents.  Clover’s management has completed an assessment of the effectiveness of Clover’s internal control over financial reporting in compliance with the requirements of Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act for the fiscal year ended December 31, 2018, and such assessment concluded that such internal control system was effective.  Clover’s independent registered public accountant has issued (and not subsequently withdrawn or qualified) an attestation report concluding that Clover maintained effective internal control over financial reporting as of December 31, 2018.  Clover’s internal control over financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable, under the Exchange Act) is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that (i) pertain to the maintenance of records that are in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Clover, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Clover are being made only in accordance with authorizations of management and directors of Clover and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Clover’s assets that could have a material effect on its financial statements.

(d)          Clover has disclosed, based on the most recent evaluation by its chief executive officer and its chief financial officer prior to the date hereof, to Clover’s auditors and the audit committee of the Clover Board (i) any significant deficiencies or material weaknesses in the design or operation of its internal controls over financial reporting that are reasonably likely to adversely affect Clover’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Clover’s internal control over financial reporting.

(e)          Each of the consolidated balance sheets included in or incorporated by reference into the Clover Reports (including the related notes and schedules) fairly presents, the consolidated financial position of Clover and its consolidated Subsidiaries as of its date and each of the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows included in, or incorporated by reference into, the Clover Reports (including any related notes and schedules) fairly presents the consolidated results of operations, retained earnings (loss) and changes in financial position, as the case may be, of such companies for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that will not be material in amount or effect in accordance with GAAP consistently applied during the periods involved, except as may be noted therein).

              SECTION 6.6.          Absence of Certain Changes.

 

(a)          Except as expressly contemplated by this Agreement and the Transaction Documents, since December 31, 2018, Clover and its Subsidiaries have conducted their respective businesses only in, and have not engaged in any material transaction other than in accordance with, the ordinary course of such businesses consistent with past practice.

(b)          Since December 31, 2018, there has not been any change, event, occurrence, state of facts, condition, circumstance or effect that, individually or in the aggregate with such other changes, events, occurrences, states of facts, conditions, circumstances or effects, has resulted in or would reasonably be expected to result in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

              SECTION 6.7.          Litigation and Liabilities.

(a)          There are no Actions pending or, to Clover’s Knowledge, threatened against Clover or any of its Subsidiaries, except for those that would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole. Neither Clover nor any of its Subsidiaries is a party to or subject to the provisions of any Governmental Order that restricts in any material respect the manner in which Clover and its Subsidiaries conduct their businesses, that otherwise is material to Clover and its Subsidiaries or that would, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

(b)          Except (i) as reflected or reserved against in Clover’s most recent consolidated balance sheet (including the related notes and schedules) included in the Clover Reports filed prior to the date hereof, (ii) for obligations or liabilities incurred in the ordinary course of business consistent with past practice since the date of such consolidated balance sheet, (iii) liabilities and obligations arising out of or in connection with this Agreement, the Transaction Documents and the transactions contemplated hereby and thereby; or (iv) liabilities and obligations that would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect, neither Clover nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, matured, unmatured, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of Clover.

SECTION 6.8.          Compliance with Laws; Licenses; Anti-Corruption Laws; Import and Export Laws.

(a)          Since the Applicable Date, the businesses of Clover and its Subsidiaries have not been, and are not being, conducted in violation of any Laws, Permits or any Privacy Policies, in each case, except for violations that, individually or in the aggregate, have not resulted and would not reasonably be expected to result in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or

 

under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.

(b)          Each of Clover and its Subsidiaries has obtained and is in compliance with all Permits necessary to conduct its business as presently conducted (the “Clover Licenses”), except those the absence of which, individually or in the aggregate, have not resulted and would not reasonably be expected to result in a Clover Material Adverse Effect.  The operation of the business of Clover and its Subsidiaries as presently conducted is not, and has not been since the Applicable Date, in violation of, nor is Clover or its Subsidiaries in default or violation under, any Clover License, and, to Clover’s Knowledge, no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation of any material term, condition or provision of any Clover License, except where such default or violation of such Clover License, individually or in the aggregate, has not resulted and would not reasonably be expected to result in a Clover Material Adverse Effect.  There are no Actions pending or, to Clover’s Knowledge, threatened, that seek the revocation, cancellation or adverse modification of any Clover License, except where such revocation, cancellation or adverse modification would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect.  Since the Applicable Date, neither Clover nor any of its Subsidiaries has received any notice or communication of any noncompliance or alleged noncompliance with any Clover Licenses, except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect.

(c)          Since the Applicable Date, (i) none of Clover, its Subsidiaries or any Person associated with or acting on behalf of Clover or any of its Subsidiaries, including any officer, director, employee, agent and Affiliate thereof has granted, paid, offered or promised to grant, pay, or authorized or ratified the granting of payment, directly or indirectly, of any rebates, monies or anything of value to any Government Official or any political party or candidate for political office, or to any other Person under circumstances where Clover, any of its Subsidiaries, or any Person associated with or acting on behalf of Clover or any of its Subsidiaries, including any officer, director, employee, agent and Affiliate thereof, knew or had reason to know that all or a portion of such rebates, monies or things of value would be offered, promised, or given, directly or indirectly, to any Government Official, for the purpose of (A) influencing any act or decision of such Government Official in his or her official capacity; (B) inducing such Government Official to do, or omit to do, any act in relation to his or her lawful duty; (C) securing any improper advantage or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Authority, in each case, in order to assist Clover, any of its Subsidiaries or any Person associated with or acting on behalf of Clover or any of its Subsidiaries, including any officer, director, employee, agent and Affiliate thereof, in obtaining or retaining business for or with, or directing business to, any Person or to secure any other improper benefit or advantage, (ii) Clover, its Subsidiaries and each Person associated with or acting on behalf of Clover or any of its Subsidiaries, including any officer, director, employee, agent and Affiliate thereof, have complied with the Anti-Corruption Laws and (iii) Clover and its Subsidiaries (A) have instituted policies and procedures reasonably designed to ensure compliance with the Anti-Corruption Laws in all material respects, (B) have maintained such policies and procedures in full force and effect, (C) have not been subject to any pending Actions or, to Clover’s Knowledge, threatened with any Actions that alleges any material violation of any

 

of the Anti-Corruption Laws and (D) have not made a voluntary disclosure to a Governmental Authority in respect of any of the Anti-Corruption Laws.

(d)          Since the Applicable Date, Clover and its Subsidiaries have at all times conducted their export and import and related transactions in material compliance with all applicable Import and Export Laws.

(e)          Since the Applicable Date, none of Clover and its Subsidiaries has engaged in nor is now knowingly engaging in, any unlawful dealings or transactions with (i) any Person that at the time of the dealing or transaction is or was the subject or the target of sanctions administered by OFAC or (ii) any Person in Cuba, Iran, Syria, North Korea or the Crimea region of Ukraine.

(f)          Without limiting the foregoing subsections (d) and (e), there have been no Actions, there are no pending Actions and, to Clover’s Knowledge, there are no threatened Actions, by any Governmental Authority of potential violations against Clover or any of its Subsidiaries with respect to compliance with Import and Export Laws.

              SECTION 6.9.          Clover Material Contracts.

(a)          Except for this Agreement and except for the Contracts filed as exhibits to the Clover Reports, as of the date hereof, none of Clover or its Subsidiaries is a party to or bound by any Contract (or, in each case, any group of related Contracts with respect to a single transaction or series of related transactions):

(i)           that would be required to be filed by Clover as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act;

(ii)          for the purchase of products or for the receipt of services, which (A) involved consideration or payments by the Clover and its Subsidiaries in excess of $10,000,000 in the aggregate during the calendar year ended December 31, 2018 or (B) requires consideration or payments by Clover and its Subsidiaries in excess of $10,000,000 in the aggregate over the remaining term of such Contract;

(iii)         that (A) purports to limit in any respect either the type of business in which Clover or any of its Subsidiaries (including, after the Effective Time, the SpinCo Entities) may engage or the manner or locations in which any of them may so engage in any business, (B) could require the disposition of any material assets or line of business of Clover or any of its Subsidiaries (including, after the Effective Time, the SpinCo Entities) (taken as a whole), (C) grants “most favored nation” status or contains “exclusivity,” requirements obligations or similar provisions that would purport to apply to Clover or any of its Subsidiaries (including, after the Effective Time, the SpinCo Entities), or (D) includes “take or pay” requirements or similar provisions obligating a Person to obtain a minimum quantity of goods or services from another Person, in each case of (A), (C) and (D), that are material to the Clover and its Subsidiaries and other than distribution agreements;

(iv)         relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise) for total consideration (including assumption of

 

debt and any earn-out, deferred or contingent payment obligations) in excess of $50,000,000 pursuant to which any potential earn-out, deferred or contingent payment obligations remain outstanding (excluding indemnification obligations in respect of representations and warranties) or otherwise survive as of the date hereof;

(v)          relating to any material partnership, joint venture, strategic alliance or other similar agreement or arrangement;

(vi)         between Clover or any of its Subsidiaries, on the one hand, and any director or officer of Clover or any Person beneficially owning five percent or more of the outstanding shares of Clover Common Stock or any of their respective Affiliates (other than Clover and its Subsidiaries), on the other hand;

(vii)        relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether or not incurred, assumed, guaranteed or secured by any asset), in either case, in excess of $500,000,000;

(viii)       that grants any right of first refusal or right of first offer or similar right or that limits or purports to limit the ability of Clover or any of its Subsidiaries to sell, transfer, pledge or otherwise dispose of any assets that are material to Clover and its Subsidiaries, taken as a whole;

(ix)         evidencing financial or commodity hedging or similar trading activities, including any interest rate swaps, financial derivatives master agreements or confirmations, or futures account opening agreements or brokerage statements or similar Contract, in each case that require payments in excess of $5,000,000;

(x)          the primary purpose of which is to grant or receive any material license to, or right in or to use, material Intellectual Property Rights or material IT Assets, excluding nonexclusive licenses (i) to commercially available software or (ii) granted by a Clover or any of its Subsidiaries in the ordinary course of business, which do not involve the payment or receipt of royalties or other amounts of more than $10,000,000 annually; or

(xi)         that prohibits the payment of dividends or distributions in respect of the capital stock of Clover or any of its Subsidiaries, the pledging of the capital stock of Clover or any of its Subsidiaries or the incurrence of indebtedness for borrowed money or guarantees by Clover or any of its Subsidiaries.

Each such Contract described in subsections (i) through (xi) of this Section 6.9 is referred to herein as a “Clover Material Contract.”

(b)          A complete and correct copy of each Clover Material Contract has been made available to Moon in an electronic data room prior to the date hereof.  Each of the Clover Material Contracts is valid and binding on Clover or its Subsidiaries, as the case may be, and, to Clover’s Knowledge, each other party thereto, and is in full force and effect, except for such failures to be valid and binding or to be in full force and effect as would not, or would not reasonably be expected to, individually or in the aggregate, result in a Clover Material Adverse Effect.  There exists no breach or event of default with respect to any Clover Material Contracts

 

on the part of Clover or its Subsidiaries or, to Clover’s Knowledge, any other party thereto, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a breach or default thereunder by Clover or its Subsidiaries or, to Clover’s Knowledge, any other party thereto, except in each case, for such invalidity, failure to be binding, unenforceability, ineffectiveness, breaches or defaults that would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect.

              SECTION 6.10.        Real Property.

(a)          Except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect, with respect to the Clover Owned Real Property, (i) Clover or one of its Subsidiaries, as applicable, has good and marketable title to the Clover Owned Real Property, free and clear of any Lien other than Permitted Liens, and (ii) there are no outstanding options or rights of first refusal to purchase the Clover Owned Real Property, or any portion of the Clover Owned Real Property or interest therein.  There are no parties other than Clover or its Subsidiaries in possession of the Clover Owned Real Property.  Except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect, the Clover Owned Real Property and all buildings, structures, improvements, and fixtures located on the Clover Owned Real Property have been maintained in accordance with normal industry practice, are in good operating condition and repair, and are suitable for the purposes for which they are currently used.

(b)          With respect to the Clover Leased Real Property, the agreements for such property are valid, legally binding, enforceable and in full force and effect in accordance with their terms, and none of Clover or any of its Subsidiaries, or to the Knowledge of Clover, any third party is in breach of or default under such lease or sublease, and no event has occurred which, with notice, lapse of time or both, would constitute a breach or default by any of Clover or its Subsidiaries, or to the Knowledge of Clover, any third party or permit termination, modification or acceleration by any third party thereunder, except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole.  The Clover Leased Real Property and all buildings, structures, improvements, and fixtures located on the Clover Leased Real Property are suitable for the purposes for which they have currently used, except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect.  There are no Contracts or written or oral concessions granting to any Person other than Clover or its Subsidiaries the right to use or occupy any of the Clover Leased Real Property.

(c)          Neither Clover nor any of its Subsidiaries has received any notice of any pending or threatened condemnation of any Clover Owned Real Property or any Clover Leased Real Property by any Governmental Authority, nor, to Clover’s Knowledge, are there any public improvements or re-zoning measures proposed or in progress, in each case, that would reasonably be expected to result in a Clover Material Adverse Effect.

              SECTION 6.11.        Employee Benefits.

 

(a)          Section 6.11 of the Clover Disclosure Letter sets forth a complete and correct list of each material Benefit Plan (which list as of the date hereof need not include any Clover Non-U.S. Benefit Plan (as defined below) that Clover was not able to schedule on the date hereof, but which list shall be updated by Clover no later than sixty (60) days following the date of this Agreement solely to add such Clover Non-U.S. Benefit Plans and Clover shall make available to Moon a copy of each such Clover Non-U.S. Benefit Plan prior to the expiration of such 60-day period), and separately identifies each material Benefit Plan that is maintained primarily for the benefit of employees outside of the United States (a “Clover Non-U.S. Benefit Plan”).

(b)          With respect to each material Benefit Plan, Clover has made available to Moon, to the extent applicable, prior to the date hereof (or, solely with respect to any Clover Non-U.S. Benefit Plan that Clover was not able to schedule on the date hereof, shall make available to Moon within sixty (60) days following the date of this Agreement) complete and correct copies of (i) the Benefit Plan document, including any amendments or supplements thereto, and all related trust documents, insurance contracts or other funding vehicles, (ii) a written description of such Benefit Plan if such plan is not set forth in a written document, (iii) the most recently prepared actuarial report and (iv) all material correspondence to or from any Governmental Authority received in the last three years with respect to such Benefit Plan.

(c)          Except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect, (i) each Benefit Plan (including any related trusts), other than Clover Non-U.S. Benefit Plans, has been established, operated and administered in compliance with its terms and applicable Laws, including ERISA and the Code, (ii) all contributions or other amounts payable by Clover or any Subsidiary with respect to each Benefit Plan have been paid or accrued in accordance with GAAP and (iii) there are no pending or, to Clover’s Knowledge, threatened claims (other than routine claims for benefits) or Actions by a Governmental Authority by, on behalf of or against any Benefit Plan or any trust related thereto.

(d)          With respect to each ERISA Plan, Clover has made available to Moon, to the extent applicable, prior to the date hereof complete and correct copies of (i) the most recent summary plan description together with any summaries of all material modifications thereto, (ii) the most recent IRS determination or opinion letter and (iii) the two most recent annual reports (Form 5500 or 990 series and all schedules and financial statements attached thereto and any amendments or supplements thereto).

(e)          Each ERISA Plan that is intended to be qualified under Section 401(a) of the Code, has been determined by the IRS to be qualified under Section 401(a) of the Code and, to Clover’s Knowledge, nothing has occurred that would adversely affect the qualification or tax exemption of any such Benefit Plan.  With respect to any ERISA Plan, neither Clover nor any Subsidiary of Clover has engaged in a transaction in connection with which Clover or a Subsidiary of Clover reasonably would be subject to either a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed by either Section 4975 or 4976 of the Code.

 

(f)          Neither Clover nor any Person that is a member of a “controlled group of corporations” (as defined in Section 414(b) of the Code), is under “common control” (as defined in Section 414(c) of the Code), or is a member of the same “affiliated service group” (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code) with Clover has maintained, established, participated in or contributed to, or is or has been obligated to contribute to, or has otherwise incurred any material obligation or liability (including any contingent liability) under, (i) a plan that is subject to Section 412 of the Code or Section 302 or title IV of ERISA or (ii) any Multiemployer Plans, in each case, in the last six years.  No Benefit Plan is, and neither Clover nor any Person that is a member of a “controlled group of corporations” (as defined in Section 414(b) of the Code), is under “common control” (as defined in Section 414(c) of the Code), or is a member of the same “affiliated service group” (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code) with Clover has any liability under, a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA) or a Multiple Employer Plan.

(g)          With respect to any ERISA Plan subject to the minimum funding requirements of Section 412 of the Code or Title IV of ERISA, (i) no such plan is, or is expected to be, in “at-risk” status (within the meaning of Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of the Code), (ii) as of the last day of the most recent plan year ended prior to the date of this Agreement, the actuarially determined present value of all “benefit liabilities” within the meaning of Section 4001(a)(16) of ERISA did not exceed the then-current value of assets of such ERISA Plan or, if such liabilities did exceed such assets, the amount thereof was properly reflected on the financial statements of Clover, (iii) no unsatisfied liability (other than for premiums to the Pension Benefit Guaranty Corporation) under Title IV of ERISA has been, or is expected to be, incurred by Clover, (iv) the Pension Benefit Guaranty Corporation has not instituted proceedings to terminate any such ERISA Plan and Clover has not received notice from the Pension Benefit Guaranty Corporation of its intent to terminate a plan or appoint a trustee, (v) no application for a waiver of premiums is pending with the Pension Benefit Guaranty Corporation, (vi) except as would not reasonably be expected to be material to Clover, no “reportable event” within the meaning of Section 4043 of ERISA (excluding any such event for which the thirty day notice requirement has been waived under the regulations to Section 4043 of ERISA) has occurred, nor has any event described in Sections 4062, 4063 or 4041 of ERISA occurred and (vii) neither Clover nor any Subsidiary has engaged in a transaction a principal purpose of which was to evade liability under ERISA as contemplated by Section 4069 of ERISA.

(h)          Except as required by applicable Law, no Benefit Plan provides retiree or post-employment medical, disability, life insurance or other welfare benefits to any Person, and neither Clover nor any of its Subsidiaries has any obligation to provide such benefits.

(i)           Each Benefit Plan that is a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the Code) is in documentary compliance with, and has been operated and administered in material compliance with, Section 409A of the Code and the guidance issued by the IRS provided thereunder.

(j)           Neither the execution, delivery or performance of this Agreement, stockholder adoption or other approval of this Agreement nor the consummation of the Merger

 

or the other transactions contemplated hereby could, either alone or in combination with another event, (i) entitle any current or former employee, director, officer or independent contractor of Clover or any of its Subsidiaries to severance pay or any material increase in severance pay, (ii) accelerate the time of payment or vesting or materially increase the amount of compensation due to any such employee, director, officer, or independent contractor or (iii) directly or indirectly require Clover or any of its Subsidiaries to transfer or set aside any assets to fund any payments or benefits under any Benefit Plan.

(k)          Neither the execution, delivery or performance of this Agreement, stockholder adoption or other approval of this Agreement nor the consummation of the Merger or the other transactions contemplated by this Agreement or the Transaction Documents could, either alone or in combination with another event, result in the payment of any amount to any current or former employee, director, officer or independent contract of Clover or any of its Subsidiaries that could, individually or in combination with any other such payment, constitute an “excess parachute payment” as defined in Section 280G(b)(1) of the Code.

(l)           Neither Clover nor any of its Subsidiaries has any obligation to provide, and no Benefit Plan or other agreement provides any current or former employee, director, officer or independent contract of Clover or any of its Subsidiaries with the right to, a gross-up, indemnification, reimbursement, make-whole or other payment for any excise or additional Taxes, interest or penalties incurred pursuant to Section 409A or Section 4999 of the Code or due to the failure of any payment to be deductible under of Section 280G of the Code.

(m)         Except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect, (i) all Clover Non-U.S. Benefit Plans comply in all respects with applicable local Law, and all such plans that are intended to be funded or book-reserved are funded or book-reserved, as appropriate, based upon reasonable actuarial assumptions determined by qualified actuaries and (ii) as of the date hereof, there is no pending or threatened litigation relating to Clover Non-U.S. Benefit Plans.

              SECTION 6.12.        Labor Matters.

(a)          Section 6.12(a) of the Clover Disclosure Letter sets forth a complete and correct list of any collective bargaining agreement or other material agreement with a labor union, works council or like organization that Clover or any of its Subsidiaries is a party to or otherwise bound by (collectively, the “Clover Labor Agreements”), and, to Clover’s Knowledge, there are no activities or Actions by any individual or group of individuals, including representatives of any labor organizations, trade unions or labor unions, to organize any employees of Clover or any of its Subsidiaries.  Clover has made available to Moon prior to the date hereof complete and correct copies of each material Clover Labor Agreement listed in Section 6.12(a) of the Clover Disclosure Letter.

(b)          There are no labor unions, trade unions, works councils or like organizations that represent employees of Clover or any of its Subsidiaries.  The execution, delivery and performance of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement or the Transaction Documents, either alone or in combination with another event, will not (i) entitle any third party (including any labor union,

 

trade union, works council or like organization or Governmental Authority) to any payments under any of the Clover Labor Agreements or (ii) require the consent of, or advance notification to, or advance consultation with, any labor union, trade union, works council or like organization with respect to employees of Clover and its Subsidiaries.

(c)          As of the date hereof, there is no strike, lockout, slowdown, work stoppage, organizing activities, unfair labor practice or other material labor dispute, or Proceedings or grievance pending or, to Clover’s Knowledge, threatened against Clover or any of its Subsidiaries.  Each of Clover and its Subsidiaries is in compliance in all material respects with the Clover Labor Agreements.

(d)          Neither Clover nor any of its Subsidiaries has incurred any material liability or obligation under the WARN Act that remains unsatisfied.

(e)          Clover and its Subsidiaries are, and since the Applicable Date, have been, in material compliance with all applicable Laws, rules and regulations, ordinances, Governmental Orders, Contracts, policies, plans and programs relating to employment, employment practices, compensation, the classification of employees as exempt/non-exempt, the classification of individuals as employees or independent contractors, immigration, employee leave, benefits, hours, terms and conditions of employment, and the termination of employment and unemployment insurance.

              SECTION 6.13.        Environmental Matters.

Except for such matters that, individually or in the aggregate, would not reasonably be expected to result in a Clover Material Adverse Effect or or have a material adverse effect on the ability of Clover to perform its obligations hereunder or under the Transaction Documents or to consummate the transactions contemplated hereby or thereby, taken as a whole:  (i) Clover and its Subsidiaries have at all times been in compliance with all, and have not violated any, Environmental Laws; (ii) no Clover Owned Real Property or Clover Leased Real Property or any other real property, currently or formerly owned, leased or operated by Clover or any of its Subsidiaries (including soils, groundwater, surface water, buildings or other structures) contain any Hazardous Material under conditions or circumstances that would reasonably be expected to result in liability to Clover or any of its Subsidiaries; (iii) neither Clover nor any of its Subsidiaries is subject to liability for any Hazardous Material present at or on any third-party property or is otherwise subject to any liability regarding any failure to properly store or handle, or any release of or exposure to, any Hazardous Material; (iv) neither Clover nor any of its Subsidiaries has received any notice, demand, letter, claim or request for information or is a party to or the subject of any pending or, to Clover’s Knowledge, threatened Action alleging that Clover or any of its Subsidiaries may be in violation of or subject to liability under any Environmental Law or regarding any Hazardous Material; (v) neither Clover nor any of its Subsidiaries is subject to any Governmental Order or other arrangement with any Governmental Authority or any indemnity or other agreement with any third party relating to liability or obligations relating to any Environmental Law or regarding any Hazardous Material; and (vi) there are no other circumstances or conditions involving Clover or any of its Subsidiaries that would reasonably be expected to result in any claim, liability, investigation,

 

cost or restriction on the ownership, use, or transfer of any property pursuant to any Environmental Law or regarding any Hazardous Material.

              SECTION 6.14.        Taxes.

(a)          Clover and each of its Subsidiaries (i) have prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all material Tax Returns required to be filed by any of them and all such filed Tax Returns are true, complete and correct in all material respects, (ii) have paid all Taxes shown as due on such Tax Returns and all material amounts of Taxes that Clover or any of its Subsidiaries are obligated to withhold from amounts owing to any employee, former employee, independent contractor, creditor, stockholder or third party, except with respect to matters contested in good faith by appropriate Actions and for which adequate reserves have been established in accordance with GAAP and (iii) have not waived any statute of limitations with respect to a material amount of Taxes or agreed to any extension of time with respect to an assessment or deficiency of a material amount of Taxes, in each case in writing, which waiver or extension is currently in effect.  There are no material Tax Liens upon any property or assets of Clover or any of its Subsidiaries except Permitted Liens.

(b)          As of the date hereof, (i) no deficiencies for a material amount of Taxes have been proposed or assessed in writing against or with respect to any Taxes due by or Tax Returns of Clover or any of its Subsidiaries, (ii) there are not pending or, to Clover’s Knowledge, threatened in writing, any audits, examinations, investigations or other Actions in respect of any material Taxes or material Tax Returns of Clover or any of its Subsidiaries and (iii) no claim has been made by a Governmental Authority in any jurisdiction where Clover or any of its Subsidiaries does not file Tax Returns that Clover or any of its Subsidiaries is or may be subject to material taxation by, or required to file Tax Returns in, such jurisdiction, which claim has not been fully resolved.

(c)          As of the date hereof, neither Clover nor any of its Subsidiaries (i) has been a member of an affiliated group filing an affiliated, combined, unitary, consolidated or similar income Tax Return (other than a group the common parent of which is Clover or any of its Subsidiaries), (ii) is a party to any Tax allocation, Tax sharing, Tax indemnity or similar agreement, other than commercial agreements entered into in the ordinary course of business, the principal purpose of which is not related to Taxes, and the Tax Matters Agreement or (iii) has liability for the Taxes of any Person (other than Clover or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law) or as transferee or successor.

(d)          During the last two years, neither Clover nor any of its Subsidiaries has been either a “distributing corporation” or a “controlled corporation” in a transaction intended to qualify under Section 355 of the Code.

(e)          Neither Clover nor any of its Subsidiaries has “participated” within the meaning of Treasury Regulation Section 1.6011-4(c)(3)(i)(A) in any “listed transaction” within the meaning of Section 6011 of the Code and the Treasury Regulations thereunder, as in effect and as amended by any guidance published by the IRS for the applicable period.

 

(f)          Clover and its Subsidiaries have made adequate provision in accordance with GAAP for any material amounts of Taxes that are not yet due and payable for all taxable periods, or portions thereof, ending on or before the date hereof.

(g)          Neither Clover nor any of its Subsidiaries has agreed to make or is required to make any adjustment for a taxable period ending after the Closing Date under Section 481(a) of the Code or any similar provision of state, local or foreign Tax Law by reason of a change in or incorrect accounting method.

(h)          Neither Clover nor any of its Subsidiaries has taken any action or knows of any fact or circumstance that could reasonably be expected to prevent (i) the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, (ii) the Contribution and Distribution from qualifying as a “reorganization” under Sections 368(a), 361 and 355 of the Code or (iii) each of the transactions described on Schedule 7.3(b) from qualifying as either a “distribution” under Section 355 of the Code or as a “reorganization” under Sections 368(a), 361 and 355 of the Code.

(i)          None of Clover, any of its Subsidiaries or a coordinating group described in Treasury Regulations Section 1.355-7(h)(4) of which Clover or any of its Subsidiaries is a part, has acquired actually or constructively under Section 355(e)(4)(C) of the Code stock of Moon.

              SECTION 6.15.        Intellectual Property.

Except as would not, individually or in the aggregate, reasonably be expected to be material to the business of Clover and its Subsidiaries, taken as a whole:

(a)          All registrations and applications of Intellectual Property Rights included in the Clover Owned Intellectual Property are subsisting and unexpired, and, to the Knowledge of Clover, valid and enforceable.

(b)          Clover and its Subsidiaries exclusively own their material Clover Owned Intellectual Property, free and clear of any and all Liens (other than Permitted Liens), and Clover has not since the Applicable Date received any written claim from any other Person challenging the validity, enforceability or ownership of same.

(c)          Since the Applicable Date, the operation of Clover’s and its Subsidiaries’ businesses has not infringed, misappropriated or otherwise violated the Intellectual Property Rights of any other Person, and neither Clover nor any of its Subsidiaries has since the Applicable Date received any written claim from any other Person alleging the same, except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect.  To the Knowledge of Clover, no Person is infringing any Clover Owned Intellectual Property, except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect.

(d)          Since the Applicable Date, Clover and its Subsidiaries have taken all commercially reasonable actions and have implemented all reasonable policies and procedures to protect (i) its and their material trade secrets and confidential information included in the Clover

 

Owned Intellectual Property, (ii) any Personal Data collected, stored, used, disclosed, transmitted, processed or disposed of in connection with or by or on behalf of Clover or its Subsidiaries and (iii) the integrity, continuous operation and security of its and their IT Assets, and there has been no unauthorized access to, and no material breaches, outages, violations of, any of the foregoing in clauses (i) – (iii), except as would not, individually or in the aggregate, reasonably be expected to result in a Clover Material Adverse Effect.

SECTION 6.16.        Insurance

Clover and each of its Subsidiaries are covered by insurance policies and self-insurance programs and arrangements relating to the business, assets and operations of Clover and its Subsidiaries that (a) are in full force and effect and (b) are sufficient for compliance with all applicable Laws and Contracts to which Clover or any of its Subsidiaries is a party or by which it is bound and as is customary in the industries in which Clover and its Subsidiaries operate.  All premiums due under such insurance policies and self-insurance programs and arrangements have been paid.

              SECTION 6.17.        Takeover Statutes.

The Clover Board has taken all necessary action to exempt this Agreement, the other Transaction Documents and the transactions contemplated hereby (including the Merger and the Voting Agreement) and thereby from the restrictions set forth in Article X of the Clover Certificate.  No Takeover Statute or any anti-takeover provision in Clover’s Organizational Documents is applicable to this Agreement, the Merger or the other transactions contemplated by this Agreement.

              SECTION 6.18.        Brokers and Finders.

Other than Citigroup Global Markets Inc. and Baird (the fees and expenses of which will be paid by Clover), no broker, finder, investment banker, financial advisor or other similar Person is entitled to any brokerage fee, finders fee or other similar fee or commission in connection with the transactions contemplated by this Agreement based on arrangements made by or on behalf of Clover or any Clover Subsidiary.

SECTION 6.19.        Proxy Statement; Registration Statements

None of the information regarding Clover or the Clover Subsidiaries or the transactions contemplated by this Agreement or the Transaction Documents provided by Clover specifically for inclusion in, or incorporation by reference into, the Proxy Statement, the Clover Registration Statement, the SpinCo Registration Statement or the Distribution Documents will, in the case of the definitive Proxy Statement or any amendment or supplement thereto, at the time of the mailing of the definitive Proxy Statement and any amendment or supplement thereto, or, in the case of the Clover Registration Statement, the SpinCo Registration Statement and the Distribution Documents, at the time such registration statement becomes effective, at the Distribution Date and at the Effective Time, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Proxy Statement and the Clover Registration Statement will comply as to form in all

 

material respects with the provisions of the Securities Act and the Exchange Act, as the case may be, except that no representation is made by Clover with respect to information provided by Moon or SpinCo specifically for inclusion in, or incorporation by reference into, the Proxy Statement or the Clover Registration Statement.

              SECTION 6.20.        No Other Moon or SpinCo Representations or Warranties.

Clover acknowledges and agrees that, except for the representations and warranties of Moon and SpinCo expressly set forth in this Agreement or any Transaction Document, neither Moon, SpinCo nor any of their respective Subsidiaries nor any other Person acting on behalf of Moon, SpinCo or any of their respective Subsidiaries makes any representation or warranty, express or implied and Clover is not relying on any representations or warranties, express or implied, other than the representations and warranties expressly set forth in Article IV and Article V. Without limiting the generality of the foregoing, Clover acknowledges that no representations or warranties are made with respect to any projections, forecasts, estimates or budgets with respect to the SpinCo Business that may have been made available to Clover, Merger Sub or any of their Representatives by Moon, SpinCo or their respective Representatives.

SECTION 6.21.        Financing

(a)          As of the date hereof, the Financing Commitment Letter has not been amended, waived or modified by or with the consent of Clover, and the respective commitments contained in the Financing Commitment Letter have not been withdrawn, modified or rescinded in any respect.  Except for the Financing Commitment Letter, Clover has not entered into any side letters or other contracts, instruments or other commitments, obligations or arrangements (whether written or oral) related to the funding of the full amount of the Financing, other than as expressly set forth in the Financing Commitment Letter and delivered to Moon prior to the date of this Agreement.

(b)          The Financing Commitment Letter is in full force and effect and is a legal, valid and binding obligation of Clover and, to the Knowledge of Clover, the other parties thereto (other than SpinCo). As of the date of this Agreement, no event has occurred and on the Closing Date, no event shall have occurred and be continuing, which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Clover under any term or condition of the Financing Commitment Letter. Clover has fully paid any and all commitment fees, any other fees or any other amounts required by the Financing Commitment Letter to be paid on or before the date of this Agreement and Clover represents that it shall fully pay or cause to be paid any other fees or other amounts that are due under the Financing Commitment Letter or any related fee letter.  Other than as set forth in the Financing Commitment Letter, there are no conditions precedent to the funding of the full amount of the Financing. As of the date hereof, Clover has no reason to believe that any of the conditions to the Financing to be satisfied by it will not be satisfied on a timely basis or that the Financing will not be available to SpinCo immediately prior to the Distribution.

 

SECTION 7.1.          Conduct of Business by Clover and Merger Sub Pending the Merger

(a)          Clover covenants and agrees as to itself and its Subsidiaries that, following the date hereof and prior to the Effective Time (or the earlier termination of this Agreement) (the “Interim Period”) unless Moon shall otherwise approve in writing (such approval not to be unreasonably withheld, conditioned or delayed), and except (x) as otherwise required or expressly contemplated by this Agreement (including as set forth in Section 7.1(a) of the Clover Disclosure Letter) or the Transaction Documents or (y) as required by applicable Law, the business of Clover and its Subsidiaries shall be conducted in the ordinary course of business consistent with past practice and, to the extent consistent therewith, Clover and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Authorities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of its and its Subsidiaries’ present employees and agents.  Without limiting the generality of, and in furtherance of, the foregoing, during the Interim Period, except (w) as otherwise required or expressly contemplated by this Agreement or the Transaction Documents, (x) as Moon may approve in writing (such approval not to be unreasonably withheld, conditioned or delayed), (y) as required by Law or (z) as set forth in the corresponding subsection of Section 7.1(a) of the Clover Disclosure Letter, Clover will not and will not permit its Subsidiaries to:

(i)           adopt, make or propose any change in the Organizational Documents of Clover;

(ii)          acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material amount of assets, securities, properties, interests or businesses, other than acquisitions of goods or services in the ordinary course of business consistent with past practice or any acquisitions with a value not exceeding of $50,000,000 in the aggregate (in each case, subject to Section 7.6(f));

(iii)         issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of Clover or any of its Subsidiaries (other than the issuance of shares (A) by a wholly owned Subsidiary of Clover to Clover or another wholly owned Subsidiary or (B) in respect of the settlement of Clover Equity Awards in accordance with their terms and, as applicable, the Clover Stock Plan as in effect on the date hereof), securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities (other than the issuance of annual Clover Equity Awards and issuance of Clover Equity Awards in connection with new hires or promotions, in each case, in the ordinary course of business consistent with past practice);

 

(iv)         make any material loans, advances, guarantees or capital contributions to or investments in any Person (other than to Clover or a wholly owned Subsidiary of Clover) other than (x) in the ordinary course of business consistent with past practice or (y) in an amount not to exceed $10,000,000 in the aggregate (in each case, subject to Section 7.6(f));

(v)          (A) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock except for dividends paid by any direct or indirect wholly owned Subsidiary of Clover to Clover or to any other direct or indirect wholly owned Subsidiary of Clover or (B) enter into any agreement with respect to the voting of its capital stock;

(vi)         reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock (other than (i) the withholding of shares to satisfy withholding Tax obligations upon the exercise, vesting or settlement of Clover Equity Awards in accordance with their terms and, as applicable, the Clover Stock Plans as in effect on the date hereof and (ii) repurchases of shares of Clover Common Stock pursuant to Clover’s announced stock repurchase program);

(vii)        incur any indebtedness for borrowed money or guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of Clover or any of its Subsidiaries, except for (A) indebtedness for borrowed money incurred in the ordinary course of business, (B) indebtedness for borrowed money under Clover’s existing revolving credit facility incurred in the ordinary course of business, (C) indebtedness for borrowed money under letters of credit, bonds, sureties or similar credit support or assurances in the ordinary course of business or (D) guarantees of indebtedness of wholly owned Subsidiaries of Clover;

(viii)       make any material changes with respect to accounting policies or procedures, except as required by GAAP;

(ix)         compromise, settle or agree to settle any Actions or investigation (including any Action or investigation relating to this Agreement or the transactions contemplated hereby) other than compromises, settlements or agreements in the ordinary course of business that (i) other than pursuant to clause (ii) directly below, involve only the payment of monetary damages not in excess of $5,000,000 individually or $25,000,000 in the aggregate, in any case without the imposition of equitable relief on, or the admission of wrongdoing by, Clover or its Subsidiaries or (ii) involve the payment of an amount not in excess of $20,000,000 in the aggregate for Actions relating to, or arising from, alleged exposure to asbestos;

(x)          transfer, sell, lease, license, mortgage, pledge, surrender, encumber (other than an encumbrance that constitutes a Permitted Lien), divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets, rights, properties or businesses, in whole or in part, except for (A) non-exclusive licenses, (B) sales or other dispositions of obsolete assets or sales of inventory, (C) cancellations, abandonments, lapses or expirations of non-material registrations or applications of Intellectual Property Rights, in each case of (A), (B) and (C), in the ordinary course of business, or (D) other dispositions of assets in an amount not to exceed $50,000,000 in the aggregate;

 

(xi)         except as otherwise required by existing Benefit Plans, policies or Contracts, (A) adopt, enter into, amend or increase the benefits under any Benefit Plan if such action would increase the benefits provided to any employee of Clover or any of its subsidiaries or the cost for providing such benefits (except to the extent permitted by the following clause (B)) or (B) grant any increase in compensation or severance pay to any employee of Clover or any of its subsidiaries other than (x) increases in base salary or wages for employees whose base compensation is less than $225,000 in the ordinary course of business consistent with past practice, (y) annual merit-based increases to employee salaries and base wage rates in the ordinary course of business or (z) in connection with a promotion or job reassignment in the ordinary course of business;

(xii)        materially change any actuarial or other assumptions used to calculate funding obligations with respect to any ERISA Plan in which employees of Clover or any of its subsidiaries participate that is required by Law to be funded or materially change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or the IRS;

(xiii)       become a party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with a trade union, labor union, works council or similar organization;

(xiv)       adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other material reorganization;

(xv)        (i) except in the ordinary course of business or as required by Law, terminate or fail to use commercially reasonable efforts to renew any Clover Material Contract to which Clover or any of the Clover Subsidiaries is a party or modify, amend, waive, release or assign any material rights or claims thereunder or (ii) except in the ordinary course of business, enter into any Contract that would have been a Clover Material Contract were it in effect as of the date hereof;

(xvi)       engage in any activity that would constitute a breach of Section 6.01 of the Employee Matters Agreement if the Employee Matters Agreement were fully executed and effective as of the date hereof;

(xvii)      make, change or revoke any material Tax election or settle, compromise or abandon any material Tax liability, in each case (i) other than in the ordinary course of business or (ii) as would not be likely to have a material and adverse impact on Clover and the Clover Subsidiaries taken as a whole; or

(xviii)     agree, commit, arrange, authorize, resolve or enter into any understanding to do any of the foregoing.

(b)          In addition, during the Interim Period, Clover shall and shall cause each of the Clover Subsidiaries to (i) prepare and timely file all Tax Returns that it is required to file; (ii) timely pay all Taxes shown to be due and payable on such Tax Returns; and (iii) promptly notify Moon of any notice of any Action or audit in respect of any Tax matters (or any significant developments with respect to ongoing Actions or audits in respect of such Tax matters).

 

              SECTION 7.2.          Conduct of Business by Moon and SpinCo Pending the Merger .

(a)          Moon covenants and agrees as to itself and its Subsidiaries (including the SpinCo Entities) that, during the Interim Period, unless Clover shall otherwise approve in writing (such approval not to be unreasonably withheld, conditioned or delayed), and except (x) as otherwise required or expressly contemplated by this Agreement (including as set forth in Section 7.2(a) of the SpinCo Disclosure Letter), the Reorganization or the Transaction Documents, or (y) as required by applicable Law, the SpinCo Business shall be conducted in the ordinary course of business consistent with past practice and, to the extent consistent therewith, it and the SpinCo Entities shall use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Authorities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of the SpinCo Business’ and SpinCo Entities’ present employees and agents.  Without limiting the generality of, and in furtherance of, the foregoing, during the Interim Period, except (w) as required or expressly contemplated by this Agreement, the Reorganization or the Transaction Documents, (x) as Clover may approve in writing (such approval not to be unreasonably withheld, conditioned or delayed), (y) as required by Law or (z) as set forth in the corresponding subsection of Section 7.2(a) of the SpinCo Disclosure Letter, Moon will not and will not permit the SpinCo Entities to, in each case with respect to the SpinCo Business:

(i)           adopt, make or propose any change in the Organizational Documents of any SpinCo Entity;

(ii)          acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material amount of assets, securities, properties (including owned real properties), interests (including leasehold interests in real properties) or businesses, other than (A) acquisitions of goods or services in the ordinary course of business consistent with past practice or (B) any acquisitions with a value not exceeding $50,000,000 in the aggregate (in each case, subject to Section 7.6(f)); provided, except with respect to any Owned Real Property or Leased Real Property that is included in the PFS Acquisition or which would be an Excluded Asset, the foregoing $50,000,000 basket shall not apply with respect to any Owned Real Property or Leased Real Property that (i) is subject to any known material Hazardous Materials or material violations of any Environmental Law or (ii) is located in any country set forth in Section 7.2(a)(ii)(z) of the SpinCo Disclosure Letter;

(iii)         issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of a SpinCo Entity, securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities (other than issuances to SpinCo Entities and rights arising from the Distribution);

(iv)         make any material loans, advances, guarantees or capital contributions to or investments in any Person, other than to SpinCo or a wholly owned SpinCo Subsidiary;

 

(v)          (A) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any capital stock of a SpinCo Entity except for dividends paid by any direct or indirect wholly owned Subsidiary of SpinCo to SpinCo or to any other direct or indirect wholly owned Subsidiary of SpinCo or (B) enter into any agreement with respect to the voting of the capital stock of a SpinCo Entity;

(vi)         reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of the capital stock of a SpinCo Entity (other than the withholding of shares to satisfy withholding Tax obligations upon the exercise, vesting or settlement of Moon Equity Awards in accordance with their terms and, as applicable, the Moon Stock Plans as in effect on the date here);

(vii)        to incur any indebtedness for borrowed money or guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of SpinCo or any SpinCo Subsidiary, in each case, that would be a SpinCo Liability at the Effective Time, except for (A) indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice not to exceed $50,000,000 in the aggregate, (B) indebtedness for borrowed money under letters of credit, bonds, sureties or similar credit support or assurances in the ordinary course of business, (C) the Total SpinCo Debt (as defined in the Separation and Distribution Agreement) or (D) indebtedness or guarantees of indebtedness among wholly owned Subsidiaries of SpinCo or SpinCo;

(viii)       make any material changes with respect to accounting policies or procedures of any SpinCo Entity or the SpinCo Business, except as required by GAAP;

(ix)          compromise, settle or agree to settle any Actions or investigation (including any Action or investigation relating to this Agreement or the transactions contemplated hereby) that would be SpinCo Assets or SpinCo Liabilities at the Effective Time, other than compromises, settlements or agreements in the ordinary course of business that (i) other than pursuant to clause (ii) directly below, involve only the payment of monetary damages not in excess of $5,000,000 individually or $25,000,000 in the aggregate, in any case without the imposition of equitable relief on, or the admission of wrongdoing by, any SpinCo Entity or (ii) involve the payment of an amount not in excess of $2,000,000 in the aggregate for Actions relating to, or arising from, alleged exposure to asbestos;

(x)          transfer, sell, lease, license, mortgage, pledge, surrender, encumber (other than an encumbrance that constitutes a Permitted Lien), divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets, rights, properties or businesses, in whole or in part, that would be SpinCo Assets at the Effective Time; except for (A) non-exclusive licenses, (B) sales or other dispositions of obsolete assets or sales of inventory, (C) cancellations, abandonments, lapses or expirations of non-material registrations or applications of Intellectual Property Rights, in each case of (A), (B) and (C), in the ordinary course of business, or (D) other dispositions of assets in an amount not to exceed $10,000,000 in the aggregate;

 

(xi)         except as otherwise required by existing Benefit Plans, Law, policies or Contracts or where the cost thereof would be entirely borne by Moon, (A) adopt, enter into, amend or increase the benefits under any Benefit Plan if such action would increase the benefits provided to any SpinCo Employee or the cost for providing such benefits (except to the extent permitted by the following clause (B)), or (B) grant any increase in compensation or severance pay to any SpinCo Employee other than  (x) increases in base salary or wages for SpinCo Employees whose base compensation is less than $225,000 in the ordinary course of business consistent with past practice, (y) annual merit-based increases to employee salaries and base wage rates in the ordinary course of business or (z) in connection with a promotion or job reassignment in the ordinary course of business;

(xii)        materially change any actuarial or other assumptions used to calculate funding obligations with respect to any ERISA Plan in which SpinCo Employees participate with respect to SpinCo Employees that is required by Law to be funded or materially change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or the IRS;

(xiii)        with respect to the SpinCo Business, (A) hire any new employee (other than to replace a terminated employee or, solely where such employee would be a Group 1 Employee, Group 2 Employee or Group 3 Employee (as each such term is defined in the Employee Matters Agreement) upon hiring, to fill open job positions in the ordinary course of business) or assign any existing Moon employee to the SpinCo Business such that such individual becomes a SpinCo Employee, or (B) transfer the employment or reallocate the duties or responsibilities of any SpinCo Employee employed as of the date of this Agreement, such that such Person would not be a SpinCo Employee at the Closing;

(xiv)       become a party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with a trade union, labor union, works council or similar organization;

(xv)        except as set forth on Section 7.2(a)(xv) of the SpinCo Disclosure Letter, issue to SpinCo Employees any additional awards under the Moon Stock Plans that would be subject to Section 3.4, or modify or waive the terms of any outstanding Moon Equity Awards that are subject to Section 3.4, or modify or waive the terms of any Moon Stock Plan as applied to any outstanding awards under such Moon Stock Plans that are subject to Section 3.4;

(xvi)       engage in any activity that would constitute a breach of Section 6.02 of the Employee Matters Agreement if the Employee Matters Agreement were fully executed and effective as of the date hereof;

(xvii)      (i) except in the ordinary course of business, or as required by Law, terminate or fail to use commercially reasonable efforts to renew any SpinCo Material Contract to which SpinCo or any of the SpinCo Subsidiaries is a party or modify, amend, waive, release or assign any material rights or claims thereunder or (ii) except in the ordinary course of business, enter into any Contract that would have been a SpinCo Material Contract if it were in effect as of the date hereof;

 

(xviii)     except in the ordinary course of business, enter into or amend any agreement or arrangement that will be a SpinCo Contract as of the Closing with any Affiliate of Moon or any Moon Subsidiary (other than SpinCo or a SpinCo Subsidiary);

(xix)        amend or modify the acquisition agreement (other than immaterial amendments or modifications) or amend or modify in any material respect any ancillary agreement in respect of the acquisition set forth on Section 7.2(a)(xix) of the SpinCo Disclosure Letter (the “Pending Acquisition” and such agreements, the “Pending Acquisition Agreements”), waive, release or assign any rights, obligations or conditions under any Pending Acquisition Agreements in a manner materially adverse to SpinCo, grant any material affirmative consent under any Pending Acquisition Agreement or fail to use commercially reasonable efforts to complete such Pending Acquisition on the terms and conditions set forth in the Pending Acquisition Agreement;

(xx)         fail to make an amount of capital expenditures for the SpinCo Business set forth in Section 7.2(a)(xx) of the SpinCo Disclosure Letter, excluding variations below such amount not exceeding 5.0%, in the aggregate;

(xxi)        adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other material reorganization;

(xxii)       make, change or revoke any material Tax election in respect of the SpinCo Business that would bind any SpinCo Entity for periods following the Effective Time or settle, compromise or abandon any material Tax liability for which a SpinCo Entity would be responsible under the Tax Matters Agreement, in each case other than (i) in the ordinary course of business or (ii) as would not be likely to have a material and adverse impact on the SpinCo Entities, taken as a whole;

(xxiii)      take or refrain from taking any action in respect of working capital of the SpinCo Business that is outside of the ordinary course of business consistent with past practices, including (w) delaying the payment of accounts payable of, or other amounts owed to any Person by, the SpinCo Business, (x) accelerating the receipt of accounts receivable of, or other amounts owed by any Person to, the SpinCo Business, (y) deferring the purchase of inventory pursuant to orders received or anticipated, or (z) amending or waiving any credit or collection policy of the SpinCo Business, in each case of clauses (w), (x), (y) and (z) other than in the ordinary course of business consistent with past practice; or

(xxiv)      agree, commit, arrange, authorize, resolve or enter into any understanding to do any of the foregoing.

(b)          In addition, during the Interim Period, Moon shall cause each SpinCo Entity to (i) prepare and timely file all Tax Returns that it is required to file; (ii) timely pay all Taxes shown to be due and payable on such Tax Returns; and (iii) promptly notify Clover of any notice of any Action or audit in respect of any Tax matters (or any significant developments with respect to ongoing Actions or audits in respect of such Tax matters).

 

SECTION 7.3.          Tax Matters

(a)          This Agreement is intended to constitute a “plan of reorganization” within the meaning of Section 1.368‑2(g) of the Treasury Regulations and the Parties hereby adopt it as such. From and after the date of this Agreement and until the Effective Time, each Party shall use its reasonable best efforts to ensure the Tax‑Free Status of the External Transactions and shall not knowingly take any action, cause or permit any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act could prevent the Tax‑Free Status of the External Transactions. Following the Effective Time, none of Moon, Clover or any of their Affiliates shall knowingly take any action, cause or permit any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act could prevent the Tax‑Free Status of the External Transactions.

(b)          Clover and Moon shall cooperate and use their respective reasonable best efforts in order for:

(i)           Clover to obtain the opinion of Clover Tax Counsel, in form and substance reasonably acceptable to Clover, dated as of the Closing Date, on the basis of the facts and customary representations and assumptions set forth or referred to in such opinion and the Tax Representation Letters to the effect that, for U.S. federal income Tax purposes, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and no income, gain or loss will be recognized by any of Clover, Merger Sub, SpinCo or the holders of SpinCo Common Stock as a result of the Merger (except with respect to the receipt of cash in lieu of fractional shares of Clover Common Stock) (such opinion of such Clover Tax Counsel, the “Clover Tax Opinion”); and

(ii)          Moon to obtain the opinion of Moon Tax Counsel, in form and substance reasonably acceptable to Moon, dated as of the Closing Date, on the basis of the facts and customary representations and assumptions set forth or referred to in such opinion and the Tax Representation Letters, (I) as to the Tax-Free Status of the External Transactions; (II) that, for U.S. federal income Tax purposes, each of the transactions described on Schedule 7.3(b) will qualify as either a “distribution” under Section 355 of the Code or as a “reorganization” under Section 368(a), including by way of Sections 361 and  355 of the Code, as applicable, and no income, gain or loss will be recognized by the parties thereto (as determined for U.S. federal income Tax purposes) that is subject to U.S. federal income Tax; and (III) covering any other matters reasonably requested by Moon with respect to the Tax treatment of material transactions undertaken pursuant to the Plan of Reorganization (such opinion of Moon Tax Counsel, the “Moon Tax Opinion”).  Notwithstanding the foregoing, no additional opinion described in clause (III) of the previous sentence shall be a condition to Closing, and to the extent that Moon receives the ruling described in Section 2.1(d) of the Separation and Distribution Agreement, the opinion of Moon Tax Counsel as it relates to clause (b) of the definition of Tax-Free Status of the External Transactions shall be waived by Moon, or Moon Tax Counsel shall provide such opinion on the basis of such ruling.

(c)          As a condition precedent to the rendering of the Moon Tax Opinion and the Clover Tax Opinion, Clover, Moon and SpinCo, and others, if required, shall, as of the Closing Date, execute and deliver to Moon Tax Counsel and Clover Tax Counsel the Tax

 

Representation Letters. In addition, Clover, Moon and SpinCo, and others, if required, shall, as of the date for filing the Clover Registration Statement (or such other date(s) as determined necessary by counsel in connection with the filing of the Clover Registration Statement or its exhibits), execute and deliver to Moon Tax Counsel and Clover Tax Counsel the Tax Representation Letters, dated and executed as of the applicable filing date.

SECTION 7.4.          Preparation of the Registration Statements, Proxy Statement and Schedule TO; Clover Stockholders Meeting

(a)          Registration Statements; Proxy Statement; Schedule TO. As promptly as practicable after the delivery by Moon of the Audited Financial Statements, any applicable Interim Financial Statements, the Rule 3-05 Audited Financial Statements, and any applicable Rule 3-05 Interim Financial Statements pursuant to Section 7.17, to the extent such filings are required by Law in connection with the transactions contemplated by this Agreement (i) Clover, Moon and SpinCo shall jointly prepare and Clover shall file with the SEC, the Proxy Statement to be sent to the holders of Clover Common Stock relating to the Clover Stockholders Meeting and the Clover Registration Statement, in which the Proxy Statement will be included as a prospectus, in connection with the registration under the Securities Act of the shares of Clover Common Stock to be issued in the Merger; (ii) Clover, Moon and SpinCo shall jointly prepare and Moon shall file with the SEC the SpinCo Registration Statement; and (iii) if the Distribution is effected in whole or in part as an exchange offer, Moon shall prepare and file with the SEC, when and as required, a Schedule TO and other filings pursuant to Rule 13e‑4 under the Exchange Act (collectively, the “Schedule TO”). The Clover Registration Statement, the Proxy Statement, the SpinCo Registration Statement and the Schedule TO shall comply as to form in all material respects with the requirements of the Exchange Act and the Securities Act and the rules and regulations of the SEC thereunder.

(b)          Each of Clover, Moon and SpinCo shall use its reasonable best efforts to have the Clover Registration Statement and the SpinCo Registration Statement (together, the “Registration Statements”) declared effective as promptly as practicable after such filing (including by responding to comments of the SEC) and, prior to the effective date of the Clover Registration Statement and the SpinCo Registration Statement, each of Clover, Moon and SpinCo shall take all action reasonably required (other than qualifying to do business in any jurisdiction in which it is not now so qualified or filing a general consent to service of process in any such jurisdiction) to be taken under any applicable securities Laws in connection with, in the case of Clover, the issuance of Clover Common Stock and, in the case of Moon and SpinCo, the Distribution. As promptly as practicable after the SpinCo Registration Statement shall have become effective, Moon shall cause the Distribution Documents to be mailed to holders of Moon Common Stock. As promptly as practicable after the Clover Registration Statement shall have become effective, Clover shall cause the Proxy Statement to be mailed to Clover’s stockholders. No filing of, or amendment or supplement to, the Clover Registration Statement or the Proxy Statement will be made by Clover without providing Moon and SpinCo with a reasonable opportunity to review and comment thereon (and such comments shall be reasonably considered by Clover). No filing of, or amendment or supplement to, the SpinCo Registration Statement or the Schedule TO, if applicable, will be made by Moon or SpinCo without providing Clover with a reasonable opportunity to review and comment thereon (and such comments shall be reasonably considered by Moon).

 

(c)          If at any time prior to the Effective Time any information relating to Clover, Moon or SpinCo, or any of their respective Affiliates, directors or officers, is discovered by Clover, Moon or SpinCo to be required to be set forth in an amendment or supplement to the Clover Registration Statement, the Proxy Statement, the SpinCo Registration Statement or the Schedule TO, so that any such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party that discovers such information shall promptly notify the other Parties and an appropriate amendment or supplement describing such information shall be promptly prepared by the Parties and filed with the SEC and, to the extent required by Law, disseminated to the stockholders of Clover. Each Party shall notify the other Party promptly of the time when the Clover Registration Statement or the SpinCo Registration Statement has become effective, and of the issuance of any stop order or suspension of the qualification of the shares of Clover Common Stock issuable in connection with the Merger or shares of SpinCo Common Stock issuable in the Distribution for offering or sale in any jurisdiction. In addition, each Party agrees to provide the other Parties and their respective counsel with copies of any written comments, and shall inform the other Party of any oral comments, that such Party or its counsel may receive from time to time from the SEC or its staff with respect to the Clover Registration Statement, the Proxy Statement, the SpinCo Registration Statement or the Schedule TO promptly after receipt of such comments, and any written or oral responses thereto. Each Party and its respective counsel shall be given a reasonable opportunity to review any such written responses and each Party shall give due consideration to the additions, deletions or changes suggested thereto by the other Parties and their respective counsel.

(d)          In connection with the filing of the Registration Statements and other SEC filings contemplated hereby, Moon shall use its reasonable best efforts to (i) cooperate with Clover to prepare pro forma financial statements that comply with the rules and regulations of the SEC to the extent required for SEC filings, including the requirements of Regulation S-X; and (ii) provide and make reasonably available upon reasonable notice the senior management employees of Moon to discuss the materials prepared and delivered pursuant to this Section 7.4(d).

(e)          Moon and SpinCo agree to promptly provide Clover with the information concerning Moon and SpinCo and their respective Affiliates required to be included in the Proxy Statement and the Clover Registration Statement. In furtherance of the foregoing, Moon and SpinCo shall use all reasonable best efforts to, or shall use all reasonable best efforts to cause their respective Representatives to, furnish promptly to Clover such additional financial and operating data and other information, as to the SpinCo Business as Clover may require in connection with the preparation of the Proxy Statement and the Clover Registration Statement.

(f)          Clover agrees to promptly provide Moon and SpinCo with the information concerning Clover and its Affiliates required to be included in the SpinCo Registration Statement and the Schedule TO. In furtherance of the foregoing, Clover shall use all reasonable best efforts to, or shall use all reasonable best efforts to cause its Representatives to, furnish promptly to Moon and SpinCo such additional financial and operating data and other information, as to it and its Subsidiaries’ businesses as Moon and SpinCo may require in connection with the preparation of the SpinCo Registration Statement and the Schedule TO.

 

(g)

(i) Clover shall establish a record date for, and, as soon as practicable following the effectiveness of the Clover Registration Statement, duly call and give notice of and convene and, as soon as practicable thereafter, hold a meeting of its stockholders (the “Clover Stockholders Meeting”) for the purpose of seeking the Clover Stockholder Approval. Clover shall not postpone, delay or adjourn, or change the record date with respect to, the Clover Stockholders Meeting, without the prior written consent of Moon (which consent shall not be unreasonably withheld, conditioned or delayed); provided, however, that Clover may, after consultation with Moon, and, in the case of clause (A) below upon the reasonable request of Moon shall, adjourn the Clover Stockholders Meeting (A) for a period reasonably necessary to allow reasonable additional time to solicit additional proxies, if and to the extent the requisite Clover Stockholder Approval would not otherwise be obtained, (B) for a period reasonably necessary if a quorum has not been established, (C) to allow reasonable additional time for the filing and mailing of any supplemental or amended disclosure which the Clover Board has determined in good faith after consultation with outside counsel is necessary under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the Clover stockholders prior to the Clover Stockholders Meeting; or (D) for a period reasonably necessary if required by Law.

(ii) Unless the Clover Board shall have effected a Clover Change of Recommendation in accordance with Section 7.10, Clover shall, through the Clover Board, make the Clover Recommendation and include such Clover Recommendation in the Proxy Statement and use its reasonable best efforts to (A) solicit from its stockholders proxies in favor of the Clover Stockholder Approval, and (B) take all other actions necessary or advisable to secure the Clover Stockholder Approval.

(iii) Notwithstanding any Clover Change of Recommendation, unless this Agreement is terminated in accordance with its terms, the obligations of the Parties hereunder shall continue in full force and effect. Without limiting the generality of the foregoing, unless this Agreement is terminated in accordance with its terms, the Clover Share Issuance shall be submitted to the stockholders of Clover for approval at the Clover Stockholders Meeting whether or not (x) the Clover Board shall have effected a Clover Change of Recommendation or (y) any Competing Proposal shall have been publicly proposed or announced or otherwise submitted to Clover or any of its Representatives. Notwithstanding anything to the contrary contained in this Agreement, Clover shall not be required to hold the Clover Stockholders Meeting if this Agreement is validly terminated.

SECTION 7.5.          Listing

As promptly as practicable following the date hereof, Clover shall make application to the NYSE for the listing of the shares of Clover Common Stock to be issued pursuant to the transactions contemplated by this Agreement and use all reasonable best efforts to cause such shares to be approved for listing on the NYSE, subject to official notice of issuance.

SECTION 7.6.          Reasonable Best Efforts

 

(a)          Subject to the terms and conditions of this Agreement, each Party will use their respective reasonable best efforts to take, or cause to be taken, all reasonable actions, and to do, or cause to be done, all reasonable things necessary, proper or advisable under any applicable Laws to consummate and make effective the Merger and the other transactions contemplated by this Agreement as soon as practicable after the date hereof, including (i) preparing and filing all forms, registrations, petitions, notices, and filings required to be made to consummate the Merger and the other transactions contemplated by this Agreement; (ii) satisfying the conditions to consummating the Merger and the other transactions contemplated by this Agreement; (iii) taking all reasonable actions to avoid or eliminate each and every impediment to Closing, including obtaining any material consent, authorization, waiver, license, order, waiting period expiration, approval, permit, exemption, or clearance from any third party, which are necessary or advisable to be obtained in order to consummate the Merger or any of the other transactions contemplated by this Agreement (including, for the avoidance of doubt, as required under the HSR Act and under the Competition Laws of the jurisdictions set forth in Schedule 7.6(a)) (collectively, the “Approvals”); and (iv) using reasonable best efforts not to take any action after the date of this Agreement that would reasonably be expected to result in a material delay in obtaining, or in not obtaining, any Approvals.

(b)          In furtherance and not in limitation of the foregoing, the parties agree (i) as promptly as practicable and advisable, and in any event no later than 20 Business Days after the date of this Agreement, to prepare and submit Notification and Report Forms as required under the HSR Act; (ii) as promptly as practicable and advisable, to prepare and submit any notification required under the Competition Laws of any of the jurisdictions listed in Schedule 7.6(b); and (iii) as promptly as practicable and advisable, to prepare and submit all other necessary filings with other Governmental Authorities relating to the Merger; and (iv) as promptly as practicable following the receipt thereof, respond to (or properly reduce the scope of) any formal or informal request for additional information or documentary material received by either Party from any Governmental Authority.

(c)          Notwithstanding anything in this Agreement to the contrary, Clover and Moon shall jointly determine the strategy to be pursued for obtaining all Approvals and clearances (other than any strategy related to Remedial Actions) under any Competition Law, including with respect to any filings, notifications, submissions, and communications made in connection with the obtaining of the required Approvals or clearance under any Competition Law; provided that, Clover shall (subject to Section 7.6(d) below) determine, after consultation with and taking into account in good faith any suggestions of Moon with respect thereto, the strategy to be pursued with respect to whether and to what extent to offer, or agree to sell, divest, lease, license, transfer, dispose of, hold separate, or place any restrictions on the operation of any assets, licenses, operations, rights, product lines, businesses, or interests therein of Clover or SpinCo (a “Remedial Action”); provided that the Parties shall act reasonably promptly and cooperate in connection herewith in a manner designed to cause the Closing not to occur materially later than the date the Closing would otherwise have occurred if it had not been necessary to obtain Approvals and clearances under Competition Laws.

(d)          Without limiting this Section 7.6, but subject to the next sentence of this Section 7.6(d), each Party will take, or to cause to be taken, any and all steps and to make any and all undertakings necessary to avoid or eliminate each and every impediment under the HSR

 

Act or any other Competition Law that may be asserted by any Governmental Authority with respect to the Merger so as to enable the Closing to occur as soon as reasonably possible, including proposing, negotiating, committing to and effecting, by consent decree, hold separate order or otherwise, the sale, divestiture, licensing or disposition of such assets or businesses of SpinCo (or the SpinCo Subsidiaries) or Clover (or the Clover Subsidiaries), as applicable, or otherwise taking or committing to take action that limits SpinCo’s or the SpinCo Subsidiaries’ or Clover’s or the Clover Subsidiaries’, as applicable, freedom of action with respect to, or their ability to retain, any of the businesses, product lines or assets of SpinCo (or the SpinCo Subsidiaries) or Clover (or the Clover Subsidiaries) in each case, as may be required in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order, or other order in any suit or proceeding, which would otherwise have the effect of preventing the Closing; provided, however, (A) Moon shall not take or agree to any of the foregoing actions in connection with the matters contemplated by this Section 7.6(d) without the prior written consent of Clover and (B) that the Parties shall not be required to take and shall not take or agree to take any of the foregoing actions in connection with the matters contemplated by this Section 7.6(d) that require sales, divestitures, dispositions, licenses or other Remedial Action in respect of any assets or businesses of Clover (or the Clover Subsidiaries) or SpinCo (or the SpinCo Subsidiaries) (x) that, in the aggregate in the United States account for more than $200 million of revenue generated during the 12-month period ended December, 31, 2019 or (y) that, in the aggregate in all jurisdictions including outside of the United States, account for more than $400 million of revenue generated during the 12-month period ended December 31, 2019; provided, further, that the effectiveness of any such sale, divestiture or disposition License or other Remedial Action or commitment shall be conditioned upon the Closing occurring. For the avoidance of doubt, nothing in this Agreement shall require Moon to agree to any sale, divestiture, licensing or disposition of any assets or businesses, or restriction or change in the ownership, conduct or operations of any assets or businesses, in each case, that are not included in the SpinCo Business.

(e)          The Parties shall cooperate in all respects with each other in connection with all actions to be taken pursuant to this Section 7.6, including in the preparation and making of filings contemplated by Section 7.6(b).  Moon shall use its reasonable best efforts to provide to Clover all necessary information and assistance as Clover may reasonably require in responding to any Governmental Authority’s request for additional information or in connection with any other investigation or inquiry, including any proceeding initiated by a third party. Each Party shall keep the other Party and its counsel reasonably informed of any communication received by such Party from, or given by such Party to, the Antitrust Division of the Department of Justice (the “DOJ”), the Federal Trade Commission (the “FTC”) or any other U.S. or foreign Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby (and in each case, if any such communication is in writing, share a copy with the other Party).  Each Party shall consult with the other in advance of any meeting or conference with the DOJ, the FTC, or any other Governmental Authority, and to the extent permitted by the DOJ, the FTC or such other applicable Governmental Authority or other Person, give the other Party the opportunity to attend and participate in such meetings and conferences.  The parties may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other under this Section 7.6(e) as “Antitrust Counsel Only Material.”  Such materials and the information contained therein shall be given only to the

 

outside antitrust counsel of the recipient and will not be disclosed by such outside counsel to employees, officers or directors of the recipient unless express permission is obtained in advance from the source of the materials or its legal counsel.  Notwithstanding anything to the contrary in this Section 7.6(e), materials provided pursuant to this Section 7.6(e) may be redacted (i) to remove references concerning valuation; (ii) to the extent necessary to comply with contractual arrangements; and (iii) to the extent necessary to address reasonable privilege and confidentiality concerns.

(f)          Neither Clover nor Moon shall enter into any transaction or any agreement to effect any transaction (including any merger or acquisition) that would reasonably be expected to materially delay or materially and adversely affect such Party’s ability to (i) obtain the timely expiration or termination of the waiting period under the HSR Act, or the authorizations, consents, orders and approvals required under any other Competition Law applicable to the transactions contemplated by this Agreement, or (ii) obtain all authorizations, consents, orders and approvals of Government Authorities necessary for the consummation of the transactions contemplated by this Agreement in accordance with the terms and conditions of this Agreement.

SECTION 7.7.          Financing

(a)          Clover shall, and shall cause its Subsidiaries to, use reasonable best efforts to take (or cause to be taken) all actions necessary, proper or advisable to arrange as promptly as reasonably practicable prior to the Closing (i) the Financing on the terms and conditions (including any “market flex” provisions included in any related flex letter) set forth in the executed commitment letter (including: (A) all exhibits, schedules, annexes and amendments to such agreement in effect as of the date of this Agreement; (B) any associated flex letter (together, the “SpinCo Financing Commitment Letter”); (C) any associated fee letter; and (D) any other associated side letter or other agreement or arrangement containing conditions to the funding of the full amount of the Financing (together with the SpinCo Financing Commitment Letter, the “Financing Commitment Letter”)) from Citi, KKR Capital Markets LLC, KKR Corporate Lending LLC and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA (together with all additional lenders and financing sources added to the SpinCo Financing Commitment Letter or Financing Commitment Letter, the “Lenders”), pursuant to which, among other things, the Lenders have committed to provide SpinCo with debt financing with net proceeds of $1,900,000,000 for the purpose of making the SpinCo Payment (as defined in the Separation and Distribution Agreement) (the debt financing contemplated by the Financing Commitment Letter, being referred to as the “Financing”) or on such other terms that would not be prohibited by Section 7.7(b) or (ii) in the event all or any portion of the Financing pursuant to the Financing Commitment Letter becomes unavailable, the Alternative Financing on the terms and conditions set forth in the Alternative Commitment Letter (including any “market flex” provisions included in any flex letter relating thereto) or on such other terms as would not be prohibited by Section 7.7(b). Clover shall, and shall cause its Subsidiaries to, use reasonable best efforts to (A) maintain the Financing Commitment Letter in effect until the earlier of the initial funding of the Financing or the effectiveness of the Financing Agreements, (B) negotiate definitive agreements with respect to the Financing, on the terms and conditions contained in the Financing Commitment Letter (including any “market flex” provisions included in any related flex letter) or on such other terms that would not be prohibited by Section 7.7(b) (the “Financing Agreements”) and shall deliver to SpinCo a copy thereof as promptly as practicable (and no later than one (1) Business Day after such execution), and upon

 

the effectiveness thereof, maintain the Financing Agreements in effect until the initial funding of the Financing, (C) comply with the obligations that are set forth in the Financing Commitment Letter that are applicable to Clover or any Subsidiary of Clover and satisfy on a timely basis all conditions precedent to the availability of the Financing set forth in the Financing Commitment Letter and the Financing Agreements that are within its control, (D) fully enforce the rights of Clover under the Financing Commitment Letter and the Financing Agreements, and (E) use reasonable best efforts to arrange for the Financing to be available for SpinCo to draw upon and consummate at or prior to the Distribution. In the event the Financing in the amounts set forth in the Financing Commitment Letter or the Financing Agreements, or any portion thereof, becomes unavailable, or it becomes reasonably likely that it may become unavailable, on the terms and conditions contemplated in the Financing Commitment Letter (including any “market flex” provisions included in any related flex letter) or the Financing Agreements, Clover shall, and shall cause its Subsidiaries to, use reasonable best efforts to obtain promptly alternative financing, from the same or alternative financing sources, in an amount sufficient to make the SpinCo Payment, and which Alternative Financing shall not contain conditions precedent to the funding thereof that are less favorable to Clover or SpinCo than the conditions precedent with respect to the Financing set forth in the Financing Commitment Letter and to obtain, and, when obtained, to provide promptly to SpinCo a copy of, a new financing commitment that provides for such Alternative Financing (the “Alternative Commitment Letter”) and to negotiate definitive agreements with respect thereto on the terms and conditions contained therein (the “Alternative Financing Agreements”); provided that the terms of any Alternative Financing must be consistent with the Tax-Free Status of the External Transactions, as reasonably determined by Moon and SpinCo. In the event any Alternative Financing is obtained, any reference in this Agreement to “Financing” shall include such Alternative Financing, any reference to “Financing Commitment Letter” shall include the Alternative Commitment Letter with respect to such Alternative Financing, any reference to “Lenders” shall include the financial institutions providing such Alternative Financing, and any reference to “Financing Agreements” shall include any definitive agreements with respect to such Alternative Commitment Letter, and all obligations of each Party pursuant to this Section 7.7 shall be applicable thereto to the same extent as such Party’s obligations, as the case may be, with respect to the Financing. Clover shall promptly pay all commitment, engagement or arrangement fees, ticking fees, structuring fees, upfront fees or similar fees and expenses associated with the Financing (including as a result of the exercise of any “market flex” provisions in any flex letter by the Lenders) (the “Commitment Fee Expenses”) which Commitment Fee Expenses may not be netted from the proceeds of the Financing, except to the extent the amount of the Financing is increased to fund flex OID as contemplated by the Financing Commitment Letter.

(b)

(i)           Without limitation of the obligations of Clover under this Agreement, Clover shall give SpinCo prompt written notice if Clover becomes aware of (w) any breach (or threatened breach) or default (or any event or circumstance that, with or without notice, lapse of time or both, could reasonably be expected to give rise to any material breach or default) by any party to the Financing Commitment Letter or the Financing Agreements; (x) any actual or threatened withdrawal, repudiation or termination of the Financing by any of the Lenders; (y) any material dispute or disagreement between or among any of the parties to the Financing Commitment Letter or the Financing Agreements relating to, or otherwise potentially affecting,

 

the amount or the availability of the Financing on the Closing Date or satisfaction of the conditions thereunder; and (z) any amendment or modification of, or waiver under, the Financing Commitment Letter or the Financing Agreements. Clover shall give SpinCo prompt written notice if Clover believes in good faith that Clover will not be able to timely arrange for SpinCo to obtain all or any portion of the Financing on the terms and in the manner or from the sources contemplated by the Financing Commitment Letter or the Financing Agreements. Clover shall keep SpinCo informed in reasonable detail of the status of its efforts to arrange the Financing, including by providing copies of then-current drafts of the Financing Agreements and providing copies of all definitive Financing Agreements, in each case, upon request. Clover shall not, without the prior written consent of SpinCo, amend, modify, supplement, restate, substitute, replace, terminate, or agree to any waiver under the Financing Commitment Letter in a manner that: (i) adds new or expands upon the conditions precedent to the funding of the Financing as set forth in the Financing Commitment Letter, (ii) would reduce the aggregate amount of the Financing provided for under the Financing Commitment Letter, (iii) would limit the rights and remedies of Clover as against the Lenders or (iv) would otherwise prevent or delay or impair the consummation of the transactions contemplated by this Agreement and the Transaction Documents; provided, that notwithstanding the foregoing, (x) Clover may implement any of the “market flex” provisions exercised by the Lenders in accordance with any related flex letter as of the date hereof (or, in respect of any Alternative Financing, in accordance with the “market flex” provisions exercised by the Lenders in accordance with any flex letter relating thereto) and (y) additional lenders and financing sources, and Affiliates thereof, may be added (including in replacement of a Lender) to the Financing Commitment Letter (or all or a portion of the commitments may be assigned to new or existing lenders and financing sources) after the date hereof or thereof and Clover may reallocate commitments or assign or re-assign titles and roles to or among parties to the Financing Commitment Letter.

(ii)          Without limitation of the obligations of SpinCo under this Agreement, SpinCo shall give Clover prompt written notice if SpinCo obtains actual Knowledge of (w) any breach (or threatened breach) or default (or any event or circumstance that, with or without notice, lapse of time or both, could reasonably be expected to give rise to any material breach or default) by any party to the SpinCo Financing Commitment Letter; (x) any actual or threatened withdrawal, repudiation or termination of the Financing by any of the Lenders; (y) any material dispute or disagreement between or among any of the parties to the SpinCo Financing Commitment Letter relating to, or otherwise potentially affecting, the amount or the availability of the Financing on the Closing Date or satisfaction of the conditions thereunder; and (z) any amendment or modification of, or waiver under, the SpinCo Financing Commitment Letter.

(c)          Prior to the Closing, each of Moon (on behalf of SpinCo) and SpinCo shall (and shall cause its Subsidiaries to) use its reasonable best efforts to provide, at the sole expense of Clover, and shall use its reasonable best efforts to cause its Representatives to provide, the cooperation reasonably requested by Clover that is necessary, proper or customary in connection with the arrangement and consummation of the Financing. Such cooperation shall include:

(i)           furnishing to Clover, as promptly as practicable following Clover’s request, with such pertinent and customary reasonably available information necessary to syndicate or complete the underwriting or private placement of the Financing as may be reasonably requested by Clover regarding the business, operations, financial projections and

 

prospects of the SpinCo Business as is customary for investment grade public companies in connection with the arrangement or marketing of financings such as the Financing;

(ii)          furnishing to Clover the Audited Financial Statements, the Interim Financial Statements, the Rule 3-05 Audited Financial Statements and the Rule 3-05 Interim Financial Statements, as set forth in Section 7.17;

(iii)         reasonably assisting Clover in the preparation of pro forma financial statements in accordance with Article 11 of Regulation S-X under the 1933 Act and other financial data and financial information of the SpinCo Business, the Rule 3-05 Business and if applicable, SpinCo and the SpinCo Subsidiaries necessary to syndicate or complete the underwriting or private placement of the Financing;

(iv)         using reasonable best efforts to cause the independent accountants for the SpinCo Business and the Rule 3-05 Business, respectively, to provide customary assistance and cooperation in the Financing including using reasonable best efforts to cause such accountants to participate in a reasonable number of drafting sessions and accounting due diligence sessions;

(v)          upon reasonable advance notice, participating in a reasonable number of meetings (including one-on-one meetings with the parties acting as lead arrangers, bookrunners, underwriters or agents for, and prospective lenders and purchasers of, the Financing and senior management and Representatives, with appropriate seniority and expertise, of Moon, SpinCo and their respective Subsidiaries), presentations, road shows, due diligence sessions, drafting sessions and sessions with rating agencies in connection with the Financing at times and dates reasonably acceptable to Moon, SpinCo and their respective Subsidiaries;

(vi)         reasonably assisting with the preparation of customary marketing materials (including assistance in creating usual and customary “public versions” of the foregoing), including confidential information memoranda, and materials for rating agency presentations, lender and investor presentations, bank syndication materials, roadshow presentations and similar documents required in connection with the Financing by providing information about the SpinCo Business reasonably available to Moon, SpinCo and their respective Subsidiaries;

(vii)        causing (x) SpinCo and its Subsidiaries to take customary corporate actions, subject to the occurrence of the Closing, in each case reasonably requested by Clover that are necessary to authorize and permit the consummation of the Financing and (y) subject to the immediately succeeding paragraph, SpinCo and/or its applicable Subsidiary to, to the extent consistent with the Financing Commitment Letter or the Alternative Financing as contemplated by Sections 7.7(a) and (b) above and the lenders thereunder are prepared to enter into such agreements, enter into the Financing Agreements or Alternative Financing Agreements and make the borrowing thereunder contemplated by the Financing Commitment Letter and otherwise reasonably cooperate with Clover in satisfying the provisions of Section 7.7(a) and (b) above;

(viii)       providing such customary assistance with the preparation of any credit or loan agreements, purchase agreements, indentures, and other related definitive financing

 

documents as may be reasonably requested and facilitating in the provision of guarantees and collateral of SpinCo and the SpinCo Subsidiaries, in each case, related to the Financing and obtaining releases of existing Liens, in each case to be effective no earlier than the borrowing under the Financing on the Closing Date immediately prior to the Distribution;

(ix)         cooperating with the Lender Related Parties’ due diligence, to the extent reasonable;

(x)          as soon as practicable, furnishing written notice to Clover if any of Moon, SpinCo or their respective Subsidiaries shall have actual knowledge of (A) any facts as a result of which a restatement of any of the Audited Financial Statements, the Interim Financial Statements, the Rule 3-05 Audited Financial Statements or the Rule 3-05 Interim Financial Statements for such financial statements to comply with GAAP is reasonably likely or (B) independent accountants for SpinCo, the SpinCo Business or the Rule 3-05 Business withdrawing any audit opinion with respect to the Audited Financial Statements or the Rule 3-05 Business, respectively; and

(xi)         providing no later than three (3) Business Days prior to the anticipated closing of the Financing after any request therefor from Clover, all documentation and other information about SpinCo and the SpinCo Business required by applicable “know your customer” and anti-money laundering rules and regulations including the USA PATRIOT Act to the extent reasonably requested at least 10 Business Days prior to the anticipated closing of the Financing.

Notwithstanding anything to the contrary in this Section 7.7(c), no action contemplated in this Section 7.7(c) shall be required if any such action shall: (I) unreasonably disrupt or interfere with the business or ongoing operations of Moon, SpinCo or their respective Subsidiaries; (II) (x) cause any representation or warranty or covenant contained in this Agreement to be breached or (y) cause Moon, SpinCo or any of their respective Subsidiaries to breach any material Contract, applicable Law or Organizational Document; (III) involve the entry into any Financing Agreement or any other binding commitment by (x) SpinCo or any of its Subsidiaries that is not contingent upon the Closing Date occurring or that would be effective prior to the Closing Date or (y) Moon or any of its Subsidiaries (other than SpinCo and its Subsidiaries); (IV) require(x)  SpinCo or any of its Subsidiaries or any of their Representatives to provide (or to have provided on its behalf) any certificates or legal opinions that would be effective prior to the Closing Date or (y) Moon or any of its Subsidiaries (other than SpinCo and its Subsidiaries) or any of their Representatives to provide (or to have provided on its behalf) any certificates or legal opinions; (V) require Moon, SpinCo or any of their respective Subsidiaries to pay any out-of-pocket fees or expenses prior to the Closing that are not promptly reimbursed by Clover as set forth in Section 7.7(e), (VI) cause any director, officer or employee of Moon, SpinCo or any of their respective Subsidiaries to incur any personal liability; (VII) require Moon, SpinCo or any of their respective Subsidiaries to execute and deliver any pledge or security documents or certificates, documents or instruments relating to the provision of guarantees and collateral in connection with the Financing other than those related to SpinCo and the SpinCo Subsidiaries that shall not become effective prior to the Closing Date;  (VIII) except as necessary to give effect to the items expressly contemplated in this Section 7.7(c) and without limiting clauses (III) and (VII) above, require Moon, SpinCo or any of their respective Subsidiaries to execute and deliver any

 

documentation (including corporate resolutions) related to the Financing or (IX) cause any condition to the Closing set forth in Article VIII to fail to be satisfied. SpinCo hereby consents to the use of SpinCo’s and the SpinCo Subsidiaries’ logos solely to the extent necessary in connection with the Financing and solely in connection with a description of the SpinCo Business or the transactions contemplated by this Agreement and solely in a manner that is accurate and not intended or likely to harm or disparage the reputation or goodwill of the relevant party, or any of their respective Intellectual Property rights and will comply with Moon or SpinCo’s usage requirements and guidelines to the extent made available to Clover prior to such use.  Clover acknowledges and agrees that (1) Moon, SpinCo, their respective Subsidiaries’ and their respective Representatives shall not be required to (x) pay any Commitment Fee Expenses or incur any other Liability in connection with the Financing, or, if applicable, the Alternative Financing or (y) prepare any pro forma financial statements, (2) the effectiveness of any documentation executed by Moon, SpinCo and their respective Subsidiaries shall be subject to the consummation of the Closing and (3) nothing shall obligate any individual other than an employee continuing to serve as a director of SpinCo or its Subsidiaries after the Closing to adopt or approve any corporate resolution or execute or deliver any other document in connection with the Financing, any Alternative Financing or the Financing Agreements.  Notwithstanding anything to the contrary contained herein, Moon, SpinCo and their respective Subsidiaries shall not be required to deliver any financial statements or other financial information except as contemplated by clause (ii) above or Section 7.17.

(d)          All non-public or otherwise confidential information regarding the SpinCo Business obtained by Clover or its Representatives pursuant to this Section 7.7 shall be kept confidential in accordance with the terms of the Confidentiality Agreement. Any Lender Related Parties who receive non-public or otherwise confidential information as provided in the first sentence of this Section 7.7(d) will be deemed to be Representatives of Clover for purpose of the obligations in such sentence. Notwithstanding any other provision set forth herein, in the Confidentiality Agreement or in any other agreement between Moon and Clover (or their respective Affiliates), Moon agrees that Clover may share information with respect to SpinCo, the SpinCo Subsidiaries and the SpinCo Business with the Lender Related Parties subject to the provisions of this Section 7.7(d), and that (i) Clover and such Lender Related Parties may share such information (A) with potential financing sources in connection with any marketing efforts for the Financing; provided, however, that the recipients of such information and any other information contemplated to be provided by Clover or any of its Subsidiaries pursuant to this Section 7.7, agree to customary confidentiality arrangements, including “click through” confidentiality agreements and confidentially provisions contained in customary bank books and offering memoranda, or (B) insofar as is necessary to comply with all applicable disclosure laws and regulations in connection with any offering of securities, in which event, Clover shall inform Moon as promptly as practicable, and (ii) such Lender Related Parties may disclose such information in accordance with the confidentiality provisions set forth in the Financing Commitment Letter or the engagement letter dated the date of this Agreement between Citi and Clover (or the terms substantially similar to those in the Financing Commitment Letter or such engagement letter); provided, further, that Clover shall be responsible to Moon for any breach by any Lender Related Parties of (x) the obligations in the first sentence of this Section 7.7(d) or (y) the confidentiality provisions set forth in the immediately preceding clause (ii).

 

(e)          Clover shall, and shall cause its Subsidiaries to (i) promptly upon request by SpinCo, reimburse Moon, SpinCo and their respective Subsidiaries for all reasonable and documented out-of-pocket costs and expenses (including reasonable and documented attorneys’ fees) incurred by Moon, SpinCo or any of their respective Subsidiaries in connection with cooperation provided for in this Section 7.7, including by reimbursing SpinCo, in the event that the Financing is funded but the Closing does not occur, for any original issue discount or other fees or expenses netted from the Financing and for any premium or breakage costs (including “LIBOR breakage costs”) in connection with any prepayment or repayment of the Financing, and (ii) promptly indemnify and hold harmless Moon, SpinCo, their respective Subsidiaries and their respective Representatives from and against any and all liabilities, claims, losses, damages, costs, expenses, interest, awards, judgments and penalties (including reasonable and documented attorneys’ fees) actually suffered or incurred by them in connection with the arrangement or consummation of the Financing, except to the extent any such liabilities, claims, losses, damages, costs, expenses, interest, awards, judgments or penalties arise out of or result from fraud or willful misconduct by any of Moon, SpinCo, their respective Subsidiaries or their respective Representatives, as determined by a final, non-appealable judgment of a court of competent jurisdiction.

SECTION 7.8.          Access to Information.

During the Interim Period, subject to applicable Law, Moon shall, and shall cause the SpinCo Entities, on the one hand, and Clover shall, and shall cause the Clover Subsidiaries, on the other hand, afford to the other Party and its Representatives, reasonable access, during normal business hours, in such manner as to not interfere with Clover’s and its Subsidiaries’ or the SpinCo Entities’ (as applicable) normal operation, the offices, properties, books and records, Contracts, files, audits and personnel of Clover and the Clover Subsidiaries or the SpinCo Business and the SpinCo Entities (as applicable), including the information set forth in Schedule 7.8, and shall furnish such Party and its Representatives with financial and operating data of Clover and the Clover Subsidiaries or the SpinCo Business and the SpinCo Entities (as applicable) and other information concerning the affairs of Clover and the Clover Subsidiaries or the SpinCo Business and SpinCo Entities (as applicable), in each case, as such Party and its Representatives may reasonably request; provided that (a) such investigation shall only be upon reasonable notice; (b) no Party nor its Representatives shall be permitted to perform any environmental sampling, including sampling of soil, groundwater, surface water, building materials, or air or wastewater emissions; and (c) nothing in this Agreement shall require any Party to permit any inspection or disclose any information to any other Party that (i) would cause a violation of any Law or any confidentiality obligations and similar restrictions that may be applicable to such information or (ii) would cause a risk of a loss of attorney‑client privilege or other disclosure privilege to the first Person (provided that the Person that would otherwise be required to disclose information to the other shall take any and all reasonable action necessary to permit such disclosure without such violation of agreement or Law or loss of privilege). The Parties hereby agree that the provisions of the Confidentiality Agreement shall apply to all information and material furnished by any Party or its Representatives thereunder and hereunder. SpinCo will make available to Clover prior to the Closing true and complete copies of the Organizational Documents of the SpinCo Subsidiaries.

SECTION 7.9.          D&O Indemnification and Insurance

 

(a)          For six years after the Effective Time, Clover shall cause the Surviving Corporation to indemnify and hold harmless the present (as of the Effective Time) and former officers and directors of each SpinCo Entity (“SpinCo Directors and Officers”) in respect of acts or omissions occurring at or prior to the Effective Time to the fullest extent permitted by the DGCL or any other applicable Law or provided under such SpinCo Entity’s Organizational Documents as in effect on the date hereof (or, in the case of a SpinCo Entity created after the date hereof, on customary terms).

(b)          For six years after the Effective Time, Clover shall cause to be maintained in effect provisions in each SpinCo Entity’s Organizational Documents regarding elimination of liability of directors, indemnification of officers and directors and advancement of expenses to the SpinCo Entities’ respective former and current officers and directors that are no less advantageous to those Persons than the corresponding provisions in existence on the date hereof (or, in the case of a SpinCo Entity created after the date hereof, on customary terms).

(c)          Notwithstanding anything contained in this Agreement to the contrary, this Section 7.9 shall survive the consummation of the transactions contemplated hereby and shall be binding on all successors and assigns of Clover and the Surviving Corporation and are intended to be for the benefit of, and will be enforceable by, each SpinCo Director and Officer and his or her heirs and representatives. If Clover, the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of Clover or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 7.9.

              SECTION 7.10.        No Solicitation.

(a)          No Solicitation or Negotiation.  Clover agrees that, except as expressly permitted by this Section 7.10, neither it nor any of its Subsidiaries shall and it shall instruct and use its reasonable best efforts to cause its and its Subsidiaries’ Representatives not to, directly or indirectly:

(i)           initiate, solicit or knowingly encourage any inquiries or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, any Competing Proposal;

(ii)          engage in, continue or otherwise participate in any discussions or negotiations regarding, or that could reasonably be expected to lead to, a Competing Proposal, or provide any information or data to any Person in connection with the foregoing, in each case, except to notify such Person of the existence of the provisions of this Section 7.10;

(iii)         otherwise knowingly facilitate any effort or attempt to make a Competing Proposal; or

(iv)         resolve or agree to do any of the foregoing.

 

Notwithstanding anything to the contrary in the foregoing provisions of this Section 7.10, prior to but not after the time the Clover Stockholder Approval is obtained, Clover may (A) provide information in response to a request therefor by a Person who has made an unsolicited bona fide written Competing Proposal that did not result from a breach of this Section 7.10 if the Person so requesting such information enters into an Acceptable Confidentiality Agreement; or (B) engage or otherwise participate in any discussions or negotiations with any Person who has made such an unsolicited bona fide written Competing Proposal that did not result from a breach of this Section 7.10, if and only to the extent that (I) prior to taking any action described in clause (A) or (B) directly above, the Clover Board determines in good faith after consultation with its outside legal counsel that failure to take such action would be inconsistent with the directors’ duties under applicable Law and (II) in each such case referred to in clause (A) or (B) directly above, the Clover Board has determined in good faith and after consultation with its outside legal counsel and financial advisor that such Competing Proposal either constitutes a Superior Proposal or could reasonably be expected to lead to a Superior Proposal.

(b)          No Change in Clover Recommendation or Alternative Acquisition Agreement.

(i)           The Clover Board shall not:

(x)          (A) withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to Moon, the Clover Recommendation, (B) authorize, approve, recommend or otherwise declare advisable, or publicly propose to authorize, approve, recommend or otherwise declare advisable, any Competing Proposal, (C) fail to include the Clover Recommendation in the Proxy Statement or (D) fail to recommend against a tender offer or exchange offer for Clover Common Stock within 10 Business Days after the commencement of such offer (any of the foregoing, a “Clover Change of Recommendation”); or

(y)          except as expressly permitted by, and after compliance with, Section 7.10(b)(ii) hereof, cause or permit Clover or any of its Subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other similar agreement (other than an Acceptable Confidentiality Agreement) (an “Alternative Acquisition Agreement”) relating to any Competing Proposal or otherwise resolve or agree to do so.

(ii)          Notwithstanding anything to the contrary set forth in this Section 7.10, the Clover Board may, prior to but not after the time the Clover Stockholder Approval is obtained, (A) make a Clover Change of Recommendation if an Intervening Event has occurred or (B) make a Clover Change of Recommendation or authorize Clover to terminate this Agreement pursuant to Section 9.3(a) to enter into a definitive written agreement with respect to a Superior Proposal if Clover receives a Competing Proposal that the Clover Board has determined in good faith, after consulting with its financial advisor and outside legal counsel, constitutes a Superior Proposal and, after consulting with its outside legal counsel, in each case

 

of (A) and (B), that failure to take such action would be inconsistent with such directors’ fiduciary duties under applicable Law; provided that the Clover Board may not take any such action unless (I) prior to making such Clover Change of Recommendation or authorizing such termination to enter into a definitive written agreement with respect to such Superior Proposal pursuant to Section 9.3(a), Clover provides prior written notice to Moon at least five (5) Business Days in advance (the “Notice Period”) of its intention to take such action and the basis thereof, including in the case of a Superior Proposal, the terms and conditions of such Superior Proposal, and in the case of an Intervening Event, a description of such Intervening Event, (II) during the Notice Period Clover shall negotiate with Moon in good faith should Moon propose to make amendments or other revisions to the terms and conditions of this Agreement such that, in the case of a Superior Proposal, such Competing Proposal no longer constitutes a Superior Proposal and, in the case of an Intervening Event, the failure to take such action is no longer inconsistent with the directors’ fiduciary duties under applicable Law as determined in the good faith judgment of the Clover Board after consulting with its outside legal counsel and (III) the Clover Board has taken into account any amendments or other revisions to the terms and conditions of this Agreement agreed to by Moon in writing prior to the end of the Notice Period and determined in good faith that, after consulting with its outside legal counsel, a failure to make such Clover Change of Recommendation continues to be inconsistent with the directors’ fiduciary duties under applicable Law; it being understood that any material amendments or other material revisions to any Competing Proposal will be deemed to be a new Competing Proposal, including for purposes of the Notice Period, and any material change in the event, occurrence or facts constituting an Intervening Event share require a new written notice to Moon and a new Notice Period; provided, however, that any such new Notice Period following any such material amendments or other material revisions to any Competing Proposal or any material change in the event, occurrence or facts constituting an Intervening Event shall be reduced to two (2) Business Days.

(c)          Certain Permitted Disclosure.  Nothing contained in this Section 7.10 shall prohibit Clover from (i) taking and disclosing a position contemplated by Rule 14d-9, Rule 14e-2(a)(2) or (3) or Item 1012(a) of Regulation M-A promulgated under the Exchange Act, (ii) making any disclosure that constitutes a “stop, look and listen” communication pursuant to Section 14d-9(f) promulgated under the Exchange Act or (iii) making any legally required disclosure to stockholders with regard to the transactions contemplated by this Agreement or a Competing Proposal, which actions shall not constitute or be deemed to constitute a Clover Change of Recommendation so long as any such disclosure (x) includes the Clover Recommendation, without any alteration, modification or qualification thereof and (y) does not include any statement that constitutes a Clover Change of Recommendation.

(d)          Termination of Existing Discussions.  Clover agrees that, as of the date hereof, it shall cease and cause to be terminated any existing activities, solicitations, discussions or negotiations with any parties conducted heretofore with respect to any Competing Proposal (other than with Moon and its Affiliates and their Representatives).

(e)          Notice.  Clover agrees that it will promptly (and, in any event, within twenty-four (24) hours) notify Moon if any inquiries, proposals or offers with respect to a Competing Proposal are received by, any information in connection therewith is requested from, or any such discussions or negotiations related thereto are sought to be initiated or continued

 

with, Clover or any of its Representatives indicating, in connection with such notice, the name of such Person making the Competing Proposal and providing copies of any written requests, proposals or offers, including proposed agreements, the material terms and conditions of any proposals or offers and thereafter shall keep Moon reasonably informed on a reasonably current basis of the status and material terms of any such inquiries, proposals or offers (including any material amendments thereto).

(f)           Any failure of Clover’s Subsidiaries or their Representatives to comply with this Section 7.10 (as if such Subsidiaries or Representatives were directly subject to this Section 7.10) shall be deemed a breach of this Section 7.10 by Clover.

(g)          For purposes of this Agreement:

(i)           “Competing Proposal” shall mean, other than the transactions contemplated by this Agreement, any proposal or offer from a third party relating to (A) a merger, reorganization, sale of assets, share exchange, consolidation, business combination, recapitalization, dissolution, liquidation, or similar transaction involving Clover or (B) any acquisition by any Person or group (as defined in or under Section 13 of the Exchange Act) other than Clover or any of its Subsidiaries, Moon, SpinCo or any Affiliate thereof, in each of cases (A) and (B) resulting in, or any proposal or offer which if consummated would result in, any Person or group (as defined in or under Section 13 of the Exchange Act) becoming the beneficial owner, directly or indirectly, in one or a series of related transactions, of 20% or more of the total voting power of Clover Common Stock, or 20% or more of the total assets taken as a whole.

(ii)          “Superior Proposal” means an unsolicited bona fide written Competing Proposal (except the references therein to “20%” shall be replaced by “50%”) made by a third party which did not result from a breach of this Section 7.10, and which, in the good faith judgment of the Clover Board after consultation with its outside financial and legal advisors, taking into account the various legal, financial and regulatory aspects of such Competing Proposal, (A) if accepted, is reasonably likely to be consummated in accordance with its terms and conditions and (B) if consummated, would result in a transaction that is more favorable to Clover’s stockholders, from a financial point of view, than the Merger and the other transactions contemplated hereby, and after taking into account all adjustments or modifications to the terms and conditions thereof irrevocably agreed to in writing by Moon pursuant to Section 7.10(b) in response to such Superior Proposal.

SECTION 7.11.        Public Announcements

Clover, Moon, SpinCo and Merger Sub shall use their reasonable best efforts to consult with each other before issuing any press release, having any communication with the press (whether or not for attribution), making any other public statement or scheduling any press conference or conference call with investors or analysts with respect to this Agreement or the transactions contemplated hereby and, except in respect of any public statement or press release (i) as either Clover or Moon may reasonably determine is required by applicable Law or any listing agreement with or rule of the NYSE or other applicable stock exchange or (ii) that is consistent with the previous public statements or press releases made jointly by the Parties in investor conference calls, SEC filings or other documents approved by the Parties, shall not issue

 

any such press release or make any such other public statement or schedule any such press conference or conference call before such consultation. Without limiting the obligations set forth in Section 7.10, Clover shall not be required, however, to consult with or obtain any consent from Moon or SpinCo before issuing any press release or filing or making any other public statement with respect to a Clover Change of Recommendation.

                              SECTION 7.12.        Expenses.

 Except as otherwise provided in the Separation and Distribution Agreement or this Agreement, including Section 9.5, all Expenses (whether or not reasonable or documented) incurred by the Parties shall be borne solely by the Party that has incurred such Expenses. For the avoidance of doubt, all fees and expenses of bankers, lawyers, accountants, consultants and other professional advisers to Moon and SpinCo shall be borne solely by Moon.

SECTION 7.13.        Section 16 Matters

Prior to the Effective Time, Clover and SpinCo shall take all such steps as may be required to cause any dispositions of Clover Common Stock (including derivative securities with respect to Clover Common Stock) or acquisitions of SpinCo Common Stock (including derivative securities with respect to SpinCo Common Stock) resulting from the transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Clover or SpinCo to be exempt under Rule 16b‑3 promulgated under the Exchange Act, such steps to be taken in accordance with applicable SEC rules and regulations and interpretations of the SEC staff.

SECTION 7.14.        Control of Other Party’s Business

Nothing contained in this Agreement shall give Moon or SpinCo, directly or indirectly, the right to control or direct Clover’s operations prior to the Effective Time. Nothing contained in this Agreement shall give Clover, directly or indirectly, the right to control or direct the operations of the SpinCo Business prior to the Effective Time. Prior to the Effective Time, each of Moon, SpinCo and Clover shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations.

SECTION 7.15.        SpinCo Share Issuance

Prior to the Distribution, SpinCo will take all actions necessary to authorize the issuance of and shall issue to Moon a number of shares of SpinCo Common Stock such that the total number of shares of SpinCo Common Stock outstanding on the Distribution Date and immediately prior to the Effective Time will equal the number of shares of Moon Common Stock entitled to receive the Distribution outstanding on the Distribution Date and immediately prior to the Effective Time in accordance with the terms of the Separation and Distribution Agreement. Each of Moon and SpinCo shall effect such amendments, filings or other actions with respect to its respective Organizational Documents as are necessary to effect the Distribution in accordance with the terms of this Agreement.

SECTION 7.16.        Exchange Offer

 

If Moon consummates the Exchange Offer and Moon’s shareholders subscribe for less than all of the SpinCo Common Stock in the Exchange Offer, Moon shall distribute, pro rata to its shareholders, any unsubscribed SpinCo Common Stock on the Distribution Date immediately following the consummation of the Exchange Offer so that Moon will be treated for U.S. federal income Tax purposes as having distributed all of the SpinCo Common Stock to its shareholders.

SECTION 7.17.        Financials

(a)          As promptly as practicable following the date hereof (and in any event by no later than October 27, 2019), Moon shall deliver to Clover the following audited combined financial statements for the SpinCo Business and, if financial statements of SpinCo are required by the rules and regulations of the SEC to be included in the Registration Statements, for SpinCo: the balance sheets as of December 31, 2018 and December 31, 2017 and the related statements of income, comprehensive income, equity and cash flows for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, in each case accompanied by a report satisfying the requirements of Regulation S-X of the independent registered public accounting firm for the SpinCo Business and, if financial statements of SpinCo are required by the rules and regulations of the SEC to be included in the Registration Statements, for SpinCo (collectively, the “Initial Audited Financial Statements”, and the date on which Moon delivers to Clover the Initial Audited Financial Statements, the “Initial Audited Financial Statements Delivery Date”). In the event that the Closing Date is 60 days or more after the end of the fiscal year ending December 31, 2019, Moon shall deliver to Clover as promptly as practicable (but in no event earlier than February 17, 2020 or later than 60 days after the end of such fiscal year), the audited combined financial statements for the SpinCo Business and, if financial statements of SpinCo are required by the rules and regulations of the SEC to be included in the Registration Statements, for SpinCo as of the end of, and for, such fiscal year consisting of the balance sheets as of the end of such fiscal years and the statements of income, comprehensive income, equity and cash flows for such fiscal years as are required under Regulation S-X, in each case accompanied by a report satisfying the requirements of Regulation S-X of the independent registered public accounting firm for the SpinCo Business and, if financial statements of SpinCo are required by the rules and regulations of the SEC to be included in the Registration Statements, for SpinCo (together with the Initial Audited Financial Statements, the “Audited Financial Statements”); provided that Moon will reasonably cooperate, as may be reasonably requested by Clover, with Clover in connection with Clover’s and SpinCo’s completion of the audit for the Audited Financial Statements in the event that the Closing Date occurs prior to the 60th day after the end of the fiscal year ending December 31, 2019.  Moon shall provide Clover with a reasonable opportunity to review preliminary draft of the Audited Financial Statements in advance of delivery pursuant to this Section 7.17(a).

(b)          For the quarterly period ending March 31, 2019 and each subsequent quarterly period ending prior to the Closing Date, other than any calendar quarter ending December 31 (each, an “Interim Financial Period”), Moon shall deliver to Clover the combined unaudited financial statements of the SpinCo Business and, if financial statements of SpinCo are required by the rules and regulations of the SEC to be included in the Registration Statements, for SpinCo as of the end of, and for, such Interim Financial Period (the “Interim Financial Statements”) consisting of the combined balance sheets as of the end of such Interim Financial Period and combined statements of income, comprehensive income and cash flows for

 

such Interim Financial Period (and the portion of the fiscal year then ended) and the corresponding period of the prior fiscal year, which will, if such financial statements are required by the rules and regulations of the SEC to be included in the Registration Statements, have been reviewed by the independent registered public accounting firm for the SpinCo Business and, if financial statements of SpinCo are required by the rules and regulations of the SEC to be included in the Registration Statements, for SpinCo as provided in AS 4105, Interim Financial Information. The Interim Financial Statements will be delivered as promptly as practicable following the end of the corresponding Interim Financial Period but no later than 40 days after the end of such Interim Financial Period; provided that in no event shall Moon be required to deliver any Interim Financial Statements prior to the Initial Audited Financial Statements Delivery Date.

(c)          As promptly as practicable following the date hereof (and in any event by no later than the later of: (x) October 27, 2019 and (y) 120 days following the consummation of the PFS Acquisition), Moon shall deliver to Clover the following audited combined financial statements of the PFS Business  (the “Rule 3-05 Business”) to the extent required by Rule 3-05 of Regulation S-X to be included in the Registration Statements: the balance sheets as of December 31, 2018 and December 31, 2017 and the related statements of income, comprehensive income, equity and cash flows for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, in each case accompanied by a report satisfying the requirements of Regulation S-X of the independent registered public accounting firm for the Rule 3-05 Business (collectively, the “Rule 3-05 Audited Financial Statements”, and the date on which Moon delivers to Clover the Rule 3-05 Audited Financial Statements, the “Rule 3-05 Audited Financial Statements Delivery Date”). Notwithstanding the above, SpinCo shall not be required to deliver Rule 3-05 Audited Financial Statements for the fiscal year ended December 31, 2016 to the extent the staff of the SEC permits such 3-05 Audited Financial Statements to be omitted from the Registration Statements.

(d)          For the quarterly period ending March 31, 2019 and each subsequent quarterly period ending prior to the earlier of (i) the acquisition by Moon of the Rule 3-05 Business and (ii) the Closing Date, other than any calendar quarter ending December 31 (each, a “Rule 3-05 Interim Financial Period”), Moon shall, if financial statements of the Rule 3-05 Business are required by the rules and regulations of the SEC to be included in the Registration Statements, deliver to Clover the combined unaudited financial statements of the Rule 3-05 Business (the “Rule 3-05 Interim Financial Statements”) consisting of the combined balance sheets as of the end of such Interim Financial Period and combined statements of income, comprehensive income and cash flows for such Interim Financial Period (and the portion of the fiscal year then ended) and the corresponding period of the prior fiscal year, which will, if such financial statements are required by the rules and regulations of the SEC to be included in the SpinCo Registration Statement, have been reviewed by the independent registered public accounting firm for the Rule 3-05 Business as provided in AS 4105, Interim Financial Information. The Rule 3-05 Interim Financial Statements will be delivered as promptly as practicable following the end of the corresponding Rule 3-05 Interim Financial Period and by no later than 60 days after the consummation of the of PFS Acquisition; provided that in no event shall Moon be required to deliver any Rule 3-05 Interim Financial Statements prior to the Rule 3-05 Audited Financial Statements Delivery Date.

 

(e)          The Parties agree to discuss in good faith the timing of the delivery of the first Interim Financial Statements and Interim Rule 3-05 Interim Financial Statements in light of the timing of the relative filing of the SpinCo Registration Statement and the Clover Registration Statement and the timing of the Financing.

SECTION 7.18.        Transaction Documents

Clover shall, or shall cause its applicable Subsidiaries to, execute and deliver to Moon at or prior to the Closing each of the Transaction Documents to which it is or will be a party at the Effective Time. Moon and SpinCo shall, or shall cause its applicable Subsidiaries to, execute and deliver to Clover at or prior to the Closing each of the Transaction Documents to which it is or will be a party at the Effective Time.

SECTION 7.19.        Confidentiality.

 The terms of the Confidentiality Agreement are incorporated herein by reference and shall continue in full force and effect and shall survive the Closing and remain in full force and effect until their expiration in accordance with the Confidentiality Agreement; provided, however, that, upon the Closing the confidentiality obligations of Clover contained in the Confidentiality Agreement shall terminate in respect of that portion of the Evaluation Material (as defined in the Confidentiality Agreement) exclusively relating to the SpinCo Business. If this Agreement is, for any reason, terminated prior to the Closing, the Confidentiality Agreement shall nonetheless continue in full force and effect in accordance with its terms.

SECTION 7.20.        Further Actions.

(a)          Except as otherwise expressly provided in this Agreement, the Parties shall, and shall cause their respective Subsidiaries to, use their respective reasonable best efforts to take, or cause to be taken, all appropriate action, to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper or advisable under applicable Law (other than with respect to the matters covered in Section 7.6) to execute and deliver the Transaction Documents and such other documents and other papers as may be required to carry out the provisions of this Agreement and to consummate and make effective the transactions contemplated by this Agreement and the Separation and Distribution Agreement. Prior to the Closing, (i) SpinCo shall not terminate or assign the Separation and Distribution Agreement, consent to any amendment or modification of any provision of the Separation and Distribution Agreement or any Exhibit or Schedule thereto or waive compliance with any of the agreements or conditions contained in the Separation and Distribution Agreement, in each case, without the prior written consent of Clover; and (ii) any consent, approval, authorization or similar action to be taken by SpinCo under the Separation and Distribution Agreement or other Transaction Document shall be subject to the prior written consent of Clover (it being understood that, if any such matter is subject to a “not unreasonably withheld” or similar standard (including the standard set forth in Section 2.1(d) of the Separation and Distribution Agreement), such standard shall be applicable to such consent requirement by Clover).

(b)          Subject to the applicable terms of the Separation and Distribution Agreement and each other Transaction Document, from time to time after the Closing, without

 

additional consideration, each Party shall, and shall cause its Subsidiaries to, execute and deliver such further instruments and take such other action as may be necessary or is reasonably requested by another Party hereto to make effective the transactions contemplated by this Agreement, the Separation and Distribution Agreement and the other Transaction Documents.

(c)          Moon shall submit the letter of covenants to the French Ministry of Economy in connection with the PFS Acquisition in substantially the form that was made available to Clover prior to the date hereof.

                              SECTION 7.21.        Transition Services Agreement; Headquarters Lease; Supply Agreements; Employee Matters Agreement

(a)          Each of the Parties shall (i) cooperate reasonably with each other, to negotiate in good faith and use reasonable best efforts to agree upon the Services Schedule (Exhibit A) and such other Schedules attached to the Transition Services Agreement, and (ii) execute and deliver at the Closing the Transition Services Agreement with such Services Schedule (Exhibit A) and other Schedules as shall have been mutually agreed by the Parties. If, prior to the Closing Date, SpinCo or Clover identifies any service (other than a service listed on Exhibit B to the Transition Services Agreement as an Excluded Service (an “Excluded Service”)) that is or was provided to the SpinCo Business by Moon or any of its Affiliates at any time during the period commencing twelve (12) months prior to the date hereof until the Closing Date (the “Services Period”) (other than any such service provided during such period outside of the ordinary course of business in connection with the transactions contemplated by the Separation and Distribution Agreement), either directly or indirectly through third-party service providers, which service (i) Moon or its Affiliates continues to provide with respect to any operations, businesses or divisions of the Moon Group, and (ii) SpinCo reasonably believes is necessary for the operation or conduct of the SpinCo Business following the Closing in substantially the same manner as the SpinCo Business was operated or conducted during the Services Period, then promptly following a written notice from SpinCo or Clover to Moon to such effect and describing such service, the Parties shall promptly  provide for such service to be included in the Services Schedule (Exhibit A) to the Transition Services Agreement such that Moon or its Affiliates will provide (or arrange for the provision of) such service to SpinCo and its Affiliates in accordance with the terms of the Transition Services Agreement.  If, prior to the Closing Date, Moon identifies any service (other than an Excluded Service) that is or was provided to the Moon Business by SpinCo or any of its Affiliates at any time during the Services Period (other than any such service provided during such period outside of the ordinary course of business in connection with the transactions contemplated by the Separation and Distribution Agreement), either directly or indirectly through third-party service providers, which service (i) SpinCo or its Affiliates continues to provide with respect to any operations, businesses or divisions of the SpinCo Group and (ii) Moon reasonably believes is necessary for the operation or conduct of the Moon Business following the Closing in substantially the same manner as the Moon Business was operated or conducted during the Services Period, then promptly following a written notice from Moon to SpinCo and Clover to such effect and describing such service, the Parties shall promptly  provide for such service to be included in the Services Schedule (Exhibit A) to the Transition Services Agreement such that SpinCo or its Affiliates will provide (or arrange for the provision of) such service to Moon and its Affiliates in accordance with the terms of the Transition Services Agreement.  The compensation associated with any such service shall

 

be determined in accordance with the terms set forth in Section 2.1 of the Transition Services Agreement. The Parties shall cooperate reasonably with each other, negotiate in good faith and use reasonable best efforts to agree upon the terms of such service in the Services Schedule (Exhibit A) to the Transition Services Agreement, which Services Schedule shall describe in reasonable detail the nature, scope, service period(s) and other terms applicable to such service.  Upon Clover’s reasonable written request, Moon shall use its reasonable best efforts to provide Clover with reasonably available information regarding the quality, priority, volume, service level and standard of care of any services provided by Moon or any Moon Subsidiary to the SpinCo Business during the Services Period and shall use commercially reasonable efforts to provide Clover with a detailed itemization (on a service-by-service basis, including by people/non-people and geography) for all services included in the “Total Transferring Corporate Costs vSend” (located in file 1.8.1 in the SpinCo Datasite).

(b)          After the date hereof until the Distribution Time, each of the Parties shall (and shall cause its Subsidiaries, including the SpinCo Entities to) use its (and their) reasonable best efforts to take all actions necessary or appropriate to prepare and otherwise set up for, including to obtain all required Approvals and Notifications (as defined in the Transition Services Agreement) for, the initiation and implementation of the transition services to be provided under the Transition Services Agreement; provided, however, that except to the extent expressly provided in Section 7.4 of the Separation and Distribution Agreement or in any other Transaction Documents, neither Moon nor SpinCo shall be obligated to contribute capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial or commercial accommodation) to any Person in order to obtain or make any such Approvals or Notifications (as defined in the Transition Services Agreement).

(c)          Each of the Parties shall (i) cooperate with each other, to negotiate in good faith and use reasonable best efforts to agree upon each Party’s use and occupancy of the Headquarters Property, as defined in the Real Estate Matters Agreement (the “Headquarters Lease”), in accordance with the terms of the Headquarters Term Sheet, as defined in the Real Estate Matters Agreement, and on other commercially reasonable terms, and (ii) execute and deliver at the Closing the Headquarters Lease as shall have been mutually agreed by the parties thereto.

(d)          Each of the Parties shall (i) cooperate with each other, negotiate in good faith and use reasonable best efforts to agree upon supply agreements (the “Supply Agreements”) by and between Moon and SpinCo, in accordance with the term sheets attached as Exhibit D to this Agreement and on other commercially reasonable terms, and (ii) execute and deliver at the Closing the Supply Agreements as shall have been mutually agreed by the parties thereto.

(e)          Each of the Parties shall (i) cooperate with each other, negotiate in good faith and use reasonable best efforts to agree upon a tender agreement (the “Tender Agreement”) with respect to asbestos-related Actions, to be entered into by and among Moon, SpinCo and Clover, in accordance with the term sheets attached as Exhibit E to this Agreement and on other customary terms, and (ii) execute and deliver at the Closing the Tender Agreement as shall have been mutually agreed by the parties thereto.

 

(f)          Prior to the Distribution Time, notwithstanding the fact that the Employee Matters Agreement has not yet been executed by the parties thereto, the Parties agree on behalf of themselves and their respective Affiliates that all the provisions of the Employee Matters Agreement that on their face would be operative prior to the Distribution Time if the Employee Matters Agreement had been executed by the parties thereto as of the date hereof, then notwithstanding the fact that the Employee Matters Agreement has not yet been executed by the parties thereto are incorporated herein by reference, mutatis mutandis, and shall be operative prior to the Distribution Time as if such the Employee Matters Agreement had been executed with respect to such provisions prior to the relevant time.

SECTION 7.22.        Transaction Litigation

Clover shall promptly notify Moon of, and keep Moon apprised in the defense of, any Action brought by stockholders of Clover or in the name of Clover against Clover or its directors relating to the transactions contemplated by this Agreement, including the Merger and the Clover Share Issuance, following Clover becoming aware of any such Action; provided that prior to the Effective Time, Clover shall not compromise, settle, come to an arrangement regarding or agree to compromise, settle or come to an arrangement regarding any Action arising or resulting from the transactions contemplated by this Agreement or consent to the same, without the prior written consent of Moon (not to be unreasonably withheld, conditioned or delayed) to the extent (a) such Action includes Moon or any of its Subsidiaries, directors or officers as named defendants or (b) such compromise, settlement or arrangement would reasonably be expected to have a material adverse effect on the ability of the Parties to perform their respective obligations hereunder, or to consummate the transactions contemplated hereby in a timely manner.

                              SECTION 7.23.        Covenant Not to Compete.

(a)          In furtherance of the Merger and the transactions contemplated hereby, Moon covenants and agrees that, for a period beginning on the Effective Date and ending on the date that is five years after the Closing Date, neither Moon nor any of its Subsidiaries shall, without the prior written consent of Clover, engage, directly or indirectly, in the SpinCo Business as conducted as of the Closing Date (the “Restricted SpinCo Business”) in the territories in which the SpinCo Business operates on the Effective Date.  Notwithstanding anything to the contrary in the foregoing:

(i)           nothing in this Section 7.23(a) shall prohibit Moon or its Subsidiaries from engaging in the businesses conducted by Moon or its Subsidiaries (excluding the SpinCo Business) on the Closing Date;

(ii)          nothing set forth in this Section 7.23(a) shall prohibit Moon or its Subsidiaries from owning not in excess of 5% in the aggregate of any class of capital stock or other equity interest of any Person engaged in the Restricted SpinCo Business;

(iii)         nothing set forth in this Section 7.23(a) shall prohibit Moon or its Subsidiaries from being acquired in whole or in-part (in one transaction or a series of transactions, and whether through any merger, reorganization, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, binding share exchange, business

 

combination, recapitalization, liquidation, dissolution or otherwise) by, or engaging in a business combination, merger-of-equals or similar transaction (regardless of the structure of such transaction) with, any Person (other than an Affiliate of Moon or its Subsidiaries) and this Section 7.23(a) shall cease to have any force and effect following such acquisition;

(iv)         Moon may directly or indirectly acquire (in one transaction or a series of transactions, and whether through any merger, reorganization, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution, joint venture or otherwise) any interest in or securities of any Person that derived no more than 20% of its total revenues in its most recently completed fiscal year from activities that constitute Restricted SpinCo Business; and

For the avoidance of doubt, Moon and its Subsidiaries may perform their obligations under this Agreement and the Transaction Documents.

(b)          In furtherance of the Merger and the transactions contemplated hereby, Clover covenants and agrees that, for a period beginning on the Effective Date and ending on the date that is five years after the Closing Date, neither Clover nor any of its Subsidiaries shall, without the prior written consent of Moon, engage, directly or indirectly, in the HVAC and refrigeration businesses of Moon as conducted as of the Closing Date (the “Restricted Moon Business”) in the territories in which the Moon Business operates on the Effective Date.  Notwithstanding anything to the contrary in the foregoing;

(i)           nothing in this Section 7.23(b) shall prohibit Clover or its Subsidiaries from engaging in the businesses conducted by Clover or its Subsidiaries (including the SpinCo Business) on the Closing Date;

(ii)          nothing set forth in this Section 7.23(b) shall prohibit Clover or its Subsidiaries from owning not in excess of 5% in the aggregate of any class of capital stock or other equity interest of any Person engaged in the Restricted Moon Business;

(iii)         nothing set forth in this Section 7.23(b) shall prohibit Clover or its Subsidiaries from being acquired in whole or in-part (in one transaction or a series of transactions, and whether through any merger, reorganization, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution or otherwise) by, or engaging in a business combination, merger-of-equals or similar transaction (regardless of the structure of such transaction) with, any Person (other than an Affiliate of Clover or its Subsidiaries) and this Section 7.23(b) shall cease to have any force and effect following such acquisition;

(iv)         Clover may directly or indirectly acquire (in one transaction or a series of transactions, and whether through any merger, reorganization, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution, joint venture or otherwise) any interest in or securities of any Person that derived no more than 20% of its total revenues in its most recently completed fiscal year from activities that constitute Restricted Moon Business; and

 

For the avoidance of doubt, Clover and its Subsidiaries may perform their obligations under this Agreement and the Transaction Documents.

(c)          Moon and Clover acknowledge and agree that the covenants included in this Section 7.23 are, taken as a whole, reasonable in their geographic and temporal coverage and Moon shall not raise any issue of geographic or temporal reasonableness in any proceeding to enforce such covenant; provided, however, that if the provisions of this Section 7.23 should ever be deemed to exceed the time or geographic limitations or any other limitations permitted by applicable Law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the minimum extent required by applicable Law to cure such problem.  Moon and Clover acknowledge and agree that in the event of a breach by Moon or Clover, as applicable, of the provisions of this Section 7.23, monetary damages shall not constitute a sufficient remedy.  Consequently, in the event of any such breach, Moon and Clover may, in addition to any other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or preliminary and final injunctive relief or other relief in order to enforce or prevent any violation of the provisions hereof, without the necessity of proving actual damages or posting a bond.

SECTION 7.24.        Separation and Distribution Agreement Release

Following the Effective Time, Clover shall not make, and shall not permit any member of the Clover Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Moon or any member of the Moon Group, or any other Person released pursuant to Section 5.1(a) of the Separation and Distribution Agreement, with respect to any Liabilities released pursuant to Section 5.1(a) of the Separation and Distribution Agreement.

SECTION 7.25.        Updates to Disclosure Schedules

Prior to the date that is five (5) Business Days following the Initial Audited Financial Statements Delivery Date, Moon and SpinCo may update, amend, modify or make additions to (1) Sections 4.3(a), 4.3(b), 4.3(c), 5.1(c), 5.4(a), 5.4(b) and 5.4(c) of the SpinCo Disclosure Letter to reflect any required changes to such Section as a result of any update, modification or supplement to the Plan of Reorganization in accordance with Section 2.1(d) of the Separation and Distribution Agreement or to reflect matters of which Moon does not have Knowledge as at the date hereof and (2) Sections 5.2(a), 5.11(a), 5.12(a) and 5.12(b) of the SpinCo Disclosure Letter solely to reflect required changes to such Section as a result of revisions to the list of SpinCo Employees following the date hereof in compliance with Schedule 3.01(a) of the Employee Matters Agreement. Prior to the date that is five (5) Business Days following the Initial Audited Financial Statements Delivery Date, Clover may update, amend, modify or make additions to Sections 6.4(a), 6.4(b), and 6.4(c) of the Clover Disclosure Letter to reflect any required changes to such Section as a result of any update, modification or supplement to the Plan of Reorganization in accordance with Section 2.1(d) of the Separation and Distribution Agreement or to reflect matters of which Clover does not have Knowledge as at the date hereof.  Any such updates, amendments, modifications or additions to the SpinCo Disclosure Letter or the Clover Disclosure Letter shall be deemed to have cured any inaccuracy in or breach of any representation or warranty made in this Agreement unless such update, amendment, modification

 

or addition would reasonably be expected to have a SpinCo Material Adverse Effect or a Clover Material Adverse Effect, respectively. Each of Moon, SpinCo and Clover shall make such updates reasonably promptly upon becoming aware of the need for such update.

SECTION 7.26.        Moon Name Change

Moon agrees to establish a record date for, and duly call and give notice of and convene and, as soon as practicable but no later than three Business Days following the Clover Stockholder Meeting, hold a meeting of its shareholders for the purpose of seeking approval of a resolution by the Moon shareholders of the Moon Name Change (the “Moon Name Change Resolution”) and to use its reasonable best efforts to cause the approval of the Moon Name Change Resolution, including recommending the approval of the Moon Name Change Resolution and soliciting proxies or consents in favor thereof.

SECTION 7.27.        Transfer Taxes

All sales, use, privilege, transfer (including real property transfer), intangible, recordation, registration, documentary, stamp, duty or similar Taxes (“Transfer Taxes”) imposed with respect to the Merger shall be borne equally by Moon and Clover.  Moon and Clover shall reasonably cooperate to prepare and timely file any Tax Returns relating to Transfer Taxes. This Section 7.27 does not apply to Transfer Taxes the payment or reimbursement of which is addressed by any Transaction Document.

SECTION 8.1.          Conditions to the Obligations of SpinCo, Moon, Clover and Merger Sub to Effect the Merger

The respective obligations of each Party to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law, written waiver by Moon and Clover) at or prior to the Effective Time of the following conditions:

(a)          (x) any applicable waiting period under the HSR Act shall have expired or been terminated, (y) applicable consents, authorizations, orders, or approvals that are listed on Section 8.1(a) of the SpinCo Disclosure Letter and Section 8.1(a) of the Clover Disclosure Letter shall have been obtained and (z) any other material consent by a national Governmental Authority necessary to permit the consummation of the Reorganization, the Distribution and the Merger in material compliance with applicable Law shall have been obtained;

(b)          the Reorganization and the Distribution shall have been consummated in accordance with the Separation and Distribution Agreement;

(c)          the Clover Registration Statement and the SpinCo Registration Statement, to the extent required by Law, shall have become effective in accordance with the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order; and the shares of Clover Common Stock required to be reserved for issuance pursuant to the Merger shall have been approved for listing on the NYSE, subject to official notice of issuance;

 

(d)          the Clover Stockholder Approval shall have been obtained, in accordance with applicable Law and the rules and regulations of the NYSE; and

(e)          no court of competent jurisdiction or other Governmental Authority shall have enacted any Law, or taken any other action, that is still in effect restraining, enjoining or prohibiting the Reorganization, the Distribution or the Merger.

SECTION 8.2.          Additional Conditions to the Obligations of Moon and SpinCo

The obligation of Moon and SpinCo to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law, waiver by Moon) at or prior to the Effective Time of the following additional conditions:

(a)          Clover and Merger Sub shall have performed in all material respects all obligations and complied in all material respects with all covenants required by this Agreement to be performed or complied with at or prior to the Effective Time;

(b)          all representations and warranties made by Clover set forth in Article VI (other than Section 6.1(a), Section 6.2(a), Section 6.3, Section 6.6(b) and Section 6.18), without giving effect to materiality, Material Adverse Effect or similar qualifications, shall be true and correct in all respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date), except to the extent the failure of such representations and warranties to be true and correct (without giving effect to materiality, Material Adverse Effect or similar qualifications) would not have, individually or in the aggregate, a Clover Material Adverse Effect. The representations and warranties made by Clover set forth in Section 6.1(a), Section 6.3 and Section 6.18 shall be true and correct in all material respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date). The representations and warranties made by Clover set forth in Section 6.2(a) and Section 6.6(b) shall be true and correct in all respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (other than for de minimis deviations in the case of Section 6.2(a)), and except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date;

(c)          Clover shall have delivered to Moon a certificate dated as of the Effective Time signed by a senior officer of Clover to the effect that the conditions set forth in Section 8.2(a) and Section 8.2(b) have been satisfied;

(d)          Moon shall have received the Moon Tax Opinion from Moon Tax Counsel, which opinion shall not have been withdrawn or modified in any material respect; and

 

(e)          Clover (or a Subsidiary thereof) and Merger Sub shall have entered into the applicable Transaction Documents, and to the extent applicable, performed the covenants to be performed prior to the Effective Time in all material respects, and each such agreement shall be in full force and effect.

SECTION 8.3.          Additional Conditions to the Obligations of Clover and Merger Sub

The obligation of Clover and Merger Sub to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law waiver by Clover) at or prior to the Effective Time of the following additional conditions:

(a)          SpinCo and Moon shall have performed in all material respects and complied in all material respects with all covenants required by this Agreement to be performed or complied with at or prior to the Effective Time;

(b)          All representations and warranties made by Moon set forth in Article IV and Article V (other than Section 4.1, Section 4.2, Section 4.5, Section 5.1(a), Section 5.2(a), Section 5.3, Section 5.6(b), Section 5.17 and Section 5.18, without giving effect to materiality, Material Adverse Effect or similar qualifications, shall be true and correct in all respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date), except to the extent the failure of such representations and warranties to be true and correct (without giving effect to materiality, Material Adverse Effect or similar qualifications) would not have, individually or in the aggregate, an SpinCo Material Adverse Effect. The representations and warranties made by Moon set forth in Section 4.1, Section 4.2, Section 4.5, Section 5.1(a), Section 5.3 Section 5.17 and Section 5.18 shall be true and correct in all material respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date). The representations and warranties made by Moon set forth in Section 5.2(a) and Section 5.6(b) shall be true and correct in all respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (other than for immaterial deviations in the case of the fourth sentence of Section 5.2(a)) and except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date);

(c)          Moon shall have delivered to Clover a certificate dated as of the Closing Date signed by a senior officer of Moon to the effect that each of the conditions set forth in Section 8.3(a) and Section 8.3(b) have been satisfied;

(d)          Clover shall have received the Clover Tax Opinion from Clover Tax Counsel, which opinion shall not have been withdrawn or modified in any material respect; and

 

(e)          SpinCo and Moon (or a Subsidiary thereof) shall have entered into the applicable Transaction Documents, and to the extent applicable, performed the covenants to be performed prior to the Effective Time in all material respects, and each such agreement shall be in full force and effect.

              SECTION 9.1.          Termination by Mutual Consent.

This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time, whether before or after the time the Clover Stockholder Approval is obtained, by mutual written consent of Clover and Moon.

              SECTION 9.2.          Termination by Either Moon or Clover.

This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time by either Clover or Moon if:

(a)          the Closing shall not have occurred by October 30, 2020 (the “Outside Date”), whether such date is before or after the time the Clover Stockholder Approval is obtained; provided that the right to terminate this Agreement pursuant to this Section 9.2(a) shall not be available to any Party that has breached in any material respect its obligations under this Agreement or the Separation and Distribution Agreement in any manner that shall have been the primary cause of the failure of the condition set forth in this Section 9.2(a);

(b)          the Clover Stockholder Approval shall not have been obtained at the Clover Stockholder Meeting or at any adjournment, recess or postponement thereof; or

(c)          (i) any Governmental Order permanently restraining, enjoining or otherwise prohibiting consummation of the transactions contemplated by this Agreement or by the Separation and Distribution Agreement shall become final and non-appealable or (ii) any Law shall have been enacted, entered, enforced or deemed applicable to the Merger or the other transactions contemplated by this Agreement or by the Separation and Distribution Agreement that prohibits, makes illegal or enjoins the consummation of the Merger or such other transactions contemplated by this Agreement or by the Separation and Distribution Agreement (in the case of each of clauses (i) and (ii) whether before or after the time the Clover Stockholder Approval is obtained); provided that the right to terminate this Agreement pursuant to this Section 9.2(c) shall not be available to any Party that has breached in any material respect its obligations under this Agreement or the Separation and Distribution Agreement in any manner that shall have been the primary cause of the failure of the condition set forth in this Section 9.2(c);

                                              SECTION 9.3.          Termination by Clover.

This Agreement may be terminated by Clover and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time by Clover if:

 

(a)          at any time prior to the time the Clover Stockholder Approval is obtained, (i) the Clover Board (or any committee thereof) authorizes Clover to enter into an definitive written agreement with respect to a Superior Proposal, (ii) Clover enters into a definitive written agreement providing for such Superior Proposal concurrently with or immediately after the termination of this Agreement and (iii) Clover, prior to or concurrently with such termination, pays to Moon the Termination Fee pursuant to Section 9.5(b); provided, that such actions shall have been made in compliance with Section 7.10(b);

(b)          there has been a breach of any representation, warranty, covenant or agreement made by Moon or SpinCo in this Agreement, or any such representation and warranty shall have become untrue after the date hereof, such that any of the conditions set forth in Section 8.3(a) or Section 8.3(b) would not be satisfied and such breach or condition is not curable or, if curable, is not cured within the earlier of (i) thirty days after written notice thereof is given by Clover to Moon and (ii) one Business Day before the Outside Date; provided, however, that Clover is not also in breach of this Agreement such that any of the conditions set forth in Section 8.2(a) or Section 8.2(b) would not be satisfied and such breach or condition is not curable or, if curable, is not cured within the earlier of (i) thirty days after written notice thereof is given by Moon to Clover and (ii) one Business Day before the Outside Date.

              SECTION 9.4.          Termination by Moon.

This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Effective Time by Moon if:

(a)          the Clover Board shall have made a Clover Change of Recommendation, whether or not permitted by the terms hereof, or the Board of Directors of Clover or any committee thereof shall have resolved to make, or Clover shall have publicly announced, a Clover Change of Recommendation; or

(b)          there has been a breach of any representation, warranty, covenant or agreement made by Clover in this Agreement, or any such representation and warranty shall have become untrue after the date hereof, such that any of the conditions set forth in Section 8.2(a) or Section 8.2(b) would not be satisfied and such breach or condition is not curable or, if curable, is not cured within the earlier of (i) thirty days after written notice thereof is given by Moon to Clover and (ii) one Business Day before the Outside Date; provided, however, that Moon is not also in breach of this Agreement such that any of the conditions set forth in Section 8.3(a) or Section 8.3(b) would not be satisfied and such breach or condition is not curable or, if curable, is not cured within the earlier of (A) thirty days after written notice thereof is given by Clover to Moon and (B) one Business Day before the Outside Date.

              SECTION 9.5.          Effect of Termination and Abandonment.

(a)          Except as provided in paragraphs (b) through (e) directly below, in the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article IX, this Agreement shall become void and of no effect with no liability to any Person on the part of any Party (or of any of its Representatives or Affiliates); provided, however, and notwithstanding anything in the foregoing to the contrary, that (i) subject to clause (d) directly

 

below, no such termination shall relieve any Party of any liability or damages to the other Party resulting from any Willful Breach of this Agreement and (ii) this Section 9.5 and Article X shall survive the termination of this Agreement.

(b)          In the event that

(i)           this Agreement is terminated (A)(I) by either Clover or Moon pursuant to (x) Section 9.2(a) or (y) Section 9.2(b) or (II) by Moon pursuant to Section 9.4(b); and (B)(I) before receipt of the Clover Stockholder Approval a Competing Proposal has been publicly made or disclosed with respect to Clover and, except where the Person who made such Competing Proposal or its Affiliates is a party to the Competing Proposal contemplated in clause (B)(II) has not been withdrawn (1) prior to the Outside Date in the case of clause (A)(I)(x), (2) at least two (2) Business Days prior to the Clover Stockholder Meeting in the case of clause (A)(I)(y) or (3) at least two (2) Business Days prior to the date of termination in the case of clause (A)(II) and (II) within twelve months of such termination, Clover shall have entered into an Alternative Acquisition Agreement with respect to or consummated any Competing Proposal, (substituting “50%” for each reference to “20%” in the definition of “Competing Proposal”);

(ii)          this Agreement is terminated by Moon pursuant to Section 9.4(a); or

(iii)         this Agreement is terminated by Clover pursuant to Section 9.3(a);

then Clover shall pay Moon (or its designee(s)) a termination fee of $176,000,000 (the “Termination Fee”) (less any amounts paid pursuant to Section 9.5(e)) by wire transfer of same-day funds, such payment to be made on the date of entry into an Alternative Acquisition Agreement or consummation of a Competing Proposal (whichever is earlier) in the case of clause (i) above, within three Business Days after such termination in the case of clause (ii) above, and prior to or concurrently with termination in the case of clause (iii) above.

(c)          Each of the Parties acknowledges and agrees that the covenants and obligations contained in this Section 9.5 are an integral part of the transactions contemplated by this Agreement, and that, without these covenants and obligations, the Parties would not have entered into this Agreement and that the Termination Fee is not a penalty, but rather is liquidated damages in a reasonable amount that will compensate Moon and SpinCo in the circumstances in which such Termination Fee is payable for the efforts and resources expended and opportunities foregone while negotiating this Agreement, the Separation and Distribution Agreement and the other Transaction Documents and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby and by the Transaction Documents, which amount would otherwise be impossible to calculate with precision. In the event that Clover fails to promptly pay when due the Termination Fee pursuant to Section 9.5(b) and, in order to obtain such payment Moon commences a Proceeding that results in a judgment against Clover for payment of the Termination Fee, Clover shall pay to Moon its costs and expenses (including reasonable attorneys’ fees) in connection with such Proceeding, together with interest on the Termination Fee at the prime rate set forth in the Wall Street Journal, Eastern Edition, in effect on the date such payment was required to be made from the date such payment was required to be made through the date of payment.

 

(d)          The Parties acknowledge and agree that in no event shall Clover be required to pay the Termination Fee on more than one occasion.  Notwithstanding anything in this Agreement to the contrary, upon payment of the Termination Fee in accordance with Section 9.5(b), neither Clover nor Merger Sub shall have no further liability to Moon or SpinCo with respect to this Agreement, the Separation and Distribution Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby; provided, however, that payment by Clover of the Termination Fee shall not relieve Clover from any liability or damages resulting from any Willful Breach of this Agreement.

(e)          If this Agreement is terminated pursuant to Section 9.2(b), Clover shall pay to Moon its Expenses in an amount not to exceed $35,000,000. Any Expenses of Moon due under this Section 9.5(e) shall be paid by wire transfer of immediately available funds no later than two (2) Business Days after receipt by Clover of an itemized statement identifying such Expenses.

SECTION 10.1.        Non‑Survival of Representations, Warranties and Agreements

The covenants and agreements that by their terms are to be performed following the Closing pursuant to the Separation and Distribution Agreement or this Agreement shall survive the Effective Time in accordance with their terms and all other covenants and agreements herein and therein shall terminate and shall not survive the Closing. None of the representations or warranties in this Agreement or in any certificate or instrument delivered pursuant to this Agreement shall survive the Effective Time. The Confidentiality Agreement shall survive the execution and delivery of this Agreement and any termination of this Agreement, and the provisions of the Confidentiality Agreement shall apply to all information and material furnished by any Party or its Representatives thereunder or hereunder.

SECTION 10.2.        Notices

All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service or (d) when delivered by email (so long as the sender of such email does not receive an automatic reply from the recipient’s email server indicating that the recipient did not receive such email), addressed as follows:

	if to Moon or SpinCo, to:
	▇▇▇▇▇▇▇▇▇-▇▇▇▇ plc
	170/175 Lakeview Dr.
	▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
	Attention: ▇▇▇▇ ▇. ▇▇▇▇▇

	with a copy (which shall not constitute notice) to:
	▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
	▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
	▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
	Attention:	▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
		▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
	if to Clover, to:
	▇▇▇▇▇▇▇ Denver Holdings, Inc.
	▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
	▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
	Attention:	▇▇▇▇ ▇▇▇▇▇▇▇
	with a copy (which shall not constitute notice) to:
	▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
	▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
	▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
	Attention:	▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇ ▇▇▇▇▇
	or to such other address or addresses as the Parties may from time to time designate in writing.

      SECTION 10.3.        Amendments and Waivers

(a)          Any Party may, at any time prior to the Closing, by action taken by its board of directors, or officers thereunto duly authorized, waive any of the terms or conditions of this Agreement or (without limiting Section 10.3(b)) agree to an amendment or modification to this Agreement by an agreement in writing executed in the same manner (but not necessarily by the same Persons) as this Agreement. No waiver by any of the Parties of any breach hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent breach hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No waiver by any of the Parties of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the Party sought to be charged with such waiver.

(b)          This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed by the Parties in the same manner as this Agreement and which makes reference to this Agreement; provided, that any amendments or modifications of this Section 10.3(b) or Sections 10.4 or 10.5, to the extent adversely affecting any of the Lenders, may not be amended without the prior written consent of each of the

Lenders. No amendment or modification shall be made which by Law requires further approval by the stockholders of Clover without obtaining the further approval of such stockholders.

(c)          Notwithstanding anything to the contrary in this Agreement, in the event that Steps 12A through 12D of the Plan of Reorganization are adopted in accordance with the Plan of Reorganization, the parties will reasonably cooperate to modify or amend the Merger Agreement and the Transaction Documents to the extent necessary to permit the implementation of such Steps 12A through 12D, so long as such modification would not cause the Closing to occur materially later than the date the Closing would otherwise have occurred had such modification not been made.

SECTION 10.4.        Governing Law; Jurisdiction; WAIVER OF JURY TRIAL

(a)          This Agreement, and all Actions (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement) shall be governed by and construed in accordance with the Law of the State of Delaware, without regard to the choice of law or conflicts of law principles thereof. The Parties expressly waive any right they may have, now or in the future, to demand or seek the application of a governing Law other than the Law of the State of Delaware.

(b)          Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if such court shall not have jurisdiction, any federal court of the United States of America sitting in Delaware, of if jurisdiction is not then available in such federal court, then in any Delaware state court siting in New Castle County) and any appellate court from any appeal thereof (the “Chosen Courts”) in any Action arising out of or relating to this Agreement or the Transaction Documents or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the Parties hereby irrevocably and unconditionally (i) agrees not to commence any such Action except in such courts, (ii) agrees that any claim in respect of any such Action may be heard and determined in the Chosen Courts, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Action in the Chosen Courts and (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such Action in the Chosen Courts. Each of the Parties agrees that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party irrevocably consents to service of process in the manner provided for notices in Section 10.2. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.

(c)          EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A

 

TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.4(c).

SECTION 10.5.        Assignment; Parties in Interest; Non‑Parties

(a)          No Party may assign its rights or delegate its duties under this Agreement without the written consent of the other Parties. Any attempted assignment or delegation in breach of this Section 10.5 shall be null and void. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties, any rights or remedies under or by reason of this Agreement, except as provided in Section 7.9 and Section 10.5(b) (which is intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons)

(b)          Notwithstanding anything to the contrary in this Agreement, it is hereby agreed and acknowledged that this Agreement may only be enforced against, and any claims of action that may be based upon, arise out of, or relate to, this Agreement, or the negotiation, execution or performance of this Agreement, may only be made against the Parties, and no former, current or future Affiliates, officers, directors, employees, equityholders, lenders, financing sources, managers, members, partners, agents or representatives of any Party, in each case, who is not a party to this Agreement, shall have any liability for any obligations of the Parties or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby. Such Persons who are not parties hereto are third party beneficiaries of Section 10.3, Section 10.4, and this Section 10.5(b). For the avoidance of doubt, this Section 10.5(b) shall not affect the rights of the Persons party to the Financing Commitment Letter to enforce the Financing Commitment Letter in accordance with its terms or the rights and obligations of the Parties set forth in Section 7.23.

SECTION 10.6.        Captions; Counterparts

The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed in two or more counterparts (including by electronic or .pdf transmission), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of any signature page by facsimile, electronic or .pdf transmission shall be binding to the same extent as an original signature page.

SECTION 10.7.        Entire Agreement

 

This Agreement, the Transaction Documents and the Confidentiality Agreement, including any related annexes, Exhibits and Schedules, as well as any other agreements and documents referred to herein and therein, shall together constitute the entire agreement between the Parties relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the Parties or any of their respective Affiliates relating to the transactions contemplated hereby.

SECTION 10.8.        Severability

If any provision of this Agreement or any Transaction Document, or the application of any provision to any Person or circumstance, 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.

SECTION 10.9.        Specific Performance

In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Transaction Document, the Party who is, or is to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its rights under this Agreement or such Transaction Document. Without limiting the generality of the foregoing, the Parties agree that each Party shall be entitled to enforce specifically the other Parties’ obligations to consummate the transactions contemplated by this Agreement (including the obligation to consummate the Closing and the obligations with respect to the Financing), if the conditions set forth in Article VIII have been satisfied (other than those conditions that by their nature are to be satisfied at the Closing) or waived (where permissible under applicable Law). The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any Action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties to this Agreement.

SECTION 10.10.      Financing Sources.

Notwithstanding anything in this Agreement to the contrary, the Parties hereto hereby: (a) agree that any suit, action or Proceeding, whether in contract or in tort or otherwise, involving any Lender Related Party, arising out of or relating to, this Agreement, the Financing or any of the agreements entered into in connection with the Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder (a “Financing Action”) shall be subject to the exclusive jurisdiction of the Supreme Court of the State of New York, County of New York, or, if under applicable law exclusive jurisdiction is vested in the Federal courts, the United States District Court for the Southern District of New York sitting in New York County (and appellate courts thereof) and irrevocably submits itself and its property

 

with respect to any such Financing Action to the exclusive jurisdiction of such courts, and such Financing Action (except to the extent relating to the interpretation of any provisions in this Agreement (including any provision in any documentation related to the Financing that expressly specifies that the interpretation of such provisions shall be governed by and construed in accordance with the Law of the State of Delaware)) shall be governed by, and construed in accordance with, the Law of the State of New York (without giving effect to any conflicts of law principles that would result in the application of the laws of another jurisdiction), (b) agree not to bring or support any Financing Action of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against any Lender Related Party, as the case may be, in any way arising out of or relating to, this Agreement, the Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder in any forum other than the Supreme Court of the State of New York, County of New York, or, if under applicable law exclusive jurisdiction is vested in the Federal courts, the United States District Court for the Southern District of New York sitting in New York County (and appellate courts thereof), (c) irrevocably waive, to the fullest extent that it may effectively do so, the defense of an inconvenient forum to the maintenance of any Financing Action in any such court with respect to any Financing Action against any Lender Related Party, (d) knowingly, intentionally and voluntarily waives to the fullest extent permitted by applicable Law, trial by jury in any Financing Action brought against the Lender Related Parties in any way arising out of or relating to, this Agreement, the Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder, (e) agree that none of the Lender Related Parties will have any liability to the parties to this Agreement (in each case, other than Clover and its Subsidiaries from and after the Closing) relating to or arising out of this Agreement, the Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder, whether in law or in equity, whether in contract or in tort or otherwise (provided that, notwithstanding the foregoing, nothing herein shall affect the rights of Clover, Merger Sub or its Affiliates or SpinCo or its Subsidiaries against the Lender Related Parties under any debt commitment letter or any other agreement with respect to the Financing or any of the transactions contemplated thereby or the any services thereunder), and (f) agree that the Lender Related Parties are express third party beneficiaries of, and may enforce, any of the provisions in this Agreement reflecting the foregoing agreements in this Section 10.10, and such provisions and the definition of “Lenders” and “Lender Related Party” shall not be amended in any way materially adverse to the Lender Related Parties without the prior written consent of the Lenders.

[Signature page follows.]

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

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	By:	/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
	Name:	▇▇▇▇▇ ▇. ▇▇▇▇▇
	Title:	Vice President and General Counsel, Climate Segment