DEFM14C
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the

Securities Exchange Act of 1934

Check the appropriate box:

 

  Preliminary information statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
  Definitive information statement

PPD, Inc.

 

 

(Name of Registrant as Specified in Its Charter)

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  No fee required.
  Fee computed below per Exchange Act Rules 14c-5(g) and 0-11
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Title of each class of securities to which transaction applies:

 

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Aggregate number of securities to which transaction applies:

 

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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

  (4)  

Proposed maximum aggregate value of transaction:

 

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Total fee paid:

 

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:

 

     

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Form, Schedule or Registration Statement No.:

 

     

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Filing Party:

 

     

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Date Filed:

 

     

 

 


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PPD, Inc.

929 North Front Street

Wilmington, North Carolina 28401

NOTICE OF WRITTEN CONSENT AND APPRAISAL RIGHTS

AND

INFORMATION STATEMENT

WE ARE NOT ASKING YOU FOR A PROXY AND

YOU ARE REQUESTED NOT TO SEND US A PROXY.

To our Stockholders:

This notice of written consent and appraisal rights and information statement is being furnished to the holders of common stock, par value $0.01 per share (the “Company Common Stock”), of PPD, Inc., a Delaware corporation (the “Company”) in connection with the Agreement and Plan of Merger, dated as of April 15, 2021, by and among Thermo Fisher Scientific Inc., a Delaware corporation (“Thermo Fisher”), Powder Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Thermo Fisher (“Merger Sub”), and the Company (the “Merger Agreement”), a copy of which is attached as Annex A to this information statement. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company with the Company surviving such merger as a wholly-owned subsidiary of Thermo Fisher (the “Merger”). Upon consummation of the Merger, each share of Company Common Stock issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will be canceled and converted into the right to receive an amount in cash equal to $47.50, without interest and less any applicable withholding taxes (the “Merger Consideration”). However, the Merger Consideration will not be paid in respect of (a) any shares of Company Common Stock held by Thermo Fisher, Merger Sub or the Company or any other direct or indirect wholly-owned subsidiary of the Company or Thermo Fisher (including shares of Company Common Stock held in treasury by the Company) immediately prior to the Effective Time, which will automatically be cancelled and retired and shall cease to exist and no Merger Consideration shall be delivered or deliverable in exchange therefore and (b) those shares of Company Common Stock held by any person who is entitled to demand and who has properly demanded appraisal of such shares of Company Common Stock under Delaware law and not withdrawn his, her or its demand for appraisal.

The board of directors of the Company (the “Board”), after consultation with its financial advisors and its legal counsel, unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Company and its stockholders, approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby, resolved to recommend that the holders of Company Common Stock adopt the Merger Agreement and directed that the Merger Agreement be submitted to the Company’s stockholders for adoption by the Company’s stockholders entitled to vote thereon.

The adoption of the Merger Agreement by the Company stockholders required the affirmative vote or written consent by holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon. On April 15, 2021, Hellman & Friedman Capital Partners VII, L.P., Hellman & Friedman Capital Partners VII (Parallel), L.P., HFCP VII (Parallel-A), L.P., H&F Executives VII, L.P., Hellman & Friedman Capital Partners VIII, L.P., Hellman & Friedman Capital Partners VIII (Parallel), L.P., HFCP VIII (Parallel-A), L.P., H&F Executives VIII, L.P. and H&F Associates VIII, L.P. (collectively, the “H&F Investors”), Carlyle Partners VI Holdings II, L.P. and Clocktower Investment Pte Ltd. (together with the H&F Investors, collectively, the “Majority Stockholders”), which together on such date beneficially owned 210,017,251 shares of Company Common Stock representing approximately 60% of the outstanding shares of Company Common Stock as of April 15, 2021, delivered a written consent approving and adopting in all respects the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Written Consent”). As a result, no further action by any stockholder of the Company is required under applicable law or the Merger Agreement (or otherwise) to adopt the Merger Agreement, and the Company will not be soliciting your vote for or consent to the adoption of the Merger Agreement and the approval of the transactions contemplated thereby and will not call a stockholders’ meeting for purposes of voting on the adoption of the Merger Agreement and the approval of the transactions contemplated thereby. This notice and the accompanying information statement shall constitute notice to you from the Company of the Written Consent contemplated by Section 228(e) of the General Corporation Law of the State of Delaware (the DGCL).

Under Section 262 of the DGCL, if the Merger is completed, subject to compliance with the requirements of Section 262 of the DGCL, holders of shares of Company Common Stock, other than the Majority Stockholders, will have the right to seek an appraisal for, and be paid the “fair value” in cash of, their shares of Company Common Stock (as determined by the Delaware Court of Chancery), together with interest, if any, on the amount determined to be fair value, instead of receiving the Merger Consideration. To exercise your appraisal rights, you must submit a written demand for an appraisal to the Company no later than twenty (20) days after the mailing of this information statement, which mailing date is May 25, 2021, and comply precisely with other procedures set forth in Section 262 of the DGCL, which are summarized in the accompanying information statement. A copy of Section 262 of the DGCL is attached to the accompanying information statement as Annex C. This notice and the accompanying information statement shall constitute notice to you from the Company of the availability of appraisal rights under Section 262 of the DGCL in connection with the Merger.

We urge you to read the entire information statement carefully. If the Merger is completed, you will receive instructions regarding payment for your shares of Company Common Stock.

BY ORDER OF THE BOARD OF DIRECTORS,

 

David Simmons    Julia James
Chairman & Chief Executive Officer    General Counsel and Secretary

Neither the U.S. Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosures in this notice or the accompanying information statement. Any representation to the contrary is a criminal offense.

This information statement is dated May 25, 2021 and is first being mailed to stockholders on or about May 25, 2021.


Table of Contents
TABLE OF CONTENTS          Page  
  SUMMARY      1  
  The Parties to the Merger Agreement (page 15)      1  
  The Merger (page 16)      1  
  The Merger Consideration (page 44)      2  
  Recommendation of the Board; Reasons for the Merger (page 22)      2  
  Required Stockholder Approval for the Merger (page 25)      2  
  Opinion of J.P. Morgan Securities LLC (page 26 and Annex B)      3  
  Financing (page 32)      3  
  The Merger Agreement (page 44 and Annex A)      3  
  Interests of Our Directors and Executive Officers in the Merger (page 33)      6  
  Material United States Federal Income Tax Consequences of the Merger (page 41)      6  
  Regulatory Approvals (page 43)      7  
  Procedures for Receiving Merger Consideration (page 45)      7  
  Specific Performance; Jurisdiction (page 62)      7  
  Appraisal Rights (page 64 and Annex C)      7  
  Transaction Litigation (page 41)      8  
  Market Information and Dividends (page 63)      8  
  QUESTIONS AND ANSWERS ABOUT THE MERGER      9  
  CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS      12  
  THE PARTIES TO THE MERGER AGREEMENT      15  
  THE MERGER      16  
  Background of the Merger      16  
  Recommendation of the Board; Reasons for the Merger      22  
  Required Stockholder Approval for the Merger      25  
  Opinion of J.P. Morgan Securities LLC      26  
  Certain Company Financial Forecasts      30  
  Financing      32  
  Interests of Our Directors and Executive Officers in the Merger      33  
  Delisting and Deregistration of Company Common Stock      41  
  Transaction Litigation      41  
  Material United States Federal Income Tax Consequences of the Merger      41  
  Regulatory Approvals      43  
  THE MERGER AGREEMENT      44  
  Explanatory Note Regarding the Merger Agreement      44  
  Form of Merger      44  
  Consummation and Effectiveness of the Merger      44  
  Consideration to be Received in the Merger      44  
  Appraisal Shares      45  
  Procedures for Receiving Merger Consideration      45  
  Certificate of Incorporation; Bylaws      46  
    Representations and Warranties      46  

 

 

    

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    Conduct of Business by the Company Prior to Consummation of the Merger      48  
  Regulatory Filings; Efforts      51  
  Written Consent      52  
  No Solicitation      52  
  Continuing Employee Matters      53  
  Indemnification and Insurance      55  
  Financing Covenant; Company Cooperation      55  
  Other Covenants and Agreements      56  
  Conditions to Consummation of the Merger      57  
  Termination of the Merger Agreement      58  
  Termination Fees and Expenses      59  
  Superior Proposal and Change of Recommendation      60  
  Amendment and Waiver      62  
  Specific Performance; Jurisdiction      62  
  Governing Law      62  
  MARKET INFORMATION AND DIVIDENDS      63  
  APPRAISAL RIGHTS      64  
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      68  
  WHERE YOU CAN FIND MORE INFORMATION      71  
  ANNEX A      A-1  
  ANNEX B      B-1  
    ANNEX C      C-1  

 

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SUMMARY

 

SUMMARY

This summary highlights selected information from this information statement and may not contain all of the information that is important to you. To fully understand the Merger, as hereinafter defined and as described below, contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated as of April 15, 2021, by and among Thermo Fisher Scientific Inc., a Delaware corporation (“Thermo Fisher”), Powder Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Thermo Fisher (“Merger Sub”), and PPD, Inc., a Delaware corporation (the “Company”), and for a more complete description of the legal terms of the Merger, you should carefully read this entire information statement, the annexes attached to this information statement and the documents referred to or incorporated by reference in this information statement. We have included page references in parentheses to direct you to the appropriate place in this information statement for a more complete description of the topics presented in this summary. In this information statement, the terms “PPD,” “Company,” “we,” “us” and “our” refer to PPD, Inc. All references in this information statement to terms defined in the notice to which this information statement is attached have the meanings provided in that notice. This information statement is dated May 25, 2021 and is first being mailed to our stockholders on or about May 25, 2021.

The Parties to the Merger Agreement (page 15)

The Company. The Company, based in Wilmington, North Carolina, is a leading global contract research organization providing comprehensive, integrated drug development, laboratory and lifecycle management services. Our customers include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 47 countries and more than 27,000 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a firm commitment to quality to help customers bend the cost and time curve of drug development and optimize value in delivering life-changing therapies to improve health. The Company’s principal executive offices are located at 929 North Front Street, Wilmington, North Carolina 28401 and its telephone number is (910) 251-0081. The Company’s website is www.ppd.com. Additional information about the Company is included in documents incorporated by reference into this information statement and our filings with the Securities and Exchange Commission (the “SEC”), copies of which may be obtained without charge by following the instructions in “Where You Can Find More Information” beginning on page 71.

The Company Common Stock is listed with, and trades on, the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “PPD”.

Thermo Fisher. Thermo Fisher is the world leader in serving science, with annual revenue exceeding $30 billion. Thermo Fisher’s mission is to enable its customers to make the world healthier, cleaner and safer. Whether its customers are accelerating life sciences research, solving complex analytical challenges, improving patient diagnostics and therapies or increasing productivity in their laboratories, Thermo Fisher is here to support them. Thermo Fisher’s global team of more than 80,000 colleagues delivers an unrivaled combination of innovative technologies, purchasing convenience and pharmaceutical services through its industry-leading brands, including Thermo Scientific, Applied Biosystems, Invitrogen, Fisher Scientific, Unity Lab Services and Patheon. Thermo Fisher’s principal executive offices are located at 168 Third Avenue, Waltham, Massachusetts 02451 and its telephone number is (781) 622-1000. Thermo Fisher’s website is www.thermofisher.com.

Shares of Thermo Fisher’s common stock are listed with, and trades on, the New York Stock Exchange (the “NYSE”) under the symbol “TMO”.

Merger Sub. Merger Sub was formed by Thermo Fisher solely for the purpose of completing the Merger with the Company. Merger Sub is a wholly-owned subsidiary of Thermo Fisher and has not carried on any business, conducted any operations or incurred any liabilities or obligations, other than those incidental to its formation and pursuant to the Merger Agreement, the performance of its obligations thereunder and matters ancillary thereto. Upon consummation of the Merger, Merger Sub will cease to exist. Merger Sub’s principal executive offices are located at c/o Thermo Fisher Scientific Inc., 168 Third Avenue, Waltham, Massachusetts 02451 and its telephone number is (781) 622-1000.

The Merger (page 16)

On April 15, 2021, the Company entered into the Merger Agreement with Thermo Fisher and Merger Sub. Upon the terms and subject to the conditions provided in the Merger Agreement, and in accordance with Delaware law, at the effective time of the Merger (the “Effective Time”), Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation (the “Surviving Corporation”) and a wholly-owned subsidiary of Thermo Fisher (the “Merger”). Unless otherwise set out in the Merger Agreement, because the Merger Consideration (as defined below) will be paid in cash, you will receive no equity interest in Thermo Fisher in consideration for your shares of Company Common Stock, and after the Effective Time you will not own any shares of Company Common Stock.

 

 

    

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The Merger Consideration (page 44)

Upon consummation of the Merger, each issued and outstanding share of common stock of the Company, par value $0.01 per share (“Company Common Stock”), other than (i) shares of Company Common Stock owned by the Company, Thermo Fisher or Merger Sub or any other direct or indirect wholly owned subsidiary of the Company or of Thermo Fisher and (ii) Appraisal Shares (as defined in “Appraisal Rights,” beginning on page 64), shall be converted into the right to receive $47.50 in cash, without interest and after giving effect to any required withholding taxes (the “Merger Consideration”).

At the Effective Time, each vested Company stock option (“Option”) (including any Option that vests as a result of the Merger) will generally be canceled and converted into the right to receive the sum of (i) (A) the Merger Consideration less the applicable exercise price multiplied by (B) the number of shares of Company Common Stock subject to such Option and (ii) any remaining option bonus payments in respect of the Company’s May 2019 dividend recapitalization attributable to each such Option. At the Effective Time, each Company restricted stock unit (“RSU”) that is held by a non-employee director of the Company (whether vested or unvested) will be canceled and converted into the right to receive (i) the Merger Consideration multiplied by (ii) the number of shares of Company Common Stock subject to such RSU. At the Effective Time, each unvested Option, each RSU (other than any RSU held by a non-employee director of the Company) and each Company performance-based restricted stock unit (“PSU”) will generally be canceled and converted, based on an exchange ratio that preserves the award’s value, into an equity award of Thermo Fisher with substantially the same terms and conditions, including vesting terms and conditions and treatment in connection with certain terminations of employment consistent with the Company’s applicable termination policy (except that any PSU will generally convert based on the greater of target and actual performance and will no longer be subject to performance-based vesting conditions).

We encourage you to read the Merger Agreement, which is attached as Annex A to this information statement, as it is the legal document that governs the Merger and the other transactions contemplated thereby.

Recommendation of the Board; Reasons for the Merger (page 22)

After consideration of various factors as discussed in “The Merger — Recommendation of the Board; Reasons for the Merger” beginning on page 22, the board of directors of the Company (the “Board”), after consultation with its financial advisors and its legal counsel, unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Company and its stockholders, approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby, resolved to recommend that the holders of Company Common Stock adopt the Merger Agreement and directed that the Merger Agreement be submitted to the Company’s stockholders for adoption by the Company’s stockholders entitled to vote thereon.

Required Stockholder Approval for the Merger (page 25)

Under Delaware law and the Company’s certificate of incorporation, the adoption of the Merger Agreement by our stockholders required the affirmative vote or written consent of stockholders of the Company holding in the aggregate at least a majority of the outstanding shares of Company Common Stock entitled to vote thereon. As of April 15, 2021, the record date for determining stockholders of the Company entitled to vote on the adoption of the Merger Agreement, there were 350,958,331 shares of Company Common Stock outstanding. Holders of Company Common Stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including adoption of the Merger Agreement.

On April 15, 2021, following the execution of the Merger Agreement, Hellman & Friedman Capital Partners VII, L.P., Hellman & Friedman Capital Partners VII (Parallel), L.P., HFCP VII (Parallel-A), L.P., H&F Executives VII, L.P., Hellman & Friedman Capital Partners VIII, L.P., Hellman & Friedman Capital Partners VIII (Parallel), L.P., HFCP VIII (Parallel-A), L.P., H&F Executives VIII, L.P. and H&F Associates VIII, L.P. (collectively, the “H&F Investors”), Carlyle Partners VI Holdings II, L.P. and Clocktower Investment Pte Ltd. (together with the H&F Investors, collectively, the “Majority Stockholders”), which together on such date beneficially owned 210,017,251 shares of Company Common Stock representing approximately 60% of the then outstanding shares of Company Common Stock, delivered a written consent approving and adopting in all respects the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Written Consent”). No further action by any other Company stockholder is required under applicable law or the Merger Agreement (or otherwise) in connection with the adoption of the Merger Agreement. As a result, the Company is not soliciting your vote for the adoption of the Merger Agreement and will not call a stockholders’ meeting for purposes of voting on the adoption of the Merger Agreement. No action by the stockholders of Thermo Fisher is required to complete the Merger and all requisite corporate action by and on behalf of Merger Sub required to complete the Merger has been taken.

 

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When actions are taken by the written consent of less than all of the stockholders entitled to vote on a matter, Delaware law requires notice of the action be given to those stockholders who did not consent in writing to the action and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that consents signed by a sufficient number of holders to take the action were delivered to the corporation in accordance with Section 228 of the General Corporation Law of the State of Delaware (“DGCL”). This information statement and the notice attached hereto constitute notice to you from the Company of the Written Consent as required by Delaware law.

Opinion of J.P. Morgan Securities LLC (page 26 and Annex B)

At the meeting of the Board on April 14, 2021, J.P. Morgan Securities LLC (“J.P. Morgan”) rendered its oral opinion to the Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid to the Company’s common stockholders in the proposed Merger was fair, from a financial point of view, to such stockholders. J.P. Morgan has confirmed its April 14, 2021 oral opinion by delivering its written opinion to the Board, dated April 14, 2021, that, as of such date, the consideration to be paid to the Company’s common stockholders in the proposed Merger was fair, from a financial point of view, to such stockholders.

The full text of the written opinion of J.P. Morgan dated April 14, 2021, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this information statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this information statement is qualified in its entirety by reference to the full text of such opinion. The Company’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed Merger, was directed only to the consideration to be paid in the Merger and did not address any other aspect of the Merger. J.P. Morgan expressed no opinion as to the fairness of the consideration to the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the proposed Merger. The issuance of J.P. Morgan’s opinion was approved by a fairness opinion committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the proposed Merger or any other matter.

For a description of the opinion that the Board received from J.P. Morgan, see the section of this information statement entitled “The Merger – Opinion of J.P. Morgan Securities LLC” and Annex B.

Financing (page 32)

The Merger is not subject to a financing condition. Thermo Fisher intends to finance the Merger with a combination of cash and debt financing, which could include senior unsecured bridge loans.

The Merger Agreement (page 44 and Annex A)

Conditions to Consummation of the Merger (page 57)

The obligation of each party to consummate the Merger is subject to the satisfaction (or waiver by each of the parties) on or prior to the date of the closing of the Merger (the “Closing Date”) of the following conditions:

 

 

no applicable law or judgment or other legal or regulatory restraint or prohibition (in each case whether temporary, preliminary or permanent in nature) by a court of competent jurisdiction or other governmental entity, or agreement entered into by (or with the consent of) each party, (i) restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger or the other transactions contemplated by the Merger Agreement or (ii) imposing any Remedial Action (as defined in “The Merger Agreement — Regulatory Filings; Efforts” beginning on page 51) (other than a Permitted Remedial Action, as defined in “The Merger Agreement — Regulatory Filings; Efforts” beginning on page 51) being in effect;

 

 

the expiration or termination of any applicable waiting period (including any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and all other required regulatory approvals having been obtained, in each case, without, except as otherwise agreed by Thermo Fisher in its sole discretion, the imposition of any Remedial Action (other than a Permitted Remedial Action);

 

 

the Written Consent having been obtained; and

 

 

the mailing of this information statement to the stockholders of the Company at least twenty (20) business days prior to the Closing Date and the consummation of the Merger having been permitted by Section 14(c) of the Securities Exchange Act of 1934 (including Rule 14c-2 promulgated thereunder).

 

 

    

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As of the date of this information statement, the Written Consent has been obtained.

The obligations of Thermo Fisher and Merger Sub to consummate the Merger are further subject to satisfaction (or waiver by Thermo Fisher and Merger Sub), on or prior to the Closing Date of the following conditions:

 

 

the representations and warranties of the Company being true and correct as of the Closing Date in the manner described under “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 57;

 

 

the Company having performed and complied in all material respects with all obligations required to be performed by it under the Merger Agreement at or prior to the Effective Time; and

 

 

the receipt by Thermo Fisher and Merger Sub of a certificate dated the Closing Date signed by a duly authorized officer of the Company on behalf of the Company stating that each of the two conditions specified above has been satisfied.

The obligation of the Company to consummate the Merger is further subject to satisfaction (or waiver by the Company) on or prior to the Closing Date of the following conditions:

 

 

the representations and warranties of Thermo Fisher and Merger Sub being true and correct as of the Closing Date in the manner described under “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 57;

 

 

Thermo Fisher and Merger Sub having performed and complied in all material respects with all obligations required to be performed by them under the Merger Agreement at or prior to the Effective Time; and

 

 

the receipt by the Company of a certificate dated the Closing Date signed by a duly authorized officer of Thermo Fisher on behalf of the Thermo Fisher stating that each of the two conditions specified above has been satisfied.

No Solicitation (page 52)

The Merger Agreement provides that the Company and its subsidiaries and its and their respective directors, officers and employees will not, and the Company will use reasonable best efforts to cause its and their other representatives not to, directly or indirectly, from the date of the Merger Agreement until the earlier of the termination of the Merger Agreement and the Effective Time:

 

 

solicit, initiate, or knowingly encourage or knowingly take any other action to facilitate any inquiries regarding, or the submission of any proposal or offer that constitutes, or would reasonably be expected to lead to, any Company Takeover Proposal (as defined in “The Merger Agreement — No Solicitation” beginning on page 52);

 

 

enter into, continue, knowingly encourage or otherwise participate in any discussions or negotiations regarding, or furnish to any person (other than Thermo Fisher or Merger Sub) any non-public information with respect to or in connection with any Company Takeover Proposal; or

 

 

execute or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, option agreement, merger agreement, joint venture agreement, partnership agreement or any other agreement or arrangement relating to any Company Takeover Proposal (other than certain acceptable confidentiality agreements).

Superior Proposal and Change of Recommendation (page 60)

Notwithstanding anything to the contrary in the Merger Agreement, if, at any time after the execution of the Merger Agreement and prior to obtaining the Written Consent, which was obtained on April 15, 2021, the Company or any of its representatives received a bona fide, written Company Takeover Proposal, which Company Takeover Proposal did not result from a breach of the Merger Agreement. then in response to such Company Takeover Proposal the Company could have, subject to the terms of the Merger Agreement, engaged in or otherwise participated in discussions or negotiations with such person or group and its representatives if the Company Board determined in good faith (after consultation with its outside legal counsel and financial advisor) that such Company Takeover Proposal constituted or would reasonably be expected to lead to a Superior Proposal (as defined in “The Merger Agreement — Superior Proposal and Change of Recommendation” beginning on page 60) and that the failure to take such action would reasonably be expected to be inconsistent with the Company’s directors’ fiduciary duties under applicable law.

At any time prior to obtaining the Written Consent, which was obtained on April 15, 2021, the Company Board could have made an Adverse Recommendation Change (as defined in “The Merger Agreement — Superior Proposal and Change of Recommendation” beginning on page 60) if (A) the Company Board determined in good faith (after consultation with its outside legal counsel and financial advisor) that, as a result of an Intervening Event (as defined in “The Merger Agreement — Superior Proposal and Change of Recommendation” beginning on page 60), failure to make such Adverse Recommendation Change would be inconsistent with the Company’s directors’ fiduciary duties under applicable law or (B) the Company received a Company Takeover Proposal that

 

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the Company Board determined in good faith (after consultation with its outside legal counsel and financial advisor) constituted a Superior Proposal and that the failure to make such Adverse Recommendation Change would be inconsistent with the Company’s directors’ fiduciary duties under applicable law, subject in each case, to certain notice provisions and renegotiation periods specified in the Merger Agreement. In the case of the Company’s receipt of what it determined in good faith to be a Superior Proposal, and subject to the aforementioned conditions, the Company would have also been entitled to enter into a definitive written agreement for the consummation of such Superior Proposal and concurrently terminate the Merger Agreement and pay Thermo Fisher the Termination Fee (as defined in “The Merger Agreement — Termination Fees and Expenses” beginning on page 59).

The Company’s rights to engage in negotiations or discussions with third parties and to terminate the Merger Agreement as described above ceased upon obtaining the Written Consent on April 15, 2021 in accordance with the terms of the Merger Agreement.

A more detailed description of the foregoing circumstances is provided below and in “The Merger Agreement” beginning on page 44.

Termination (page 58)

The Merger Agreement may be terminated at any time prior to the Effective Time (whether before or after receipt of the Written Consent, except as otherwise expressly noted in the Merger Agreement) by the mutual written consent of Thermo Fisher, Merger Sub and the Company.

In addition, the Merger Agreement may be terminated by either Thermo Fisher or the Company:

 

 

if the Merger is not consummated on or before the Outside Date (as defined in “The Merger Agreement — Termination of the Merger Agreement” beginning on page 58), as may be extended pursuant to the terms of the Merger Agreement; provided, that the right to terminate the Merger Agreement for this reason is not available to a party if such party’s action or failure to act is a breach of the Merger Agreement and a principal cause of or directly resulted in the failure of the Merger to occur on or before the Outside Date; or

 

 

if any legal restraint permanently (i) restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger or the other transactions contemplated by the Merger Agreement or (ii) imposing a Remedial Action (other than a Permitted Remedial Action) is in effect and has become final and non-appealable; provided, that the right to terminate the Merger Agreement for this reason is not available to a party if the failure of such party to perform any of its obligations under the Merger Agreement is a principal cause of or directly resulted in the issuance of such final, non-appealable legal restraint.

The Merger Agreement also may be terminated by either party if the other party breaches any of its representations or warranties or fails to perform any of its covenants or obligations contained in the Merger Agreement, which breach or failure to perform would give rise to the failure of a condition precedent to closing and cannot be cured prior to the Outside Date or, if capable of being cured, has not been cured prior to the earlier of (x) 30 days after the giving of written notice to the other party of such breach and (y) the Outside Date.

The Merger Agreement also provided that Thermo Fisher could have terminated the Merger Agreement (i) if the Written Consent was not delivered to Thermo Fisher prior to 8:30 a.m., New York City time, on April 16, 2021 or (ii) prior to Thermo Fisher’s receipt of the Written Consent, if an Adverse Recommendation Change had occurred; however, these termination provisions expired following delivery of the Written Consent on April 15, 2021.

The Merger Agreement also provided that the Company could have terminated the Merger Agreement, prior to receipt of the Written Consent, in order to enter into, concurrently with the termination of the Merger Agreement, a definitive written agreement providing for the consummation of a Superior Proposal; however, this termination provision expired following delivery of the Written Consent on April 15, 2021.

Termination Fees and Expenses (page 59)

The Company will pay Thermo Fisher (or its designee) a termination fee of $520,354,225 under the following circumstances:

 

 

if the Merger Agreement is terminated by the Company, prior to Thermo Fisher’s receipt of the Written Consent, in order to enter into, concurrently with the termination of the Merger Agreement, a definitive written agreement providing for the consummation of a Superior Proposal; however, this termination provision expired following delivery of the Written Consent on April 15, 2021;

 

 

 

    

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SUMMARY

 

 

if the Merger Agreement is terminated by Thermo Fisher, prior to receipt of the Written Consent, if an Adverse Recommendation Change has occurred; however, this termination provision expired following delivery of the Written Consent on April 15, 2021; and

 

 

if a Company Takeover Proposal (whether or not conditional and whether or not withdrawn) is made, proposed or communicated to the Company Board, any committee of the Company Board or management of the Company, or is publicly made, proposed or communicated publicly, or any person or group publicly proposes or announces an intention to make a Company Takeover Proposal (whether or not conditional and whether or not withdrawn) and thereafter the Merger Agreement is terminated:

 

   

by either Thermo Fisher or the Company, if the Merger is not consummated on or before the Outside Date, as may be extended pursuant to the terms of the Merger Agreement;

 

   

by Thermo Fisher, if the Company breaches any of its representations or warranties or fails to perform any of its covenants or obligations contained in the Merger Agreement, which breach or failure to perform would give rise to the failure of a condition precedent to closing and cannot be cured prior to the Outside Date or, if capable of being cured, has not been cured prior to the earlier of (x) 30 days after the giving of written notice to the Company of such breach and (y) the Outside Date; or

 

   

by Thermo Fisher, if the Written Consent is not delivered to Thermo Fisher prior to 8:30 a.m., New York City time, on April 16, 2021; however, this termination provision expired following delivery of the Written Consent on April 15, 2021; and

within 12 months of such termination any Company Takeover Proposal is consummated or the Company enters into a definitive agreement providing for the consummation of any Company Takeover Proposal, in each case whether or not involving the same Company Takeover Proposal or the person or group making the Company Takeover Proposal referred to in this clause; provided that for purposes of this subclause, all references in the definition of the term Company Takeover Proposal (as defined in “The Merger Agreement — No Solicitation”, beginning on page 52) to “20%” will deemed to be references to “50.1%”.

A more detailed description of the Termination Fee is provided in “The Merger Agreement — Termination Fees and Expenses” beginning on page 59.

Interests of Our Directors and Executive Officers in the Merger (page 33)

You should be aware that the Company’s executive officers and directors have interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Board was aware of these interests and considered them, among other matters, in approving the Merger Agreement. These interests are described below in “The Merger — Interests of Our Directors and Executive Officers in the Merger” beginning on page 33.

Material United States Federal Income Tax Consequences of the Merger (page 41)

The exchange of Company Common Stock pursuant to the Merger will be a taxable transaction for United States federal income tax purposes. Therefore, a United States Holder (as defined in “The Merger — Material United States Federal Income Tax Consequences of the Merger” beginning on page 41) receiving cash in the Merger generally will recognize capital gain or loss for United States federal income tax purposes in an amount equal to the difference between (x) the amount of cash the United States Holder received (determined before deduction of any applicable withholding taxes) and (y) the adjusted tax basis of the surrendered shares of Company Common Stock.

A Non-United States Holder (as defined in “The Merger — Material United States Federal Income Tax Consequences of the Merger”) will generally not be subject to United States federal income tax on any gain resulting from the exchange of Company Common Stock pursuant to the Merger, unless such holder has certain connections to the United States, but the Merger could be a taxable transaction to such holder under non-United States tax laws applicable to such holder.

Holders of Company Common Stock should read the section entitled “The Merger — Material United States Federal Income Tax Consequences of the Merger” beginning on page 41 for a more detailed description of the United States federal income tax consequences of the Merger. Tax matters can be complicated, and the tax consequences of the Merger to you will depend on your particular situation. Holders are urged to consult their own tax advisors about the United States federal, state, local and foreign tax consequences of the Merger.

 

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SUMMARY

 

Regulatory Approvals (page 43)

Under the HSR Act and related rules, certain transactions, including the Merger, may not be completed until notifications have been given and information furnished to the Antitrust Division of the United States Department of Justice (“Antitrust Division”) and the Federal Trade Commission (“FTC”) and all statutory waiting period requirements have been satisfied or early termination has been granted by the applicable agencies. On May 13, 2021, both the Company and Thermo Fisher filed their respective notification and report forms under the HSR Act.

Under other applicable foreign antitrust law and foreign investment laws, certain transactions, including the Merger, may not be completed until any requisite consent, non-action or expiration of any applicable waiting period is obtained.

As of the date of this information statement, the parties have not received all of the consents (including non-action or expiration of any applicable waiting period) in respect of antitrust laws and foreign investment laws required by the Merger Agreement.

Procedures for Receiving Merger Consideration (page 45)

Promptly (and in any event no later than three business days) after the Effective Time, Thermo Fisher will direct the paying agent to mail to each holder of record of shares of Company Common Stock immediately prior to the Effective Time (i) a letter of transmittal and (ii) instructions as to how to surrender such holder’s shares of Company Common Stock in exchange for the Merger Consideration. With regard to holders of Book-Entry Shares (as defined in “The Merger Agreement — Procedures for Receiving Merger Consideration” beginning on page 45), upon the paying agent’s receipt of an “agent’s message” (or such other evidence as the paying agent may reasonably request), the holder of such Book-Entry Shares will be entitled to receive the Merger Consideration.

Specific Performance; Jurisdiction (page 62)

The parties to the Merger Agreement are entitled to an injunction or injunctions, or any other appropriate form of equitable relief, to prevent breaches of the Merger Agreement and to enforce specifically the performance of the terms and provisions of the Merger Agreement, without the necessity of proving actual damages or the inadequacy of monetary damages as a remedy (and each party to the Merger Agreement has waived any requirement for the securing or posting of any bond in connection with such remedy), this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties to the Merger Agreement has agreed not to assert that a remedy of specific enforcement is unenforceable, invalid or contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy for any such breach. Each party to the Merger Agreement has agreed to irrevocably submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, only if such court declines to accept jurisdiction over a particular matter, then in the United States District Court for the District of Delaware or, if jurisdiction is not then available in the United States District Court for the District of Delaware (but only in such event), then in any Delaware state court sitting in New Castle County) and any appellate court from any of such courts (the “Chosen Courts”) for the purpose of any proceeding arising out of or relating to the Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement and has agreed that all claims with respect to such proceeding may be heard and determined exclusively in such court. The parties to the Merger Agreement have agreed that a final trial court judgment in any such proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

Appraisal Rights (page 64 and Annex C)

Pursuant to Section 262 of the DGCL, holders of shares of Company Common Stock (other than the Majority Stockholders) have the right to demand an appraisal of, and be paid the “fair value” of, their shares of Company Common Stock (as determined by the Delaware Court of Chancery), together with interest, if any, on the amount determined to be the fair value, instead of receiving the per share Merger Consideration if the Merger is completed, but only if they strictly comply with the procedures and requirements set forth under Section 262 of the DGCL. The judicially determined fair value under Section 262 could be greater than, equal to or less than the $47.50 per share that our stockholders are entitled to receive in the Merger. In order to exercise your appraisal rights, you must submit a written demand for an appraisal of your shares no later than 20 days after the date of mailing of this notice and the accompanying information statement, which mailing date is May 25, 2021, and precisely comply with other procedures set forth under Section 262 of the DGCL. In addition, even if you comply with such procedures in seeking to exercise your appraisal rights in connection with the Merger, the Delaware Court of Chancery will dismiss any such appraisal proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares of Company Common Stock entitled to appraisal exceeds 1% of the outstanding shares of Company Common Stock, or (2) the value of the consideration provided in the Merger for such total number of shares of Company Common Stock exceeds $1 million.

 

 

    

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For a more complete discussion of these procedures, see the section entitled “Appraisal Rights” beginning on page 64 and the provisions of Delaware law that grant appraisal rights and govern such procedures attached as Annex C. We urge you to read these provisions carefully and in their entirety. Moreover, due to the complexity of the procedures for exercising the right to demand appraisal, stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to comply strictly with all of the requirements of Section 262 may result in loss of the right of appraisal.

Transaction Litigation (page 41)

As of the filing of this Information Statement, the Company is not aware of any complaints filed or litigation pending related to the Merger.

Market Information and Dividends (page 63)

Shares of Company Common Stock are listed on the NASDAQ under the trading symbol “PPD”. As of May 21, 2021, 351,195,675 shares of Company Common Stock were issued and outstanding, held by approximately 53 stockholders of record. Since the date of our initial public offering we have not paid dividends on outstanding Company Common Stock. The terms of the Merger Agreement do not allow us to declare or pay a dividend between April 15, 2021 and the earlier of the consummation of the Merger or the termination of the Merger Agreement.

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER

 

QUESTIONS AND ANSWERS ABOUT THE MERGER

The following questions and answers are intended to briefly address commonly asked questions as they pertain to the Merger Agreement and the Merger. These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the “Summary” beginning on page 1 and the more detailed information contained elsewhere in this information statement, the annexes to this information statement and the documents referred to or incorporated by reference in this information statement, each of which you should read carefully. You may obtain additional information, which is incorporated by reference in this information statement, without charge by following the instructions in “Where You Can Find More Information” beginning on page 71.

 

Q:

What is the proposed transaction and what effects will it have on the Company?

 

A:

The proposed transaction is the acquisition of the Company by Thermo Fisher pursuant to the Merger Agreement. Once the closing conditions under the Merger Agreement have been satisfied or waived and subject to the other terms and conditions in the Merger Agreement, Merger Sub will merge with and into the Company. The Company will be the surviving corporation of the Merger and a wholly-owned subsidiary of Thermo Fisher, and the Company will cease to be an independent publicly traded company.

 

Q:

What will I receive in the Merger?

 

A:

Upon completion of the Merger and subject to the terms and conditions in the Merger Agreement, and subject to your compliance with the letter of transmittal delivered to you by the paying agent after the closing as further described under “The Merger Agreement — Procedures for Receiving Merger Consideration” beginning on page 45, you will receive the Merger Consideration, $47.50 in cash, without interest and less any required withholding taxes, for each share of Company Common Stock that you own, unless you properly exercise, and do not withdraw, waive or fail to perfect, appraisal rights under Section 262 of the DGCL. For example, if you own 100 shares of Company Common Stock, you will receive $4,750.00 in cash in exchange for your shares of Company Common Stock without interest and less any required withholding taxes. Upon completion of the Merger, subject to the rights of certain Option, RSU and PSU holders (described below), you will not own any equity in the surviving corporation.

 

Q:

What happens to Options, RSUs and PSUs if the Merger is completed?

 

A:

At the Effective Time, each vested Option (including any Option that vests as a result of the Merger) will generally be canceled and converted into the right to receive the sum of (i) (A) the Merger Consideration less the applicable exercise price multiplied by (B) the number of shares of Company Common Stock subject to such Option and (ii) any remaining option bonus payments in respect of the Company’s May 2019 dividend recapitalization attributable to each such Option. At the Effective Time, each RSU that is held by a non-employee director of the Company (whether vested or unvested) will be canceled and converted into the right to receive (i) the Merger Consideration multiplied by (ii) the number of shares of Company Common Stock subject to such RSU. At the Effective Time, each unvested Option, each RSU (other than any RSU held by a non-employee director of the Company) and each PSU will generally be canceled and converted, based on an exchange ratio that preserves the award’s value, into an equity award of Thermo Fisher with substantially the same terms and conditions, including vesting terms and conditions and treatment in connection with certain terminations of employment consistent with the Company’s applicable termination policy (except that any PSU will generally convert based on the greater of target and actual performance and will no longer be subject to performance-based vesting conditions).

 

Q:

When do you expect the Merger to be completed?

 

A:

We are working to complete the Merger as quickly as possible. We currently expect to complete the Merger promptly after all of the conditions to the Merger have been satisfied or waived and subject to the other terms and conditions in the Merger Agreement. Completion of the Merger is currently expected to occur by the end of 2021, although the Company cannot assure completion by any particular date, if at all.

 

Q:

What happens if the Merger is not completed?

 

A:

If the Merger is not completed for any reason, stockholders will not receive any payment for their shares of Company Common Stock in connection with the Merger, and Options, RSUs and PSUs will remain outstanding and the holding restrictions applicable to each restricted stock unit, none of which are outstanding, will remain in place. Instead, the Company will remain a publicly traded company, and shares of Company Common Stock will continue to be traded on the NASDAQ.

 

 

    

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QUESTIONS AND ANSWERS ABOUT THE MERGER

 

Q:

Why am I not being asked to vote on the Merger?

 

A:

Applicable Delaware law and the Company’s certificate of incorporation require the adoption of the Merger Agreement by the holders in the aggregate of a majority of the outstanding shares of Company Common Stock entitled to vote in order to effect the Merger. The Company’s certificate of incorporation permits stockholders to act by written consent in certain circumstances, including in connection with the approval of transactions such as the Merger. The requisite stockholder approval was obtained immediately following the execution of the Merger Agreement on April 15, 2021, when the Written Consent was delivered by the Majority Stockholders, which owned shares of Company Common Stock constituting approximately 60% of the issued and outstanding shares of Company Common Stock on that date. Therefore, your vote is not required and is not being sought. We are not asking you for a proxy, and you are requested not to send us a proxy.

 

Q:

Why did I receive this information statement?

 

A:

Applicable laws and securities regulations require us to provide you with notice of the Written Consent that was delivered by the Majority Stockholders, as well as other information regarding the Merger, even though your vote or consent is neither required nor requested to adopt or authorize the Merger Agreement or complete the Merger. This information statement also constitutes notice to you of the availability of appraisal rights in connection with the Merger under Section 262 of the DGCL, a copy of which is attached to this information statement as Annex C.

 

Q:

Did the Board approve and recommend the Merger Agreement?

 

A:

Yes. After careful consideration, the Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in the best interests of the Company and the stockholders of the Company, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated hereby, including the Merger, (iii) resolved to recommend that the holders of Company Common Stock adopt the Merger Agreement and (iv) directed that the Merger Agreement be submitted to the Company’s stockholders for adoption by the Company’s stockholders entitled to vote thereon. For a discussion of the factors that the Board considered in determining to approve and recommend the Merger Agreement, please see “The Merger — Recommendation of the Board; Reasons for the Merger” beginning on page 22.

 

Q:

What happens if I sell my shares before completion of the Merger?

 

A:

If you transfer your shares of Company Common Stock before consummation of the Merger, you will have transferred the right to receive the Merger Consideration and lose your appraisal rights. In order to receive the Merger Consideration or exercise appraisal rights, you must hold your shares through the Effective Time of the Merger.

 

Q:

How do I surrender my Book-Entry Shares held by PPD’s transfer agent, Broadridge Financial Solutions, Inc.?

 

A:

Thermo Fisher will direct the paying agent to mail to each holder of record of Book-Entry Shares instructions for use in effecting the surrender of Book-Entry Shares in exchange for the Merger Consideration. Upon the paying agent’s receipt of an “agent’s message” (or such other evidence as the paying agent may reasonably request), the holder of such Book-Entry Share will be entitled to receive the Merger Consideration in exchange for each share of Company Common Stock represented by such Book-Entry Share and such surrendered Book-Entry Share will be canceled.

 

Q:

What happens to my shares of Company Common Stock held by my broker?

 

A:

Your broker generally will handle cashing out all shares of Company Common Stock that you hold in your brokerage account after the closing of the Merger has occurred. You should direct any specific questions on this to your broker.

 

Q:

Is the Merger subject to the fulfillment of certain conditions?

 

A:

Yes. Before the Merger can be completed, the Company, Thermo Fisher and Merger Sub must fulfill or, if permissible, waive several closing conditions. If these conditions are not satisfied or waived, the Merger will not be completed. See “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 57.

 

Q:

Am I entitled to exercise appraisal rights instead of receiving the Merger Consideration for my shares?

 

A:

Yes. Under Section 262 of the DGCL, stockholders who did not provide a consent to the adoption of the Merger Agreement (i.e., stockholders other than the Majority Stockholders) are entitled to exercise appraisal rights in connection with the Merger with respect to their shares of Company Common Stock if they meet certain conditions and comply with the applicable statutory procedures for demanding and perfecting appraisal rights and do not subsequently validly withdraw or lose such rights. See the section in this information statement entitled “Appraisal Rights” beginning on page 64.

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER

 

Q:

What happens if a third party makes an offer to acquire the Company before the Merger is completed?

 

A:

If prior to obtaining the Written Consent, the Company or any of its representatives had received a bona fide, written Company Takeover Proposal, then in response to such Company Takeover Proposal the Company could have engaged in or otherwise participated in discussions or negotiations with such person or group and its representatives if the Company Board had determined in good faith that such Company Takeover Proposal constituted or would reasonably be expected to lead to a Superior Proposal and that the failure to take such action would reasonably have been expected to be inconsistent with the Company’s directors’ fiduciary duties under applicable law (as further described in “The Merger Agreement — Superior Proposal and Change of Recommendation” beginning on page 60). The Company obtained the Written Consent on April 15, 2021, thus extinguishing the Company’s rights with respect to Company Takeover Proposals.

 

Q:

Will I owe taxes as a result of the Merger?

 

A:

The exchange of Company Common Stock pursuant to the Merger will be a taxable transaction for United States federal income tax purposes. Therefore, a United States Holder receiving cash in the Merger generally will recognize capital gain or loss for United States federal income tax purposes in an amount equal to the difference between (x) the amount of cash the United States Holder received (determined before deduction of any applicable withholding taxes) and (y) the adjusted tax basis of the surrendered shares of Company Common Stock.

A Non-United States Holder will generally not be subject to United States federal income tax on any gain resulting from the exchange of Company Common Stock pursuant to the Merger, unless such holder has certain connections to the United States, but the Merger could be a taxable transaction to such holder under non-United States tax laws applicable to such holder.

Holders of Company Common Stock should read the section entitled “The Merger — Material United States Federal Income Tax Consequences of the Merger” beginning on page 41 for a more detailed description of the United States federal income tax consequences of the Merger. Tax matters can be complicated, and the tax consequences of the Merger to you will depend on your particular situation. Holders are urged to consult their own tax advisors about the United States federal, state, local and foreign tax consequences of the Merger.

 

Q:

Where can I find more information about the Company?

 

A:

We file periodic reports, proxy statements and other information with the SEC. You may read and copy this information at the SEC’s public reference facilities. Please call the SEC at (800) SEC-0330 for information about these facilities. This information is also available on the website maintained by the SEC at www.sec.gov. For a more detailed description of the available information, please refer to “Where You Can Find More Information” beginning on page 71.

 

Q:

Who can help answer my other questions?

 

A:

If you have more questions about the Merger, please contact our Investor Relations Department at (910) 251-0081. If your broker holds your shares, you should call your broker for additional information.

 

 

    

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This information statement, and the documents to which we refer you in this information statement, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, without limitation, statements regarding forecasts and projections as described in “The Merger — Certain Company Financial Forecasts” beginning on page 30, which are subject to the “safe harbor” created by those sections. Such forward-looking statements reflect our current views with respect to, among other things, the following: our proposed merger with Thermo Fisher, our current expectations and anticipated results of operations, our financial performance, the impact from the novel coronavirus disease (“COVID-19”) pandemic, the continued reliance of the biopharmaceutical industry on outsourcing to contract research organizations, the continued growth in research and development spending in the biopharmaceutical industry, estimated growth rates in addressable markets, and our ability to effectively recruit, train, develop and retain talented individuals. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such.

These statements often include words such as “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and other similar expressions. These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Accordingly, there are, or will be, important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at this time, including the impact from the COVID-19 pandemic. The forecasts and projections by the Company’s management included in this information statement reflect assumptions and estimates by management of the Company, many of which are driven by factors beyond the control of the Company, and it can be expected that one or more of them will not materialize as expected or will vary significantly from actual results. Accordingly, you should not place undue reliance on these forecasts or any other projections or forward-looking statements in this information statement, which are likewise subject to numerous uncertainties. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, actual results might differ materially from those expressed in the forward-looking statements. Those risks include, without limitation:

 

 

uncertainties associated with the proposed merger with Thermo Fisher;

 

 

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

 

the inability to complete the proposed Merger due to the failure to satisfy conditions to completion of the proposed merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed Merger;

 

 

risks related to disruption of management’s attention from our ongoing business operations due to the proposed Merger;

 

 

the effect of the announcement of the proposed Merger on our relationships with our customers, employees, operating results and business generally;

 

 

the risk that the proposed Merger will not be consummated in a timely manner;

 

 

the costs of the proposed Merger if the proposed Merger is not consummated;

 

 

restrictions imposed on our business during the pendency of the proposed Merger;

 

 

potential litigation instituted against us or our directors challenging the proposed Merger;

 

 

any failure of our backlog to accurately predict or convert into future revenue;

 

 

the fact that our customers can terminate, delay or reduce the scope of our contracts with them upon short notice or with no notice;

 

 

the impact of industry, customer and therapeutic area concentration;

 

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consolidation amongst our customers, and the potential for rationalization of the combined drug development pipeline, resulting in fewer products in clinical development;

 

 

our ability to accurately price our contracts and manage our costs associated with performance of such contracts;

 

 

any failures in our information and communication systems, including cybersecurity breaches, impacting us or our customers, clinical trial participants or employees;

 

 

our dependence on our technology network, and the impact from upgrades to the network;

 

 

any failure to perform services in accordance with contractual requirements, regulatory standards and ethical standards;

 

 

our ability to access clinical research sites, attract suitable investigators or enroll a sufficient number of patients (including as a result of the COVID-19 pandemic) for our customers’ clinical trials;

 

 

any failure by us to comply with numerous privacy laws;

 

 

our ability to keep pace with rapid technological changes that could make our services less competitive or obsolete;

 

 

our ability to recruit, retain and motivate key personnel, including the loss of any key executive who becomes seriously ill with COVID-19;

 

 

our dependence on third parties for critical goods and support services, including a significant impact from the COVID-19 pandemic on our suppliers;

 

 

any violation of laws, including laws governing the conduct of clinical trials or other biopharmaceutical research, and anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and the United Kingdom Bribery Act of 2010;

 

 

competition between our existing and potential customers and the potential negative impact on our business;

 

 

our management of business restructuring transactions and the integration of acquisitions;

 

 

risks related to the drug and medical device development services industry that could result in potential liability that could affect our business, reputation and financial condition;

 

 

any failure of our insurance to cover the potential liabilities, including indemnification obligations, associated with the operation of our business and provision of services and changes to our insurance coverage;

 

 

our use of biological and hazardous materials, which could violate law or cause injury or death, resulting in liability;

 

 

international or U.S. economic, currency, political and other risks, such as those from the COVID-19 pandemic;

 

 

disruptions to our operations by the occurrence of a natural disaster, pandemic (such as the COVID-19 pandemic), or other catastrophic events;

 

 

the current and uncertain future impact from the COVID-19 pandemic on our business, growth, reputation, prospects, financial condition, results of operations (including components of our financial results), cash flows and liquidity;

 

 

changes in tax laws, such as U.S. tax reform, or interpretations of existing tax laws;

 

 

economic conditions, import/export implications and regulatory changes relating to the United Kingdom’s exit from the European Union;

 

 

any inability to adequately protect our intellectual property or the security of our systems and the data stored therein;

 

 

our investments in third parties, which are illiquid and subject to loss;

 

 

the substantial value of our goodwill and intangible assets, which we might not fully realize, resulting in impairment losses;

 

 

difficult and volatile conditions in the capital and credit markets and in the overall economy, including those caused by the COVID-19 pandemic;

 

 

the fragmented and highly competitive nature of the drug development services industry;

 

 

changes in trends in the biopharmaceutical industry, including decreases in research and development spending and outsourcing;

 

 

the potential adverse effect that the political, economic and/or regulatory influences and changes impacting the United States and international healthcare industry could have on both our customers’ and our businesses, including as a result of healthcare reform;

 

 

any patent or other intellectual property litigation we might be involved in;

 

 

 

    

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risks related to our indebtedness;

 

 

the significant influence certain stockholders have over us; and

 

 

other risks detailed in our filings with the SEC, including “Item 1A. Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2020 and in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021. See “Where You Can Find More Information” beginning on page 71.

We believe that the assumptions on which our forward-looking statements are based are reasonable. All subsequent written and oral forward-looking statements concerning the Merger or other matters addressed in this information statement and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Forward-looking statements speak only as of the date of this information statement or the date of any document incorporated by reference in this document. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

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THE PARTIES TO THE MERGER AGREEMENT

The Company

PPD, Inc.

929 North Front Street

Wilmington, North Carolina 28401

Phone: (910) 251-0081

PPD is a leading global contract research organization providing comprehensive, integrated drug development, laboratory and lifecycle management services. Our customers include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 47 countries and more than 27,000 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a firm commitment to quality to help customers bend the cost and time curve of drug development and optimize value in delivering life-changing therapies to improve health. For more information, visit www.ppd.com. Additional information regarding the Company is contained in our filings with the SEC, copies of which may be obtained without charge by following the instructions in “Where You Can Find More Information” beginning on page 71.

The Company Common Stock is listed with, and trades on, the NASDAQ under the symbol “PPD”.

Thermo Fisher

Thermo Fisher Scientific Inc.

168 Third Avenue

Waltham, Massachusetts 02451

Phone: (781) 622-1000

Thermo Fisher Scientific Inc. is the world leader in serving science, with annual revenue exceeding $30 billion. Thermo Fisher’s mission is to enable its customers to make the world healthier, cleaner and safer. Whether its customers are accelerating life sciences research, solving complex analytical challenges, improving patient diagnostics and therapies or increasing productivity in their laboratories, Thermo Fisher is here to support them. Thermo Fisher’s global team of more than 80,000 colleagues delivers an unrivaled combination of innovative technologies, purchasing convenience and pharmaceutical services through its industry-leading brands, including Thermo Scientific, Applied Biosystems, Invitrogen, Fisher Scientific, Unity Lab Services and Patheon. For more information, please visit www.thermofisher.com.

Shares of Thermo Fisher’s common stock are listed with, and trades on, the NYSE under the symbol “TMO”.

Merger Sub

Powder Merger Corp.

c/o Thermo Fisher Scientific Inc.

168 Third Avenue

Waltham, Massachusetts 02451

Phone: (781) 622-1000

Merger Sub, incorporated in the state of Delaware, was formed by Thermo Fisher solely for the purpose of completing the Merger with the Company. Merger Sub is a wholly-owned subsidiary of Thermo Fisher and has not carried on any business, conducted any operations or incurred any liabilities or obligations, other than those incidental to its formation and pursuant to the Merger Agreement, the performance of its obligations thereunder and matters ancillary thereto. Upon consummation of the Merger, Merger Sub will cease to exist.

 

 

    

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THE MERGER

Background of the Merger

Following an assessment of the Company’s past performance, future expectations and the market generally, the Company conducted an initial public offering of its common stock on February 5, 2020.

The Board regularly reviews and assesses the Company’s performance, risks, opportunities and strategy. Additionally, as part of its ongoing oversight and management of the Company’s business, from time to time the Board and the Company’s management review and evaluate strategic opportunities and alternatives available to the Company with a focus on maximizing stockholder value. Such opportunities and alternatives include, among other things, remaining as a stand-alone entity and pursuing organic growth initiatives, share repurchases, business combinations and similar transactions.

On February 25, 2021, Marc Casper, the Chief Executive Officer of Thermo Fisher, contacted David Simmons, Chairman of the Board and the Chief Executive Officer of the Company, informing Mr. Simmons of Thermo Fisher’s interest in a potential acquisition of the Company and previewed an offer letter that Thermo Fisher intended to send to the Company with respect to a potential acquisition of the Company. The Company’s per share stock price closed at $35.23 that day.

Also on February 25, 2021, Mr. Simmons contacted each of Allen Thorpe, a member of the Board affiliated with Hellman & Friedman LLC (“H&F”), and Stephen Wise, a member of the Board affiliated with The Carlyle Group (“Carlyle”), informing them of a potential offer letter forthcoming from Thermo Fisher. Separately, on February 25, 2021 Paul Parker, Head of Strategy and Corporate Development at Thermo Fisher, contacted Allen Thorpe to advise that Thermo Fisher intended to send an offer letter with respect to a potential acquisition of the Company.

The non-binding offer letter was sent to the Company by Thermo Fisher on February 25, 2021 (the “Offer Letter”). The Offer Letter confirmed Thermo Fisher’s desire to pursue a potential transaction to acquire the Company. Specifically, the Offer Letter proposed an acquisition of 100% of the Company’s outstanding capital stock for a per share price equal to $42.25, a 20% premium to the Company’s closing share price and 60-day VWAP as of February 25, 2021 and a 9% premium to the Company’s all-time high share price of $38.76 on February 16, 2021. The Offer Letter noted that Thermo Fisher was ready to commence diligence, with a focus on key areas, including (i) strategy for clinical development services and laboratory services, (ii) revenue and cost composition detail, (iii) historical and prospective organic revenue growth, (iv) historical operating margin trends and operational initiatives being implemented to facilitate future margin expansion and (v) 2021-2025 key targets and review of major risks to achieve such targets. The Offer Letter also noted that a transaction would not contain any financing contingency. In addition, the proposal set forth in the Offer Letter required that the holders of a majority of the shares of capital stock of the Company deliver a written consent immediately following execution of the purchase agreement for a transaction (the “Written Consent”) such that any transaction would not include a fiduciary out following the receipt of the Written Consent. The Offer Letter requested that the Company grant Thermo Fisher a period of exclusivity for negotiating a potential sale of the Company.

On February 26, 2021, representatives of each of the Board, the Company, H&F, Carlyle and Simpson Thacher & Bartlett LLP (“Simpson Thacher”), counsel to the Company, discussed the Offer Letter, including legal requirements with respect to a response to the Offer Letter. Later that day, the Offer Letter was posted to the Board of the Company (including observers to the Board of the Company).

On February 27, 2021, Mr. Simmons contacted a representative of J.P. Morgan to request a conflicts check in advance of a potential engagement of J.P. Morgan as financial advisor to the Company with respect to the Offer Letter. The Company has had a longstanding relationship with J.P. Morgan and retained J.P. Morgan to act as its financial advisor in connection with the proposed merger based on, among other factors, J.P. Morgan’s overall reputation and experience as an investment banking firm, its knowledge of the healthcare industry generally, and the Company’s business and operations in particular. On March 1, 2021, J.P. Morgan delivered a disclosure letter setting forth its past relationships with the Company, certain of its stockholders, and Thermo Fisher.

On March 1, 2021, the Board convened a special meeting to discuss and evaluate the Offer Letter. Representatives of senior management, J.P. Morgan and Simpson Thacher participated in the meeting. Mr. Simmons called the meeting to order and gave a summary of the Offer Letter and related discussions. Following Mr. Simmons’ opening remarks, representatives of Simpson Thacher reviewed with the Board its fiduciary duties and obligations in respect of the Offer Letter. The Board, after reviewing any potential conflicts of J.P. Morgan and reviewing the J.P. Morgan relationship disclosure letter, also formally engaged J.P. Morgan as financial advisor to the Company in connection with the Offer Letter and a potential transaction. Mr. Simmons then led a discussion regarding the Offer Letter. In particular, Mr. Simmons noted that the Company had met or exceeded its expectations in

 

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fiscal years 2018, 2019 and 2020, and was rated a “buy” or “strong buy” among all equity research analysts covering the Company. In addition, Mr. Simmons outlined an initial set of five-year base case and upside case forecasts that had been prepared by management. J.P. Morgan also presented to the Board regarding their preliminary analysis of the Offer Letter, including, among other things, analysis of prior Thermo Fisher acquisitions. Taking into account all information presented in the meeting and the related materials, the Board determined that the proposal set forth in the Offer Letter was not a sufficiently compelling offer to cause the Company to depart from its strategic plan or to otherwise engage in further discussions with Thermo Fisher.

Later on March 1, 2021, Mr. Simmons sent a response letter to Mr. Casper (the “Response Letter”). Consistent with the determinations of the Board, the Response Letter stated that the Company believed that the Offer Letter substantially undervalued the Company and its future prospects, and the Company declined to engage with Thermo Fisher on the terms set forth in the Offer Letter.

On March 2, 2021, Mr. Casper contacted Mr. Simmons to discuss the Offer Letter and the Response Letter. Mr. Simmons explained that the Response Letter reflected the Board’s view that the offer was not at a sufficient price level that would justify further engagement given the Company’s record of achieving performance expectations.

On March 4, 2021, Mr. Casper again contacted Mr. Simmons to preview a revised offer letter. Later that day, Thermo Fisher delivered a revised offer letter to the Company (the “Revised Offer Letter”). The Revised Offer Letter reiterated Thermo Fisher’s interest in an acquisition of the Company and increased the per share price offer for the Company to $44.00, a 25% premium to the Company’s closing share price and 60-day VWAP as of February 25, 2021, a 14% premium to the Company’s all-time high share price of $38.76 on February 16, 2021, and a $1.75 per share increase from the Offer Letter, based on the strong future prospects for the Company and recent events in the industry which Mr. Casper and Mr. Simmons believed were to the Company’s advantage, as discussed between Mr. Simmons and Mr. Casper on the March 2, 2021 call. The Revised Offer Letter reiterated that Thermo Fisher was ready to commence diligence, with a focus on the same key areas identified in the Offer Letter. The Revised Offer Letter also reiterated that a transaction would not contain any financing contingency and would require the Written Consent, and requested that the Company grant Thermo Fisher a period of exclusivity for negotiating a potential sale of the Company. The Revised Offer Letter was shared with the Board later that day.    

On March 7, 2021, the Company entered into an engagement letter with J.P. Morgan.

On March 8, 2021, the Board met, along with senior management and representatives of J.P. Morgan and Simpson Thacher, to discuss and consider the Revised Offer Letter. Mr. Simmons called the meeting to order, and updated the Board on events since the March 1, 2021 Board meeting. The discussion then turned to the Revised Offer Letter and a further review of the Company’s five-year strategy and financial model, including updated five-year Base Case and Upside Case forecasts prepared by management, as further described in “Certain Company Financial Forecasts” beginning on page 30 of this Information Statement. The Upside Case and the Base Case presented a forecasted Revenue and Adjusted EBITDA Pre-Share Compensation at or higher than the initial forecasts management had presented on March 1, 2021 (and such initial forecasts, as provided by management, did not include forecasts of Adjusted EBITDA Post-Share Based Compensation, Unlevered Free Cash Flows or Adjusted Earnings Per Share). Christopher Scully, the Company’s Chief Financial Officer, led the discussion with the Board. Representatives of J.P. Morgan then provided a preliminary valuation analysis of the equity values per share of Company Common Stock based on the Base Case and Upside Case by applying various valuation analyses thereto and compared the same to the per share consideration proposed in the Revised Offer Letter. In addition, representatives of J.P. Morgan discussed process considerations, including other potential acquirors of the Company. Taking into account all information presented in the meeting and the related materials, the Board again determined that such proposal was not a sufficiently compelling offer to cause the Company to depart from its strategic plan. However, the Board nonetheless moved to form a Transaction Committee, consisting of Messrs. Simmons, Thorpe and Wise. The scope of the powers of the Transaction Committee was limited to negotiating a transaction with Thermo Fisher that achieved the maximum price that Thermo Fisher would pay. Any agreement on a transaction with Thermo Fisher continued to require the consideration and approval of the Board.

On March 9, 2021, the Company’s Transaction Committee of the Board met to discuss the process and other matters related to the Revised Offer Letter. In particular, the committee discussed potential alternative responses and negotiating strategies to the Company’s response to the Revised Offer Letter, including providing additional information to Thermo Fisher to support a higher price and the relative merits of each such approach. Later on March 9, 2021 Mr. Simmons contacted Mr. Casper to preview and discuss the Company’s planned response to the Revised Offer Letter. Throughout the next weeks during the progression of negotiations with Thermo Fisher, Mr. Simmons and the Transaction Committee kept the Board apprised of discussions with Thermo Fisher.

Following that discussion, on March 9, 2021 the Company sent Thermo Fisher their response (the “Revised Response Letter”) to the Revised Offer Letter. Consistent with the determinations of the Board, the Company’s response indicated that the Revised Offer Letter included a valuation materially less than was merited by the Company and its future prospects, and that the Company would continue to execute on its current strategy. The Revised Response Letter was shared with the Board on March 10, 2021.

 

 

    

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On March 10, 2021, Mr. Casper contacted Mr. Simmons to discuss the Revised Offer Letter and the Revised Response Letter, and Mr. Simmons indicated that the price set forth in the Revised Offer Letter was insufficient, but if Thermo Fisher committed to work toward a materially higher offer price, the Company would be willing to provide certain confidential information to support Thermo Fisher’s diligence efforts to determine whether to offer any such higher price, subject to entering into a customary non-disclosure agreement to facilitate the exchange of confidential information between the Company and Thermo Fisher in consideration of a potential transaction. Mr. Simmons did not agree to negotiate with Thermo Fisher on an exclusive basis.

During the period from March 10, 2021 until March 17, 2021 and in anticipation of a potential transaction, representatives of the Company and of Thermo Fisher had various communications regarding logistical matters relating to diligence access to facilitate a potential transaction, assuming that a sufficiently compelling offer would be presented by Thermo Fisher.

On March 18, 2021, the Company and Thermo Fisher executed a non-disclosure agreement. Such non-disclosure agreement included a standstill provision, the key provisions of which would automatically expire upon the Company entering into a definitive agreement with a third party relating to certain extraordinary transactions.

On March 19, 2021, the Company shared a diligence presentation with Thermo Fisher in advance of a management presentation by representatives of the Company to representatives of Thermo Fisher, Barclays Capital Inc. (“Barclays”) and Morgan Stanley & Co. LLC (“Morgan Stanley”), financial advisors to Thermo Fisher, and McKinsey & Company, Inc. United States (“McKinsey”), consultant to Thermo Fisher. In attendance at the management meeting were representatives of the Company and Thermo Fisher and the aforementioned advisors of Thermo Fisher. At this meeting, the representatives of the Company discussed (i) the Company’s overall strategy, (ii) a high-level summary of the Company’s recent financial performance and management’s key financial targets for the next five years and (iii) the potential sources of synergies in the event of a transaction between the Company and Thermo Fisher.

On March 22, 2021, the Company hosted further management meetings with representatives of Thermo Fisher, Barclays, Morgan Stanley and McKinsey. The meeting began with responses to a series of follow-up finance-related questions from the March 19, 2021 call before addressing human resources, information technology and related matters.

Later on March 22, 2021, the Board met, along with senior management and representatives of J.P. Morgan and Simpson Thacher, to discuss the status of developments related to the potential transaction with Thermo Fisher. Mr. Simmons called the meeting to order and provided an update of events since the most recent meeting of the Board on March 8, 2021. He summarized the discussions of the Transaction Committee (as established during the March 8, 2021 Board meeting) in relation to the Revised Offer Letter, and his subsequent discussions with Mr. Casper. Mr. Simmons then provided an overview of the management presentations between the Company and Thermo Fisher that had taken place on March 19, 2021 and March 22, 2021, including duration, content, attendees, and the nature of questions asked and answered. Mr. Simmons invited representatives of Simpson Thacher and J.P. Morgan to present to the Board on potential next steps. Representatives of Simpson Thacher provided an illustrative timeline of events, should Thermo Fisher provide a further revised offer which the Board determined sufficient to warrant continuation of engagement, such engagement including confirmatory due diligence and purchase agreement negotiation. Representatives of Simpson Thacher also explained various transaction structures that could be implemented, the advantages and disadvantages of each, and again reviewed the Board’s fiduciary duties and obligations. Representatives of J.P. Morgan then reviewed potential alternative acquirors of the Company.

On March 23, 2021, Mr. Casper contacted Mr. Simmons to discuss status of developments related to the potential transaction. Mr. Casper emphasized that Thermo Fisher continued to be interested in the potential transaction following the March 19, 2021 and March 22, 2021 management meetings. The discussion concluded with Mr. Casper indicating that some further diligence topics would be forthcoming, and Thermo Fisher intended to send a revised offer letter in the coming days. Later on March 23, 2021, the diligence questions referenced by Mr. Casper were delivered to the Company.

On March 24, 2021, the Company hosted management meetings with representatives of Thermo Fisher, Barclays, Morgan Stanley and McKinsey to discuss diligence matters, including the Company’s February results.

On March 26, 2021, the Company hosted further management meetings with representatives of Thermo Fisher, Barclays, Morgan Stanley and McKinsey to further discuss diligence matters.

On March 29, 2021, Mr. Casper contacted Mr. Simmons to preview Thermo Fisher’s revised offer letter. Mr. Casper also indicated that Thermo Fisher would withdraw from transaction discussions with the Company if any leaks with respect to a potential transaction occurred. Following that call, Thermo Fisher sent the Company a second revised offer letter (the “Second Revised Offer Letter”). The Second Revised Offer Letter reiterated Thermo Fisher’s interest in the Company and increased the per share acquisition price to $47.00, a 33% premium to the Company’s closing share price and 60-day VWAP as of February 25, 2021, a 21%

 

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premium to the Company’s all-time high share price of $38.76 on February 16, 2021, and a $3.00 per share increase from the Revised Offer Letter, again with no financing contingency. The Second Revised Offer Letter once again included a requirement for the Written Consent. The Second Revised Offer Letter was shared with the Board on March 29, 2021.

On March 29, 2021, the Board met, along with senior management and representatives of J.P. Morgan and Simpson Thacher, to consider the Second Revised Offer Letter. Mr. Simmons called the meeting to order and gave an update of events since the March 22, 2021 Board meeting. Representatives from Simpson Thacher reviewed the Board’s fiduciary duties and obligations, including in respect of the proposed Written Consent. Representatives of J.P. Morgan then reviewed certain financial considerations of the Second Revised Offer Letter. Upon consideration of the Second Revised Offer Letter, the Board determined that the per share price set forth in the Second Revised Offer Letter warranted further engagement with Thermo Fisher to obtain the maximum price per share that Thermo Fisher would be willing to pay in a potential transaction. The Board then delegated the power to determine tactics and negotiation of a potential transaction to the Transaction Committee, subject to obtaining the approval of the Board prior to agreeing to any transaction.

On March 30, 2021, Mr. Simmons contacted Mr. Casper to express that the proposed acquisition price of $47.00 per share would require further improvement in order to result in an acceptable transaction. Mr. Simmons updated the Board with respect to this discussion. Later on March 30, 2021, Mr. Casper contacted Mr. Simmons and stated that the Thermo Fisher team was prepared to conduct its confirmatory diligence review of the Company. He also confirmed that he understood the $47.00 per share acquisition price was not acceptable to the Board and that, therefore, further discussion of the price per share would be required by the Board but reiterated that Thermo Fisher’s offer was $47.00 per share. Mr. Simmons again updated the Board on the discussion with Mr. Casper.

On March 30, 2021, the Company opened a detailed virtual dataroom to facilitate diligence and a “Clean Team” confidentiality agreement was executed.

On April 1, 2021, Cravath, Swaine and Moore LLP (“Cravath”), counsel to Thermo Fisher, delivered a draft merger agreement to the Company and Simpson Thacher (the “Initial Draft Merger Agreement”). The Initial Draft Merger Agreement, among other things, (i) contemplated an obligation to deliver the Written Consent by 8:30 am New York City time on the date immediately following the date of the execution of the Merger Agreement, (ii) provided for a termination fee paid by the Company in the event that the Company entered into a “superior proposal” between signing and delivery of the Written Consent but did not propose the amount of such termination fee, and (iii) included the receipt of all regulatory approvals, whether or not specified as of the execution of the merger agreement, as a closing condition and provided for Thermo Fisher only agreeing to take remedial actions to obtain regulatory approvals if such actions would not reasonably be expected to have a material impact on the benefits Thermo Fisher reasonably expects to derive from the transaction.

From April 1, 2021 through April 9, 2021, the Company hosted a series of meetings and presentations to progress Thermo Fisher’s due diligence with respect to a potential transaction, including site visits, finance discussions and information technology discussions. In addition, there were preliminary discussions regarding the Initial Draft Merger Agreement during this period.

A draft of the Written Consent was delivered to Simpson Thacher by Cravath on April 8, 2021. Such initial draft provided that the signatories thereto would approve the merger agreement and the transactions contemplated thereby, waive appraisal rights, release certain potential claims and not transfer shares of the Company prior to Closing other than certain permitted transfers.

On April 8, 2021, the Board held a special meeting. Representatives of senior management, J.P. Morgan and Simpson Thacher were in attendance. Mr. Simmons called the meeting to order and gave an update of events since the March 29, 2021 Board meeting, including with respect to the advancement of Thermo Fisher’s due diligence and the transaction documentation. Mr. Simmons invited representatives of Simpson Thacher and J.P. Morgan to present to the Board on process considerations, including the potential for outreach to possible alternative acquirors of the Company. In addition, the J.P. Morgan materials included an updated preliminary valuation analysis of the equity values per share of Company Common Stock based on the Base Case and Upside Case by applying various valuation analyses thereto and compared the same to the per share consideration proposed in the Second Revised Offer Letter. Representatives of Simpson Thacher discussed alternative approaches to a pre-signing market check and the fiduciary out construct proposed by Thermo Fisher, risk sharing and other considerations. Representatives of Simpson Thacher and J.P. Morgan then discussed the merits of and risks associated with potential alternative acquirors of the Company, including, among others, the strategic fit of the Company for such potential acquirors (as well as Thermo Fisher), such potential acquirors’ ability to pay the consideration in all cash, taking into account their available cash and ability to obtain debt financing (and risks associated therewith) and the need by a potential acquiror to use stock to pay the consideration in whole or in part, the need by a potential acquiror to obtain the approval of its stockholders (and the risks associated therewith), potential antitrust and other regulatory considerations arising in connection with a transaction with such acquirors (and the risks associated therewith) and the risks related

 

 

    

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to sharing of competitively sensitive information regarding the Company with any such potential acquiror. In addition, the potential for any leaks and Thermo Fisher’s reaction to an extended process was discussed. Following these discussions, and taking into account the risks and other considerations presented to the Board, the Board unanimously resolved to instruct J.P. Morgan to contact potential acquirors of the Company and gauge their interest in a potential transaction prior to the execution of a definitive merger agreement with Thermo Fisher. Taking into account the merits, risks and considerations of reaching out to potential acquirors, the Board approved outreach by J.P. Morgan to four potential alternative strategic acquirors.

Over the course of April 8 and 9, 2021, J.P. Morgan reached out to the four potential alternative strategic acquirors that the Board had directed it to contact. J.P. Morgan provided each of these parties with background on the Company and indicated that there was an opportunity for a potential near-term strategic transaction, and inquired as to the potential interest of each party in engaging in diligence and other discussions with the Company towards a potential transaction. Over the course of April 9, 2021 through April 12, 2021, all four of these parties informed J.P. Morgan that they were not interested in engaging in diligence and other discussions with the Company towards a potential transaction.

Also on April 9, 2021, Mr. Simmons contacted Mr. Casper to discuss process and diligence matters. Mr. Simmons reiterated that the Company was not in favor of the Written Consent and Mr. Casper emphasized that Thermo Fisher would withdraw from transaction discussions with the Company if any leaks with respect to a potential transaction occurred and reiterated Thermo Fisher’s offer was premised on receiving the Written Consent. Finally, they discussed a few diligence matters. The Board was updated on this discussion on April 10, 2021.

Also on April 9, 2021, Simpson Thacher delivered a revised draft merger agreement to Cravath (the “Revised Merger Agreement”). The Revised Merger Agreement among other things, (i) contemplated the Company soliciting votes to approve the transaction by proxy and at a special meeting of Company stockholders, (ii) provided for a termination fee equal to 2% of equity value in the event that the Company entered into a “superior proposal” between signing and obtaining stockholder approval, and (iii) limited the regulatory closing condition to identified approvals to be agreed among the parties and included a “hell or high water” regulatory efforts standard.

On April 10, 2021, representatives from Morgan Stanley contacted representatives from J.P. Morgan. In particular, Morgan Stanley noted that the Revised Merger Agreement proposed by the Company was not acceptable to Thermo Fisher and that prior to any further discussion on price, the Company would need to agree to the Written Consent structure and show meaningful movement on the proposed language in the merger agreement regarding required regulatory approvals. Also on April 10, 2021, Cravath contacted Simpson Thacher to relay the same message.

On April 11, 2021, Cravath delivered a form restrictive covenant agreement to be executed by certain executives providing for, among other things, a five-year non-competition requirement. Cravath explained that Thermo Fisher would require that each of Messrs. Simmons, Scully, William Sharbaugh, the Chief Operating Officer of the Company, and B. Judd Hartman, the Chief Administrative Officer of the Company execute such restrictive covenant agreement concurrently with signing. Cravath also indicated that Thermo Fisher would be requesting that Mr. Simmons enter into a consulting agreement with Thermo Fisher to provide certain consulting services for a short-term transitional period following the closing of the Merger.

Further on April 11, 2021, Simpson Thacher and Cravath discussed the Revised Merger Agreement. In particular, Cravath noted that Thermo Fisher would not proceed with a transaction without a requirement to deliver the Written Consent, and Simpson Thacher noted that the Board was not prepared to enter into a transaction with the level of regulatory closing risk proposed by Thermo Fisher.

Later on April 11, 2021, Cravath delivered a further revised merger agreement to Simpson Thacher (the “Further Revised Merger Agreement”). The Further Revised Merger Agreement (i) again contemplated the Written Consent, (ii) provided for a termination fee equal to 4% of equity value in the event that the Company entered into a “superior proposal” between signing and delivery of the Written Consent, and (iii) again included the receipt of all regulatory approvals, whether or not specified as of the execution of the merger agreement, as a closing condition and provided for Thermo Fisher taking limited remedial actions to obtain regulatory approvals, including divestitures involving assets or businesses of the Company and its Subsidiaries up to a specified level and certain commitments to supply and provide Thermo Fisher’s products and services on commercially reasonable terms to the Company’s competitors, (“Supply Commitments”).

On April 12, 2021, there were various discussions between representatives of the Company, Thermo Fisher, Cravath and Simpson Thacher to discuss the Further Revised Merger Agreement. In particular, the discussions focused on appropriately allocating regulatory closing risk among the Company and Thermo Fisher, the amount of the termination fee and the Written Consent. The parties also discussed the scope of the representations and warranties of the Company and the interim operating covenants.

 

 

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Also on April 12, 2021, Mr. Casper contacted Mr. Simmons to discuss senior leadership talent, the mark-up of the merger agreement and the restrictive covenant agreements. Mr. Casper noted that the restrictive covenant agreements were critical to Thermo Fisher and would be required by Thermo Fisher to enter into the potential transaction.

On April 12, 2021, the Board held a special meeting. Representatives of senior management, Simpson Thacher and J.P. Morgan were in attendance. At the meeting, Mr. Simmons called the meeting to order and provided a report to the Board regarding the status of negotiations with Thermo Fisher since the April 8, 2021 Board meeting. Mr. Simmons then turned the meeting over to representatives of J.P. Morgan for an update regarding the discussions with each of the four potential strategic acquirors, noting that none of the conversations resulted in a party expressing interest in engaging in diligence and other discussions with the Company towards a potential transaction. Representatives of Simpson Thacher then provided the Board with an update on the terms of the merger agreement, including with respect to (i) Thermo Fisher’s requirement that the Company’s Majority Stockholders deliver the Written Consent (ii) the amount of the termination fee, and (iii) the regulatory closing condition and commitments proposed by Thermo Fisher. In light of the discussions with other potential acquirors of the Company referenced by J.P. Morgan, the Board expressed its desire to obtain the maximum per share price Thermo Fisher would pay in a potential transaction.

Early in the morning on April 13, 2021, Simpson Thacher delivered a revised draft merger agreement to Cravath (the “April 13 Revised Merger Agreement”). The April 13 Revised Merger Agreement among other things, (i) bracketed the concept of the Written Consent as an open issue, (ii) provided for a termination fee equal to 3% of equity value in the event that the Company entered into a “superior proposal” between signing and obtaining stockholder approval, and (iii) again limited the regulatory closing condition to identified approvals to be agreed among the parties and provided for Thermo Fisher taking limited remedial actions to obtain regulatory approvals, including a greater level of potential divestitures and agreeing to Supply Commitments.

Throughout the day on April 13, 2021, there were various discussions between representatives of the Company, Thermo Fisher, Cravath and Simpson Thacher to discuss the merger agreement. In addition, in the evening on April 13, 2021, there was a discussion between representatives of the Company, Thermo Fisher, Cravath, Simpson Thacher and Arnold & Porter LLP, regulatory counsel to Thermo Fisher (“Arnold & Porter”), to address the status of Thermo Fisher’s analysis of the regulatory approvals necessary to consummate an acquisition of the Company. Arnold & Porter acknowledged that although its regulatory analysis was progressing, there were still certain jurisdictions for which the determinations of whether or not Thermo Fisher would be required to make a regulatory filing had not been finalized and were not likely to be finalized prior to execution of the merger agreement.

Throughout the day on April 14, 2021 until the execution of the merger agreement on April 15, 2021, the respective management teams of the parties, together with representatives of Simpson Thacher and Cravath and the parties’ financial advisors, discussed and negotiated the remaining open items in the merger agreement. In particular, the parties agreed to (i) a termination fee equal to 3% of equity value in the event that the Company entered into a “superior proposal” between signing and obtaining stockholder approval and (ii) a regulatory closing condition limited to obtaining approvals in identified jurisdictions and Thermo Fisher agreeing to take certain remedial actions to obtain regulatory approvals, including (1) divestitures, in order to obtain regulatory approvals that involve assets or businesses of the Company and its Subsidiaries that, in the aggregate, generated no more than 10% of the consolidated revenues of the Company and its Subsidiaries for the fiscal year ended December 31, 2020 and (2) agreeing to Supply Commitments, each as further described in the section entitled “The Merger Agreement”.

On April 14, 2021, an article was published in certain media outlets suggesting that the Company had been approached about a potential acquisition by Thermo Fisher.

On April 14, 2021, Mr. Casper contacted Mr. Simmons to deliver Thermo Fisher’s “best and final offer” of $47.50 per share, in a deal that required the Written Consent. Mr. Casper indicated that Thermo Fisher would discontinue all transaction discussions if this offer price was not acceptable to the Company. The Board was made aware of this communication.

On April 14, 2021, the Board held a special meeting. Representatives of senior management, Simpson Thacher and J.P. Morgan were in attendance. Mr. Simmons opened the meeting explaining that Thermo Fisher was committed to the acquisition at a per share price equal to $47.50, but only if the Company’s Majority Stockholders agreed to deliver the Written Consent. Members of the Board reconfirmed with management and representatives of J.P. Morgan that none of the four strategic potential counterparties had engaged in any further discussion regarding a potential acquisition of the Company and that no other unsolicited inbound inquiries had been received following the news reports earlier the same day regarding a potential acquisition of the Company by Thermo Fisher. Representatives of Simpson Thacher reviewed with the Board its fiduciary duties and obligations in respect of evaluating and approving a potential acquisition of the Company by Thermo Fisher. At the request of the Board, J.P. Morgan reviewed with the Board J.P. Morgan’s financial analysis of the Merger Consideration, and rendered its oral

 

 

    

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opinion to the Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Merger Consideration to be paid to the holders of shares of Company Common Stock in the Merger is fair, from a financial point of view, to such holders. The financial forecasts relied on for purposes of the J.P. Morgan opinion included an updated five-year Final Base Case and Final Upside Case forecasts prepared by management, as further described in “Certain Company Financial Forecasts” beginning on page 30 of this Information Statement. The Final Upside Case and the Final Base Case were each updated to account for certain stock based compensation expense changes based on the latest actual year to date grant activity. J.P. Morgan subsequently confirmed its April 14, 2021 oral opinion by delivering its written opinion to the Board, dated April 14, 2021, that, as of such date, the Merger Consideration to be paid to the holders of shares of Company Common Stock in the Merger is fair, from a financial point of view, to such holders. For a detailed discussion of J.P. Morgan’s opinion, please see below under “The Merger — Opinion of J.P. Morgan Securities LLC.” Representatives of Simpson Thacher then provided the Board with a summary of the key terms of the merger agreement and described the resolutions before the Board. After further discussion by the Board, including further discussion of the resolutions to be adopted by the Board, the Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of the Company and its stockholders, (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger, (iii) recommended that the Merger Agreement be submitted to the stockholders of the Company and (iv) recommended that the stockholders of the Company adopt the Merger Agreement. In addition, the Company approved an amendment to the J.P. Morgan engagement letter providing for the fee arrangement discussed under “The Merger — Opinion of J.P. Morgan Securities LLC” on page 26.

In addition, on April 14, 2021, the parties finalized the form of Written Consent, and each of Messrs. Simmons, Sharbaugh, Scully and Hartman agreed to restrictive covenant agreements with Thermo Fisher, effective upon closing of the Merger, including non-compete terms of 3.5 years. The terms of a consulting agreement with Mr. Simmons were not agreed prior to signing and were agreed on May 14, 2021, as further described under “The Merger — Interests of Our Directors and Executive Officers in the Merger — Consulting Agreement between Thermo Fisher and Certain Executive Officers” beginning on page 33.

Early in the morning on April 15, 2021, Cravath sent revised drafts of the transaction documents to Simpson Thacher, consistent with the terms approved by the Board, including a revised merger agreement which included, among other things, (i) a per share price of $47.50 and (ii) the Written Consent. Simpson Thacher and Cravath finalized the transaction documents consistent with the terms approved by the Board.

On April 15, 2021, the Company and Thermo Fisher executed the Merger Agreement. Shortly after execution of the Merger Agreement, the Majority Stockholders delivered the Written Consent. The Company and Thermo Fisher issued a joint press release announcing the entry into the Merger Agreement before the opening of the U.S. stock exchanges on April 15, 2021.

Recommendation of the Board; Reasons for the Merger

After careful consideration, the Board unanimously:

 

 

determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of the Company and its stockholders;

 

 

approved the Merger Agreement and the transactions contemplated thereby, including the Merger;

 

 

recommended that the Merger Agreement be submitted to the stockholders of the Company; and

 

 

recommended that the stockholders of the Company adopt the Merger Agreement.

In the course of the Board making such determinations, the Board consulted with management of the Company, as well as the Company’s legal and financial advisors, and considered the following potentially positive factors, which are not intended to be exhaustive and are not presented in any relative order of importance:

 

 

Merger Consideration: The Board considered the $47.50 per share in cash to be paid as merger consideration in relation to (i) the Board’s estimate of the current and future value of the Company as an independent entity, (ii) the multiple of enterprise value to EBITDA implied by such price and (iii) the market price of the Company Common Stock on February 25, 2021, the trading day on which the Company was approached about a possible acquisition of the Company.

 

 

Negotiations with Thermo Fisher: The Board considered its belief that, after extensive negotiations and several increases in price by Thermo Fisher, the Company obtained the highest price and most favorable terms to which Thermo Fisher was willing to agree.

 

 

Strategic Alternatives: The Board considered the likelihood and potential benefits of other potential strategic or other business combination transactions (including with alternative acquirors) and continuing as an independent company.

 

 

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The Board considered the potential values, benefits, risks and uncertainties facing the Company’s stockholders associated with possible strategic alternatives to the Merger (including possible alternative business combinations and scenarios involving the possibility of remaining independent), and the timing, risks and likelihood of accomplishing such alternatives, taking into account the Board’s belief that there were likely no other potential strategic purchasers that would be reasonably likely to engage in a transaction in the near term at a price greater than the price being offered by Thermo Fisher and no financial sponsors that would be reasonably likely to make an offer at a price greater than the price being offered by Thermo Fisher.

 

   

The Board also considered the fact that the Company had not been contacted regarding any alternative acquisition proposals since the initial contact from Thermo Fisher in February 2021, including following the publication of an article suggesting that the Company had been approached about a potential transaction by Thermo Fisher on April 14, 2021, and that none of the potential strategic acquirors contacted by J.P. Morgan had expressed interest in engaging in discussions or negotiations for a potential transaction.

 

   

The Board also considered that, if the Company did not enter into the Merger Agreement with Thermo Fisher, there could be a considerable period of time before the trading price of the Company’s Common Stock would reach and sustain the per share merger consideration of $47.50, as adjusted for present value (even assuming full realization of the management projections).

 

   

The Board also considered the risk that engaging in a prolonged sale process could have resulted in the loss of an opportunity to consummate a transaction with Thermo Fisher and distracted senior management from implementing the Company’s strategic plan.

 

   

While the Board remained supportive of the Company’s strategic plan and optimistic about its prospects on a stand-alone basis, the Board considered the Company’s future prospects if the Company was to remain an independent public company, including the competitive landscape, the business, financial and execution risks and the Company’s relationships with customers, providers and suppliers and the potential impact of those factors on the trading price of Company Common Stock (which cannot be quantified numerically).

 

   

Based on the value, risk allocation, timing and other terms and conditions negotiated with Thermo Fisher, the Board ultimately determined that the acquisition by Thermo Fisher is more favorable to the Company’s stockholders than any other strategic alternative reasonably available to the Company, including continuing as an independent public company.

 

 

Premium to trading price: The Board considered that the Merger Consideration of $47.50 per share to be received by the Company stockholders in the Merger represents a significant premium over the market prices at which shares of Company Common Stock traded prior to the announcement of the execution of the Merger Agreement, including the fact that the Merger Consideration of $47.50 represented a premium of approximately:

 

   

34.8% over the closing price of shares of Company Common Stock as of February 25, 2021, the day that the Company was approached about a potential transaction by Thermo Fisher,

 

   

23.8% over the closing price of shares of Company Common Stock as of April 13, 2021, the day before the publication of an article suggesting that the Company had been approached about a potential acquisition by Thermo Fisher (the “Unaffected Date”),

 

   

29.8% over the volume weighted average price of the Company Common Stock during the 60 days prior to the Unaffected Date, and

 

   

75.9% over the Company’s initial public offering price on February 5, 2020.

 

 

Cash consideration: The Board considered the fact that the Merger Consideration is all cash, which provides certainty and immediate liquidity and value to the Company’s stockholders, enabling the Company’s stockholders to realize value that has been created at the Company while eliminating long-term business and execution risk.

 

 

Majority Stockholder support: The Board considered the support of the Majority Stockholders, which collectively controlled approximately 60% of the aggregate outstanding shares of Company Common Stock as of April 15, 2021 and which will be receiving the same form and amount of Merger Consideration for their shares of Company Common Stock as all other stockholders of the Company.

 

 

Thermo Fisher’s reputation: The Board considered the business reputation, experience and capabilities of Thermo Fisher and its management.

 

 

Fairness opinion: The Board considered the opinion of J.P. Morgan, rendered to the Board on April 14, 2021, which was subsequently confirmed by delivery of a written opinion dated April 14, 2021 that, as of such date and based upon and subject to the assumptions made, matters considered and limits on the review undertaken by J.P. Morgan in preparing its opinion, the Merger Consideration to be paid to the holders of shares of Company Common Stock pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. The J.P. Morgan opinion is more fully described below under the captions “The Merger — Opinion of J.P. Morgan Securities LLC” beginning on page 26 and the full text of the J.P. Morgan opinion is attached to this information statement as Annex B.

 

 

    

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Merger Agreement: The Board considered, in consultation with its outside legal counsel, the terms of the Merger Agreement, which were the product of arm’s-length negotiations and contained terms and conditions that were, in the Board’s view, advisable and favorable to the Company and its stockholders, including:

 

   

the representations, warranties and covenants of the parties, the conditions to the parties’ obligations to complete the Merger and their ability to terminate the Merger Agreement;

 

   

the limited number and nature of the conditions to Thermo Fisher’s obligation to consummate the Merger;

 

   

the fact that the definition of “Company Material Adverse Effect” has a number of customary exceptions and is generally a very high standard applied by courts;

 

   

the fact that the Company has sufficient operating flexibility to conduct its business in the ordinary course between execution of the Merger Agreement and consummation of the Merger;

 

   

the Merger not being subject to a financing condition, and the financial capacity of Thermo Fisher to complete the transaction;

 

   

the ability of the Company to seek specific performance in the event that Thermo Fisher breaches the Merger Agreement; and

 

   

the requirement that the parties use their respective reasonable best efforts to complete the transactions contemplated by the Merger Agreement, including to obtain all necessary governmental approvals as promptly as reasonably practicable.

 

 

Likelihood of consummation: The Board considered the likelihood that the Merger would be completed, in light of, among other things, the conditions to the Merger, the absence of a financing condition, the covenants by the parties to use their respective reasonable best efforts to obtain all necessary governmental approvals and the likelihood of obtaining required regulatory approvals for a transaction with Thermo Fisher prior to the Outside Date (as defined in “The Merger Agreement — Termination of the Merger Agreement” beginning on page 58) and the potential regulatory challenges and stockholder approvals that certain other potential buyers would face in connection with an acquisition of the Company.

 

 

Financing: The Board considered that Thermo Fisher’s market capitalization, cash on hand, receipt of committed financing and access to the capital markets as an investment grade issuer provides for sufficient access to funds to consummate the transactions contemplated by the Merger Agreement, including related fees and expenses required to be paid as of the consummation of the Merger.

 

 

Appraisal rights: The Board considered the fact that appraisal rights are available to the Company’s stockholders who properly exercise their statutory rights under Section 262 of the DGCL (see “Appraisal Rights” beginning on page 64 and Annex C).

The Board also considered and balanced against the potentially positive factors a number of potentially negative factors concerning the Merger, including the following factors:

 

 

Participation in future gains: The Board considered the fact that following the completion of the Merger, the Company will no longer exist as an independent public company and that the Company’s existing stockholders will not be able to participate in any future earnings or growth of the Company, or in any future appreciation in value of shares of Company Common Stock.

 

 

Risks associated with announcement of the Merger: The Board considered the possibility of disruption to the Company’s business that could result from the announcement of the Merger on the Company’s operations, stock price, business ventures, employees, customers, suppliers and other business partners and the resulting distraction of management’s attention from day-to-day operations of the business and its ability to attract and retain key employees during the pendency of the Merger.

 

 

Risks associated with a failure to consummate the Merger: The Board considered the fact that, while the Merger is expected to be completed, there are no assurances that all conditions to the parties’ obligations to complete the Merger will be satisfied or waived, and as a result, it is possible that the Merger may not be completed, as described under “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 57. The Board noted the fact that, if the Merger is not completed, (i) the Company will have incurred significant risk, transaction expenses and opportunity costs, including the possibility of disruption to its operations, diversion of management and employee attention, employee attrition and a potentially negative effect on its business and client relationships, (ii) depending on the circumstances that caused the Merger not to be completed, it is likely that the trading price of the Company Common Stock will decline, potentially significantly and (iii) the market’s perception of the Company’s prospects could be adversely affected.

 

 

Restrictions on the operation of the Company’s business: The Board considered the fact that, although the Company will continue to exercise control over its operations prior to the closing, the Merger Agreement prohibits the Company from taking a number of actions relating to the conduct of its business prior to the closing without the prior written consent of Thermo Fisher, which may delay or prevent the Company from undertaking business opportunities that may arise during the pendency of the Merger, whether or not the Merger is completed.

 

 

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Solicitation Efforts: The fact that the Company decided not to engage in a competitive bid process and only make limited solicitation of interest prior to execution of the Merger Agreement, which decision by the Board was informed by (i) the price and premium proposed by Thermo Fisher, (ii) the Board’s concern regarding increased risk of leaks if the Company contacted third parties regarding a potential transaction and the related potential for Thermo Fisher to discontinue transaction discussions if a leak occurred and (iii) the Board’s belief that there was a low likelihood that other strategic buyers would be interested in pursuing a transaction with the Company or that financial buyers would be interested in making a fully financed, non-contingent offer to acquire the Company at a price per share greater than $47.50.

 

 

No-solicitation provision: The Board considered the fact that the Merger Agreement restricts the Company’s ability to actively solicit acquisition proposals, subject to certain exceptions that expired upon the delivery of the Written Consent.

 

 

Written Consent: The Board considered the fact that, as a condition to entering into the Merger Agreement, Thermo Fisher required that the Merger Agreement include a provision permitting Thermo Fisher to terminate the Merger Agreement if the Majority Stockholders failed to execute and deliver the Written Consent by 8:30 am on the day immediately following the execution of the Merger Agreement, and the obligation, in certain circumstances, to pay Thermo Fisher up to $75 million in expense reimbursement in connection therewith.

 

 

Tax Treatment: The Board considered the fact that any gains arising from the receipt of the Merger Consideration would generally be taxable to the Company stockholders for United States federal income tax purposes.

 

 

Stockholder Litigation: The Board considered the risk of litigation arising from stockholders in respect of the Merger Agreement or transactions contemplated thereby.

During its consideration of the transaction with Thermo Fisher, the Board was also aware of and considered that the Company’s directors and executive officers may have interests in the Merger that differ from, or are in addition to, the interests of the Company’s stockholders generally, as described under “The Merger — Interests of Our Directors and Executive Officers in the Merger” beginning on page 33.

After taking into account all of the factors set forth above, as well as others, the Board determined that the potentially positive factors outweighed the potentially negative factors. The foregoing discussion of the factors considered by the Board is not intended to be exhaustive, but summarizes the material information and factors considered by the Board in its consideration of the Merger. The Board reached the decision to recommend and approve the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, in light of the factors described above and other factors the Board felt were appropriate. In view of the variety of factors and the quality and amount of information considered, the Board did not find it practicable to and did not quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and individual members of the Board may have given different weights to different factors. The Board conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, senior management of the Company, J.P. Morgan as financial advisor, and Simpson Thacher as legal advisor, and considered the factors overall to be favorable to, and to support, its determinations. This explanation of the reasoning of the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 12.

Required Stockholder Approval for the Merger

Under Delaware law and the Company’s certificate of incorporation, the adoption of the Merger Agreement by our stockholders required the affirmative vote or written consent of stockholders of the Company holding in the aggregate at least a majority of the outstanding shares of Company Common Stock entitled to vote thereon. As of April 15, 2021, the record date for determining stockholders of the Company entitled to vote on the adoption of the Merger Agreement, there were 350,958,331 shares of Company Common Stock outstanding. Holders of Company Common Stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including adoption of the Merger Agreement.

On April 15, 2021, following the execution of the Merger Agreement, the Majority Stockholders, which together on such date beneficially owned 210,017,251 shares of Company Common Stock representing approximately 60% of the then outstanding shares of Company Common Stock, delivered a written consent approving and adopting in all respects the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Written Consent”). No further action by any other Company stockholder is required under applicable law or the Merger Agreement (or otherwise) in connection with the adoption of the Merger Agreement. As a result, the Company is not soliciting your vote for the adoption of the Merger Agreement and will not call a stockholders’ meeting for purposes of voting on the adoption of the Merger Agreement. No action by the stockholders of Thermo Fisher is required to complete the Merger and all requisite corporate action by and on behalf of Merger Sub required to complete the Merger has been taken.

 

 

 

    

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When actions are taken by the written consent of less than all of the stockholders entitled to vote on a matter, Delaware law requires notice of the action be given to those stockholders who did not consent in writing to the action and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that consents signed by a sufficient number of holders to take the action were delivered to the corporation in accordance with Section 228 of the DGCL. This information statement and the notice attached hereto constitute notice to you from the Company of the Written Consent as required by Delaware law.

Opinion of J.P. Morgan Securities LLC

Pursuant to an engagement letter, the Company retained J.P. Morgan as its financial advisor in connection with the proposed Merger.

At the meeting of the Board on April 14, 2021, J.P. Morgan rendered its oral opinion to the Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid to the holders of Company Common Stock in the proposed Merger was fair, from a financial point of view, to such stockholders. J.P. Morgan did not determine the amount of consideration to be paid to the holders of Company Common Stock nor did it recommend the amount of consideration to be paid to the holders of Company Common Stock. J.P. Morgan has confirmed its April 14, 2021 oral opinion by delivering its written opinion to the Board, dated April 14, 2021, that, as of such date, the consideration to be paid to the holders of Company Common Stock in the proposed Merger was fair, from a financial point of view, to such stockholders.     

The full text of the written opinion of J.P. Morgan dated April 14, 2021, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this information statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this information statement is qualified in its entirety by reference to the full text of such opinion. The Company’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed Merger, was directed only to the consideration to be paid in the Merger to the holders of Company Common Stock and did not address any other aspect of the Merger. J.P. Morgan expressed no opinion as to the fairness of the consideration to the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the proposed Merger. The issuance of J.P. Morgan’s opinion was approved by a fairness opinion committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the proposed Merger or any other matter.

In arriving at its opinion, J.P. Morgan, among other things:

 

 

reviewed a draft dated April 14, 2021 of the Merger Agreement;

 

 

reviewed certain publicly available business and financial information concerning the Company and the industries in which it operates;

 

 

compared the proposed financial terms of the Merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration paid for such companies;

 

 

compared the financial and operating performance of the Company with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of Company Common Stock and certain publicly traded securities of such other companies;

 

 

reviewed certain internal financial analyses and forecasts prepared by the management of the Company relating to its business; and

 

 

performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

In addition, J.P. Morgan held discussions with certain members of the management of the Company and Thermo Fisher with respect to certain aspects of the Merger, and the past and current business operations of the Company, the financial condition and future prospects and operations of the Company and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by the Company or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan did not independently verify (and did not assume any obligation to independently verify) any such information or its accuracy or completeness. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of the Company or Thermo Fisher under any applicable laws relating to

 

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bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of the Company to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the Merger and other transactions contemplated by the Merger Agreement will be consummated as described in the Merger Agreement, and that the definitive Merger Agreement would not differ in any material respect from the draft thereof provided to J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by the Company and Thermo Fisher in the Merger Agreement and the related agreements were and will be true and correct in all respects material to its analysis. J.P Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to the Company with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the Company or on the contemplated benefits of the Merger.

The forecasts furnished to J.P. Morgan were prepared by the Company’s management. The Company does not publicly disclose internal management forecasts or projections of the type provided to J.P. Morgan in connection with J.P. Morgan’s analysis of the proposed Merger, and such forecasts were not prepared with a view toward public disclosure. These forecasts were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of the Company’s management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such forecasts. For more information regarding the use of forecasts, projections and other forward-looking statements, please refer to the section entitled “— Certain Company Financial Forecasts” beginning on page 30 of this information statement.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s written opinion dated April 14, 2021, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of the Company Common Stock in the proposed Merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration to the holders of any other class of securities, creditors or other constituencies of the Company or the underlying decision by the Company to engage in the Merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed Merger, or any class of such persons relative to the Merger Consideration to be paid to the holders of the Company Common Stock in the proposed Merger or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which Company Common Stock will trade at any future time.

The terms of the Merger Agreement, including the Merger Consideration, were determined through arm’s length negotiations between the Company and Thermo Fisher, and the decision to enter into the Merger Agreement was solely that of the Board. J.P. Morgan’s opinion and financial analyses was only one of the many factors considered by the Board in its evaluation of the proposed Merger and should not be viewed as determinative of the views of the Board or the Company’s management with respect to the proposed Merger or consideration.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodology in rendering its opinion to the Board on April 14, 2021 and contained in the presentation delivered to the Board on such date in connection with the rendering of such opinion and the description below does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

Public Trading Multiples

Using publicly available information, J.P. Morgan compared selected financial data of the Company with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be sufficiently analogous to the Company.

The companies selected by J.P. Morgan were as follows:

 

 

PPD, Inc. (based on Wall Street research analyst consensus estimates)

 

 

IQVIA Holdings Inc.

 

 

Icon plc (following the announcement of its acquisition of PRA Health Sciences, Inc.)

 

 

PRA Health Sciences, Inc. (prior to the announcement of its acquisition by Icon plc).

 

 

    

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These companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, were considered in its judgment sufficiently similar to those of the Company based on business sector participation, operational characteristics and financial metrics. However, none of the selected companies reviewed (other than the Company itself) is identical or directly comparable to the Company and certain of these companies may have characteristics that are materially different from those of the Company. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect the Company.

With respect to the selected companies, the information J.P. Morgan presented included (i) the multiple of firm value to the Wall Street research analyst consensus estimates of earnings before interest, taxes, depreciation and amortization (“EBITDA”) of the applicable company for calendar year 2021 (“CY2021E FV/EBITDA”), and (ii) the multiple of the trading price of the applicable company’s common stock to the Wall Street research analyst consensus estimates of earnings per share of the applicable company for calendar year 2021 (“CY2021E P/E”).

Based on the results of these analyses and on other factors J.P. Morgan considered appropriate, J.P. Morgan selected a CY2021E FV/EBITDA reference range for the Company of 15.8x to 18.6x, and a CY2021 P/E reference range of 19.8x to 27.1x. J.P. Morgan then applied that range to the estimates of the Company’s Adjusted EBITDA Pre-Share Based Compensation and Adjusted Earnings Per Share for 2021 included in the forecasts provided by Company management. These analyses indicated a range of implied equity values per share for Company Common Stock, rounded to the nearest $0.25, as follows:

 

      Final Base Case Forecasts      Final Upside Case Forecasts  

CY2021E FV/EBITDA

     $34.00—$41.50        $35.50—$43.50  

CY2021E P/E

     $28.50—$39.00        $30.75—$42.25  

J.P. Morgan compared these values to the closing price per share of Company Common Stock of $38.36 as of April 13, 2021 and the consideration to be paid in the Merger of $47.50 per share of Company Common Stock.

Selected Transaction Analysis

Using publicly available information, J.P. Morgan examined selected transactions involving businesses that J.P. Morgan judged to be sufficiently analogous to the business of the Company. Specifically, J.P. Morgan reviewed the following transactions:

 

Month/Year Announced

   Acquiror    Target

February 2021

   Icon plc    PRA Health Sciences, Inc.

October 2020

   Syneos Health, Inc.    Synteract, Inc.

July 2017

   Laboratory Corporation of America Holdings    Chiltern International Inc.

June 2017

   Pamplona Capital Management LLC    PAREXEL International Corporation

May 2017

   INC Research, LLC    inVentiv Health, Inc.

November 2014

   Laboratory Corporation of America Holdings    Covance Inc.

October 2011

   Carlyle/H&F    PPD, Inc.

May 2011

   INC Research, LLC    Kendle International Inc.

None of the selected transactions reviewed was identical to the proposed Merger. Certain of these transactions may have characteristics that are materially different from those of the proposed Merger. However, the transactions selected were chosen because the participants in and certain other aspects of the transactions, for purposes of J.P. Morgan’s analysis, may be considered similar to the participants in and aspects of the Merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the transactions differently than they would affect the Merger.

Using publicly available information, J.P. Morgan calculated, for each selected transaction, the multiple of the target company’s firm value implied in the relevant transaction to the target company’s estimated EBITDA for the 12 months prior to the announcement of each applicable transaction (“LTM FV/EBITDA”).

 

 

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Based on the results of this analysis and other factors that J.P. Morgan considered appropriate, J.P. Morgan selected a LTM FV/EBITDA reference range for the Company of 12.5x to 24.2x. J.P. Morgan then applied that range to the Company’s last 12 month Adjusted EBITDA Pre-Share Based Compensation as of December 31, 2020. This analysis indicated a range of implied equity values per share for Company Common Stock, rounded to the nearest $0.25, of $20.75 to $48.50, which J.P. Morgan compared the closing price per share of Company Common Stock of $38.36 as of April 13, 2021 and to the Merger Consideration of $47.50 per share of Company Common Stock.    

Discounted Cash Flow Analysis

J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining the fully diluted equity value per share for Company Common Stock.

J.P. Morgan calculated the unlevered free cash flows that the Company is expected to generate during calendar years 2021 through 2025 based upon Final Base Case and Final Upside Case financial forecasts prepared by the management of the Company through the years ended 2025. J.P. Morgan also calculated a range of terminal values of the Company at the end of this period by applying a perpetual growth rate ranging from 3.50% to 4.00% to the unlevered free cash flow of the Company during the terminal period following the forecasts. The unlevered free cash flows and the range of terminal values were then discounted to present values using a range of discount rates from 7.50% to 8.50%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of the Company. These present values, when added together, resulted in an implied firm value for the Company. To calculate an estimated equity value per share of Company Common Stock, J.P. Morgan then adjusted the implied firm values for the Company’s debt and cash, and divided the result by the fully diluted number of the shares of Company Common Stock outstanding.

Based on the foregoing, the discounted cash flow analysis indicated a range of equity values per share for Company Common Stock, rounded to the nearest $0.25, of (x) with respect to the Final Base Case financials, between $34.50 and $52.00, and (y) with respect to the Final Upside Case financials, between $39.00 and $58.50, which, in each case, J.P. Morgan compared to the closing price per share of Company Common Stock of $38.36 as of April 13, 2021 and the consideration to be paid in the Merger of $47.50 per share of Company Common Stock.

Other Information

J.P. Morgan reviewed the historical prices of the shares of Company Common Stock during the 52-week period ending April 13, 2021, noting that the low and high closing prices during such period ranged from $22.00 to $38.98 per share of Company Common Stock. J.P. Morgan also reviewed certain publicly available equity research analyst share price targets for Company Common Stock, noting that these share price targets for Company Common Stock ranged from $36.00 to $46.00 per share of Company Common Stock. J.P. Morgan noted that historical stock trading and analyst price targets analyses are not valuation methodologies but were presented merely for informational purposes.

Miscellaneous

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of the Company. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.

Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold.

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other

 

 

    

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purposes. J.P. Morgan was selected to advise the Company with respect to the Merger and deliver an opinion to the Board with respect to the Merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with the Company and the industries in which it operates.

For services rendered in connection with the Merger and the delivery of its opinion, the Company has agreed to pay J.P. Morgan a fee of $73.0 million of which $5.0 million became payable to J.P. Morgan upon delivery of its opinion, and the remainder will become payable to J.P. Morgan upon the consummation of the proposed Merger. In addition, the Company has agreed to reimburse J.P. Morgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had and continue to have commercial or investment banking relationships with Thermo Fisher, the Company, the Company’s significant shareholders Hellman & Friedman LLC (“H&F”) and The Carlyle Group Inc. (“Carlyle”), and certain of H&F and Carlyle’s affiliates and certain portfolio companies of such affiliates, for which J.P. Morgan and its affiliates have received or will receive customary compensation. Such services during such period for Thermo Fisher have included acting as joint lead arranger on a revolving credit facility which closed in December 2020 and joint bookrunner on an offering of debt securities in April 2020, March 2020 and September 2019. Such services during such period have also included acting as joint lead arranger on the Company’s revolving credit facilities which closed in January 2021 and April 2019, joint lead arranger on the Company’s term loan facility which closed in January 2021, joint lead bookrunner on the Company’s PIK toggle notes which closed in May 2019, joint bookrunner on an offering of the Company’s debt securities in May 2020, joint lead bookrunner on offerings of the Company’s equity securities in September 2020 and February 2020, joint bookrunner on an offering of Carlyle’s debt securities in September 2019 and sole placement agent on an offering of equity securities of an affiliate of Carlyle in November 2019. In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under outstanding credit facilities of Carlyle and certain portfolio companies of affiliates of each of H&F and Carlyle, and an agent bank, collateral agent and a lender under outstanding credit facilities of the Company, for which such affiliate receives customary compensation or other financial benefits. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of the Company, H&F, Carlyle and Thermo Fisher. During the two year period preceding delivery of its opinion ending as of March 31, 2021, the aggregate fees recognized by J.P. Morgan from the Company were approximately $34.0 million, from Carlyle and its controlled portfolio companies were approximately $251.4 million, from H&F and its controlled portfolio companies were approximately $84.5 million, and from Thermo Fisher were approximately $21.8 million. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of the Company, Carlyle or Thermo Fisher for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities or other financial instruments.

Certain Company Financial Forecasts

The Company does not generally publish its business plans and strategies or make external disclosures of its anticipated financial position or results of operations other than for providing, from time to time, estimates of certain expected financial results and operational metrics in its regular annual and quarterly earnings press releases and other investor materials.

The Company is especially wary of making financial forecasts or projections for extended earnings periods due to the unpredictability of the underlying assumptions and estimates and does not prepare five-year forecasts or projections in the ordinary course of business. However, in connection with its evaluation of the Merger, the Board reviewed, among other things, certain forward-looking financial cases developed by the Company’s management with respect to fiscal years 2021 through 2025.

The financial cases included in this information statement have been prepared by the Company’s management and are subjective in many respects. The financial cases were not prepared with a view to public disclosure and are included in this information statement only because such information was made available to the Board as described above. The financial cases were not prepared with a view to compliance with generally accepted accounting principles as applied in the United States, which we refer to herein as “GAAP”, the published guidelines of the SEC regarding projections and forward-looking statements or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Furthermore, the financial cases do not take into account any circumstances or events occurring after the date they were prepared, including the Merger. The financial cases are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this information statement are cautioned not to place undue reliance on this information. Although this summary of the financial cases is presented with numerical specificity, the forecasts reflect numerous variables, assumptions and estimates as to future events made by our management that our management believed were reasonable at the time the financial cases were prepared, taking into account the relevant information available to management at the time. However, such variables, assumptions and estimates are inherently uncertain and many are beyond the control of our management. Because the financial cases cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. The financial cases reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to the Company’s business, all of which are difficult to predict and many of which are beyond the Company’s control. As a result, the financial cases may not be realized and actual results may be significantly higher or lower than projected. The financial cases are subjective in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments.

 

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As such, the financial cases constitute forward-looking information and are subject to risks and uncertainties, including the various risks set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and the other reports filed by the Company with the SEC, as well as the section entitled “Cautionary Statement Regarding Forward-Looking Statements” elsewhere in this information statement. Neither the Company’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

The inclusion of this information should not be regarded as an indication that the Board, the Company, J.P. Morgan, Thermo Fisher, Thermo Fisher’s representatives and affiliates or any other recipient of this information considered, or now considers, the financial cases to be predictive of actual future results.

Except to the extent required by applicable federal securities laws, we do not intend, and expressly disclaim any responsibility, to update or otherwise revise the financial cases to reflect circumstances existing after the date when management prepared the financial cases or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the assumptions underlying the financial cases are shown to be in error.

The financial cases described below are included herein because they were made available to representatives of J.P. Morgan by the Company, and were approved by the Board and management, for use in connection with J.P. Morgan’s financial analysis, and with respect to the Final Base Case and the Final Upside Case, for use in connection with J.P. Morgan’s Opinion, as described in the sections of this information statement entitled “— Opinion of J.P. Morgan Securities LLC” on page 26 and “— Background of the Merger;” on page 16 and were made available to the Board in connection with its consideration of the Merger and other strategic alternatives available to the Company, as described in the section of this information statement entitled “— Background of the Merger” on page 16 and “— Recommendation of the Board; Reasons for the Merger” on page 22 and the Revenue and Adjusted EBITDA Pre-Share Based Compensation values were made available to Thermo Fisher in connection with its due diligence review.

The first preliminary financial case (“Base Case”) was a base case scenario (dollars in millions, except per share amounts):

 

      2021E      2022E      2023E      2024E      2025E  

Revenue

     $5,304        $5,941        $6,480        $7,125        $7,837  

Adjusted EBITDA Pre-Share Based Compensation1

     $1,000        $1,134        $1,255        $1,395        $1,550  

Adjusted EBITDA Post-Share Based Compensation2

     $961        $1,079        $1,183        $1,314        $1,467  

Adjusted Earnings Per Share3

     $1.44        $1.77        $2.01        $2.36        $2.67  

The second preliminary financial case (“Upside Case”) was an upside case scenario (dollars in millions, except per share amounts):

 

      2021E      2022E      2023E      2024E      2025E  

Revenue

     $5,466        $6,025        $6,690        $7,508        $8,435  

Adjusted EBITDA Pre-Share Based Compensation1

     $1,040        $1,151        $1,301        $1,479        $1,682  

Adjusted EBITDA Post-Share Based Compensation2

     $1,000        $1,096        $1,227        $1,394        $1,593  

Adjusted Earnings Per Share3

     $1.56        $1.87        $2.17        $2.60        $3.01  

 

(1) 

Adjusted EBITDA Pre-Share Based Compensation is calculated in the same manner as Adjusted EBITDA as presented in reports filed by the Company with the SEC, which consists of net income or loss attributable to common stockholders of the Company, adjusted for changes in recapitalization investment portfolio consideration and net income or loss attributable to noncontrolling interest and before interest expense, net, provision for or benefit from income taxes and depreciation and amortization and eliminates (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net income or loss that we do not consider indicative of our ongoing operating performance.

(2) 

Adjusted EBITDA Post-Share Based Compensation is calculated as Adjusted EBITDA Pre-Share Based Compensation, adjusted to include share based compensation expense.

(3) 

Adjusted Earnings Per Share consists of diluted earnings per share attributable to common stockholders of the Company before amortization and the elimination of (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net income or loss that we do not consider indicative of our ongoing operating performance.

 

 

    

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As described in “— Background of the Merger”, the Company updated the Base Case and the Upside Case to account for certain stock based compensation expense changes based on the latest actual year to date grant activity. The only line item that changed with respect to the foregoing is the Adjusted EBITDA Post-Share Based Compensation

The first updated financial case (“Final Base Case”) was an update of the Base Case scenario (dollars in millions, except per share amounts):

 

      2021E      2022E      2023E      2024E      2025E  

Revenue

     $5,304        $5,941        $6,480        $7,125        $7,837  

Adjusted EBITDA Pre-Share Based Compensation1

     $1,000        $1,134        $1,255        $1,395        $1,550  

Adjusted EBITDA Post-Share Based Compensation2

     $958        $1,072        $1,172        $1,300        $1,449  

Unlevered Free Cash Flows3

     $609        $651        $705        $771        $857  

Adjusted Earnings Per Share4

     $1.44        $1.77        $2.01        $2.36        $2.67  

The second updated financial case (“Final Upside Case”) was an update of the Upside Case scenario (dollars in millions, except per share amounts):

 

      2021E      2022E      2023E      2024E      2025E  

Revenue

     $5,466        $6,025        $6,690        $7,508        $8,435  

Adjusted EBITDA Pre-Share Based Compensation1

     $1,040        $1,151        $1,301        $1,479        $1,682  

Adjusted EBITDA Post-Share Based Compensation2

     $998        $1,090        $1,218        $1,384        $1,580  

Unlevered Free Cash Flows3

     $641        $678        $739        $823        $938  

Adjusted Earnings Per Share4

     $1.56        $1.87        $2.17        $2.60        $3.01  

 

(1)

Adjusted EBITDA Pre-Share Based Compensation is calculated in the same manner as Adjusted EBITDA as presented in reports filed by the Company with the SEC, which consists of net income or loss attributable to common stockholders of the Company, adjusted for changes in recapitalization investment portfolio consideration and net income or loss attributable to noncontrolling interest and before interest expense, net, provision for or benefit from income taxes and depreciation and amortization and eliminates (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net income or loss that we do not consider indicative of our ongoing operating performance.

(2)

Adjusted EBITDA Post-Share Based Compensation is calculated as Adjusted EBITDA Pre-Share Based Compensation, adjusted to include share based compensation expense.

(3)

Unlevered Free Cash Flows is calculated as cash generated from operating activities adjusted for cash paid for interest expense and capital expenditures.

(4)

Adjusted Earnings Per Share consists of diluted earnings per share attributable to common stockholders of the Company before amortization and the elimination of (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net income or loss that we do not consider indicative of our ongoing operating performance.

Certain of the measures included in the cases may be considered non-GAAP financial measures, including Adjusted EBITDA, Adjusted Earnings Per Share and Unlevered Free Cash Flows. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by the Company may not be comparable to similarly titled amounts used by other companies. The Company has not prepared, and the Board has not considered, a reconciliation of these non-GAAP financial measures to applicable GAAP financial measures.

Financing

The Merger is not subject to a financing condition. Thermo Fisher intends to finance the Merger with a combination of cash and debt financing, which could include senior unsecured bridge loans. In connection with entering into the Merger Agreement, Thermo Fisher entered into (a) a commitment letter (the “Initial Commitment Letter”), dated as of April 15, 2021, with Morgan Stanley Senior Funding, Inc. and Barclays Bank PLC (collectively, the “Initial Commitment Parties”) and (b) a supplemental commitment letter to add certain additional lender parties (the “Supplemental Commitment Letter” and, together with the Initial Commitment Letter, the “Commitment Letter”) dated as of May 3, 2021, with the Initial Commitment Parties and the additional lenders party thereto, (collectively, the “Supplemental Commitment Parties” and, together with the Initial Commitment Parties, the “Commitment Parties”), pursuant to which, subject to the terms and conditions set forth therein, the Commitment Parties committed to provide a 364-day senior unsecured bridge term loan facility in an aggregate principal amount of up to $9.5 billion (the “Bridge Facility”), to fund a portion of the consideration for the Merger. The funding of the Bridge Facility provided for in the Commitment Letter is contingent on the satisfaction of customary conditions, including (i) the execution and delivery of definitive documentation with respect to the Bridge Facility in accordance with the terms set forth in the Commitment Letter, and (ii) the consummation of the Merger in accordance with the Merger Agreement.

 

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Interests of Our Directors and Executive Officers in the Merger

You should be aware that the Company’s executive officers and directors, including associates of the Company’s directors, and in each case including organizations of which such person is an officer or partner, have interests in the Merger that are different from, or in addition to, the interests of the Company’s stockholders generally. The Board was aware of these interests and considered them, among other matters, in approving the Merger Agreement. These interests are described below. For purposes of the discussion below, the Company’s executive officers are David Simmons (Chairman and Chief Executive Officer), Christopher Scully (Executive Vice President and Chief Financial Officer, Treasurer and Assistant Secretary), William Sharbaugh (Chief Operating Officer), Anshul Thakral (Executive Vice President, Chief Commercial Officer and President of Evidera), David Johnston (Executive Vice President of Global Clinical Development), Glen Donovan (Chief Accounting Officer), Christopher Fikry (Executive Vice President, Global Laboratory Services), Ronald Garrow (Executive Vice President and Chief Human Resource Officer), B. Judd Hartman (Executive Vice President, Chief Administrative Officer), Julia James (Executive Vice President, General Counsel and Secretary) and Karen Kaucic (Executive Vice President, Chief Medical Officer).

Consulting Agreement between Thermo Fisher and Certain Executive Officers

In connection with the Merger, Thermo Fisher has entered into a consulting agreement with each of Mr. Simmons and Mr. Sharbaugh. Pursuant to each of the consulting agreements, Mr. Simmons’ and Mr. Sharbaugh’s respective employment with the Company will terminate on the Closing Date, after which Mr. Simmons and Mr. Sharbaugh will each serve as a consultant to Thermo Fisher for a period of up to 60 days. During the consulting period, each of Mr. Simmons and Mr. Sharbaugh will assist the Company and Thermo Fisher with the transition of customer relationships following the closing of the Merger. In consideration for their respective services, Thermo Fisher will pay each of Mr. Simmons and Mr. Sharbaugh a consulting fee at an annualized rate equal to Mr. Simmons’ or Mr. Sharbaugh’s respective annual base salary, as applicable, in effect immediately prior to the closing of the Merger. During the consulting period, each of Mr. Simmons and Mr. Sharbaugh will have continued use of and/or access to his current office and administrative assistant and, solely for business travel for performing the consulting services and consistent with applicable Company policies and approvals, the Company’s aircraft. The consulting services may be terminated for any reason by Thermo Fisher, at any time, or by Mr. Simmons or Mr. Sharbaugh, respectively, upon ten days’ advance written notice. Each of the consulting agreements additionally provides that termination of Mr. Simmons’ or Mr. Sharbaugh’s respective employment on the Closing Date will be treated as a termination without “cause” for purposes of such executive officer’s employment agreement and, subject to such executive officer’s timely execution, and non-revocation, of a general release of claims and his continued compliance with the restrictive covenants set forth in his employment agreement and in his proprietary information and inventions agreement, each of Mr. Simmons and Mr. Sharbaugh will be entitled to the applicable severance benefits pursuant to his respective employment agreement (as described below under “— Executive Employment Agreements” starting on page 37) and Mr. Simmons’ and Mr. Sharbaugh’s Converted Equity Awards (as defined below) will be subject to accelerated vesting in accordance with the Company’s Policy on Certain Terminations (as described below under “Treatment of Company Stock Awards”). Each consulting agreement is conditioned on the closing of the Merger and will be null and void if the Merger Agreement is terminated by the parties thereto in accordance with its terms without the occurrence of the closing of the Merger.

Restrictive Covenant Agreements

In connection with, and as a material inducement to, Thermo Fisher entering into the Merger Agreement, Thermo Fisher also entered into restrictive covenant agreements with each of Messrs. Simmons, Scully, Sharbaugh and Hartman (each such agreement, a “Restrictive Covenant Agreement”). Each Restrictive Covenant Agreement generally includes: (i) a covenant by the applicable executive not to compete with the Company and its subsidiaries for the three and one-half year period following the closing of the Merger (the “Restricted Period”); (ii) restrictions on soliciting or hiring employees of the Company and its subsidiaries, applicable during the duration of the Restricted Period; and (iii) restrictions on soliciting or contracting with customers or clients of the Company and its subsidiaries, applicable during the duration of the Restricted Period. The Restrictive Covenant Agreements are in addition to, and do not supersede, the existing restrictive covenants that each executive officer is subject to pursuant to his respective employment agreement. The Restrictive Covenant Agreements will not become effective unless and until the closing of the Merger occurs. In the event that the Merger Agreement terminates without the occurrence of the closing of the Merger, the Restrictive Covenant Agreements will automatically terminate.

Directors’ and Officers’ Indemnification and Insurance

Pursuant to the terms of the Merger Agreement, the Company’s directors and executive officers will be entitled to certain ongoing indemnification, expense advancement and insurance arrangements. See the section entitled “The Merger Agreement — Indemnification and Insurance” beginning on page 55 for a description of such ongoing arrangements.

 

 

    

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Treatment of Company Equity Awards

Under our equity incentive program, we grant equity awards in the form of Options, PSUs and RSUs to our employees, including grants of Options and PSUs to our executive officers, to incentivize and reward them for our long-term corporate performance, based on the value of Company Common Stock. Our non-employee directors are granted time vesting RSUs (“Director RSUs”), which vest on the earlier of the first anniversary of the date of grant and the first regularly scheduled annual meeting of stockholders following the date of grant. Our equity awards are granted pursuant to the Eagle Holding Company I 2017 Equity Incentive Plan (the “2017 Plan”) (Options) and the PPD, Inc. 2020 Omnibus Incentive Plan (the “2020 Plan”) (Options, PSUs and RSUs, including Director RSUs). In connection with the Merger, we anticipate that all outstanding Options which were granted pursuant to the 2017 Plan that are unvested prior to the Effective Time, including Options held by our executive officers, will fully vest and be subject to the treatment summarized below for vested Options.

At the Effective Time, all Company equity awards outstanding immediately prior to the Effective Time will generally be subject to the following treatment:

 

 

Except as otherwise agreed between any holder of a vested Option and Thermo Fisher, each vested Option, including any Option that vests as a result of the occurrence of the Merger, will be canceled, with the holder of the Option becoming entitled to receive an amount in cash equal to the sum of (A) (i) the total number of shares of Company Common Stock subject to the Option multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price of such Option and (B) any amount of the option bonus payment that the holder of the Option is entitled to receive with respect to such Option in connection with the Company’s May 2019 Dividend (as defined in the discussion below under the caption “— 2019 Cash Dividend” starting on page 35).

 

 

Each unvested Option (after giving effect to any vesting that would occur as a result of the occurrence of the Merger) will be canceled and converted into a Thermo Fisher stock option award (a “Converted Stock Option Award”) with substantially the same terms and conditions (including with respect to vesting) as were applicable to such Option immediately prior to the Effective Time, (A) with respect to a number of shares of Thermo Fisher common stock that is equal to (rounded down to the nearest whole share) (x) the Exchange Ratio (as defined below) multiplied by (y) the total number of shares of Company Common Stock subject to such Option as of immediately prior to the Effective Time and (B) with an exercise price per share that is equal to (rounded up to the nearest cent) (x) the exercise price per share of such Option as of immediately prior to the Effective Time divided by (y) the Exchange Ratio. With respect to any fractional share of Thermo Fisher common stock that would otherwise be included in a Converted Stock Option Award but for the rounding down to the nearest share of Thermo Fisher common stock as described in the previous sentence, the holder of the applicable Option will be entitled to receive a cash payment, without interest, equal to the product (rounded down to the nearest cent) of (I) the amount of such fractional share of Thermo Fisher common stock and (II) the excess of (X) the Thermo Fisher Stock Price (as defined below) over (Y) the exercise price of the Converted Stock Option Award.

 

 

Each PSU will be canceled and converted into a restricted stock unit award (a “Converted PSU Award”) with substantially the same terms and conditions (except that such restricted stock unit award shall no longer be subject to performance-based vesting conditions) as were applicable to such PSU immediately prior to the Effective Time, with respect to a number of shares of Thermo Fisher common stock that is equal to (rounded up to the nearest whole share) (x) the Exchange Ratio multiplied by (y) the total number of shares of Company Common Stock subject to such PSU based generally on the greater of (1) the target level of performance applicable to such PSU and (2) the actual level of performance achieved as of immediately prior to the Effective Time, as determined by the Board in its reasonable discretion after reasonable prior consultation with Thermo Fisher. With respect to any PSUs that are granted after April 15, 2021 with a performance period or performance goals that are different from those of existing PSUs, such conversion will be based on the target level of performance applicable to such PSU.

 

 

Each RSU that is not a Director RSU (whether vested or unvested) will be canceled and converted into a restricted stock unit award (a “Converted RSU Award,” and collectively with the Converted Stock Option Awards and the Converted PSU Awards, the “Converted Equity Awards”) with substantially the same terms and conditions (including with respect to vesting) as were applicable to such RSU immediately prior to the Effective Time, with respect to a number of shares of Thermo Fisher common stock that is equal to (rounded up to the nearest whole share) (x) the Exchange Ratio multiplied by (y) the total number of shares of Company Common Stock subject to such RSU as of immediately prior to the Effective Time.

 

 

Each Director RSU (whether vested or unvested) will be canceled, with the holder of such Director RSU becoming entitled to receive an amount in cash equal to (A) the Merger Consideration multiplied by (B) the number of shares of Company Common Stock subject to such Director RSU.

For purposes of the above, “Exchange Ratio” means a fraction, (1) the numerator of which is the Merger Consideration and (2) the denominator of which is the average closing price, rounded down to the nearest cent, per share of Thermo Fisher common stock on the New York Stock Exchange for the consecutive period of ten days immediately preceding (but not including) the Closing Date of the Merger (the “Thermo Fisher Stock Price”).

 

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Under the Merger Agreement, following the Effective Time, Thermo Fisher will continue to honor the Company’s Policy on Certain Terminations as in effect on the signing date of the Merger Agreement, with respect to the Converted Equity Awards, which provides that, in the event of the termination of employment or services of the holder of a Converted Equity Award:

 

 

By Thermo Fisher or its subsidiaries other than for “cause” (as defined in the applicable Company equity plan and award agreement thereunder) and other than due to the holder’s “disability” (as defined in the applicable Company equity plan and award agreement thereunder), within 18 months following the Effective Time, such award will immediately become fully vested upon such termination;

 

 

Due to the holder’s death or “disability”, in each case, at any time following the Effective Time, such award will immediately become (x) fully vested upon such termination, in the case of a Converted Stock Option Award or Converted RSU Award, and (y) vested upon such termination with respect to a pro-rata portion (calculated based on the number of days elapsed in the performance period that was previously applicable to such Converted PSU Award prior to such termination), in the case of a Converted PSU Award; or

 

 

Due to the holder’s “retirement” (i.e., the termination of a holder’s employment or services (other than for “cause” or due to the holder’s death or “disability”) following the date on which (1) the holder attains the age of 55 years old and the number of completed years of the holder’s employment or services with the surviving corporation and its affiliates (and their respective predecessors) is at least ten or (2) the holder attains the age of 60 years old and the number of completed years of the holder’s employment or services with the surviving corporation and its affiliates (and their respective predecessors) is at least five) at any time following the Effective Time, (x) such award will become vested upon such termination with respect to a pro-rata portion (calculated based on the number of days elapsed in the vesting period or the performance period that was previously applicable to such Converted Equity Award, as applicable, prior to the termination), and (y) in the case of a Converted Stock Option Award, the vested portion thereof will remain exercisable for one year following the termination (but in no event beyond the expiration of the Converted Stock Option Award’s term).

2019 Cash Dividend

In May 2019, our Board declared and paid a cash dividend of $3.89 per share of outstanding Company Common Stock (the “May 2019 Dividend”). Under the terms of the 2017 Plan, an adjustment to the then outstanding Options issued under the 2017 Plan (the “2017 Plan Options”) was determined to be equitable and necessary in order to prevent the dilution or enlargement of benefits under the 2017 Plan. Therefore, in connection with the May 2019 Dividend, holders of time vesting 2017 Plan Options (both vested and unvested) and certain performance vesting 2017 Plan Options (vested only), including Options held by our executive officers, were each entitled to a payment in an amount equal to (a) the number of shares underlying the applicable 2017 Plan Options multiplied by (b) the May 2019 Dividend amount, less applicable tax withholdings, with 1/3rd of such payment paid in May 2019, 1/3rd of such payment paid in October 2020 and the remaining 1/3rd of the payment to be paid in September 2021, subject to (i) the applicable holder’s continued employment through such date and (ii) the accelerated vesting provisions included in the applicable 2017 Plan Option agreement. As described in the discussion above under the caption “Treatment of Company Equity Awards”, pursuant to the Merger Agreement, in connection with the closing of the Merger, holders of 2017 Plan Options will receive a cash payment for the remaining option bonus payments, if any, in respect of the May 2019 Dividend attributable to each such 2017 Plan Option.

As of May 12, 2021, the remaining unpaid option bonus payments for our named executive officers were as follows: Mr. Simmons — $3,239,186; Mr. Scully — $497,432; Mr. Sharbaugh — $838,193; Mr. Thakral — $286,081; and Dr. Johnston — $299,355. As of May 12, 2021, the aggregate remaining unpaid option bonus payments for our other executive officers was $952,247. None of our non-employee directors were awarded option bonus payments in connection with the May 2019 Dividend.

2017 Recapitalization Letter Agreement

As described in our Annual Report on Form 10-K for our fiscal year ended December 31, 2020, the Company underwent a recapitalization transaction in 2017 and, as a result of the 2017 recapitalization of the Company, incurred certain future obligations to certain pre-recapitalization stockholders, including affiliates of H&F and Carlyle, as well as independent directors and members of management (the “Pre-Closing Holders”). Pursuant to the terms and conditions of the merger agreement the Company entered into in connection with the recapitalization in 2017 (the “2017 Merger Agreement”), the Pre-Closing Holders are entitled to receive consideration based on future payments received by the Company in respect of the existing investment portfolio at the time of the merger (the “Recapitalization Investment Portfolio”).

On April 14, 2021, the Company and affiliates of H&F and Carlyle entered into a letter agreement related to maintaining the existing contractual obligations of the Company under the 2017 Merger Agreement and granting limited information and consent rights in respect of the Recapitalization Investment Portfolio to the Pre-Closing Holders.

 

 

    

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Recapitalization Investment Portfolio distributions made to affiliates of Carlyle and affiliates of H&F during the three months ended March 31, 2021 were $11.8 million. There were no such payments made during the three months ended March 31, 2020. Recapitalization Investment Portfolio distributions were additionally made to certain directors and executive officers of the Company (such directors and executive officers, together with affiliates of Carlyle and affiliates of H&F, the “Related Holders”). In January 2021, distributions to Related Holders were $12.1 million and during the year ended December 31, 2020, distributions to Related Holders were $19.3 million.

Term Loan

Affiliates of Carlyle had investments in the Company’s senior secured first-lien term loan facility, dated as of January 13, 2021, totaling $88.1 million as of March 31, 2021 and investments in the Company’s senior secured term loan, dated as of August 18, 2015, totaling $12.6 million as of December 31, 2020. The amounts paid to the relevant affiliates for those loans for the three months ended March 31, 2021 and March 31, 2020 were as follows:

 

        

   Three Months Ended
March 31,
 

(in thousands)

   2021      2020  

Interest paid

     $534      $824

Principal paid

     12,623      204

Quantification of Company Equity Awards

For an estimate of the amounts that would be realized by each of our named executive officers with respect to their Company equity awards that are expected to vest in connection with the Merger and upon a termination without “cause” immediately following the Effective Time of the Merger with respect to their Converted Equity Awards, see “Golden Parachute Compensation” below. The estimated aggregate amount that would be realized by the six executive officers who are not named executive officers with respect to their unvested Company equity awards that are expected to vest in connection with the Merger and assuming a termination without “cause” immediately following the Effective Time in settlement of their unvested Company equity awards that were outstanding on May 12, 2021, if the Effective Time occurred on November 30, 2021, is $28,989,337 of which $20,556,137 is attributable to “single-trigger” payments and $8,433,201 is attributable to “double-trigger” payments. This amount is calculated using a price per share of Company Common Stock of $47.50 (equal to the Merger Consideration) and, in the case of PSUs, assuming maximum performance (i.e., 200% of target performance). In addition, the estimated aggregate amount that would be realized by the Company’s non-employee directors in settlement of their Director RSUs in accordance with the Merger Agreement that are outstanding as of May 12, 2021, if the Effective Time occurred on November 30, 2021, is $308,370. These amounts assume that any time-vesting equity awards that are expected to vest in accordance with their terms prior to November 30, 2021 vest, but do not attempt to forecast any additional equity grants, issuances or forfeitures that may occur prior to the closing of the Merger and do not include any additional dividend rights or dividend equivalent rights that may accrue prior to the closing of the Merger. As a result of the foregoing assumptions, which may or may not be accurate on the relevant date, the actual amounts, if any, to be realized by the Company’s executive officers who are not named executive officers and non-employee directors may materially differ from the amounts set forth above.

Other Interests

As of the date of this information statement, none of our executive officers has entered into any agreement, arrangement or understanding with Thermo Fisher regarding employment with, or compensation going forward from, Thermo Fisher, other than the consulting agreements for Mr. Simmons and Mr. Sharbaugh as described above under the section entitled “Consulting Agreement between Thermo Fisher and Certain Executive Officers.” Prior to the closing of the Merger, however, our executive officers may discuss or enter into agreements, arrangements or understandings with Thermo Fisher regarding employment with, or compensation going forward from, Thermo Fisher.

280G Mitigation Actions

The Company may take certain actions before the Effective Time to mitigate the amount of potential “excess parachute payments” for “disqualified individuals” (each as defined in Section 280G of the U.S. Internal Revenue Code of 1986, as amended (the “Code”)). As of the date of this information statement, the Company has not yet approved any specific actions to mitigate the expected impact of Section 280G of the Code on the Company and any disqualified individuals. Other than Mr. Simmons (as described below), no executive officer is entitled to receive gross-ups or tax reimbursements from the Company with respect to any potential excise taxes.

 

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Executive Employment Agreements

David Simmons

Pursuant to the terms of Mr. Simmons’ employment agreement, upon our termination of Mr. Simmons’ employment without “cause” or by Mr. Simmons for “good reason”, or due to his death or “disability” (each as defined in Mr. Simmons’ employment agreement), subject (except in the event of his death) to his timely execution, and non-revocation, of a general release of claims in our favor and continued compliance with the restrictive covenants set forth in Mr. Simmons’ employment agreement and in his proprietary information and inventions agreement, Mr. Simmons would be entitled to receive: (i) an amount in cash equal to the sum of (x) 2.0 times his annual base salary and (y) 1.5 times his annual target bonus, payable in regular installments over a 24-month period in accordance with our regular payroll practices, and (ii) monthly payments for up to a 24-month period equal to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) premiums required to continue the group medical, dental and vision coverage in effect on the termination date for Mr. Simmons and his dependents. In addition, Mr. Simmons would be entitled to the actual bonus for the year prior to the year of termination, if not paid. If such a termination occurs within two years following a change in control (as defined in Mr. Simmons’ employment agreement), subject to Mr. Simmons’ timely execution, and non-revocation, of a general release of claims against the Company and continued compliance with the restrictive covenants set forth in Mr. Simmons’ employment agreement and in his proprietary information and inventions agreement, with regard to the cash payments made pursuant to (i) above, he would be entitled to receive a lump-sum payment, instead of installment payments, payable within 60 days of his termination of employment. In the event of a transaction which would subject any payments, awards, benefits or distributions for the benefit of Mr. Simmons to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred with respect to such excise tax by Mr. Simmons (such excise tax, together with any such interest and penalties, the “Excise Tax”), then Mr. Simmons will be entitled to receive a one-time reimbursement equal to the amount of the Excise Tax.

During his employment and for 24 months following termination, Mr. Simmons’ employment agreement prohibits him from competing with our business and from soliciting our employees, customers or suppliers to terminate their employment or arrangements with the Company. Mr. Simmons is also party to a proprietary information and inventions agreement which contains a perpetual confidentiality covenant and an intellectual property assignment provision in favor of the Company.

As described above, in connection with, and effective subject to the closing of, the Merger, Thermo Fisher has entered into a consulting agreement with Mr. Simmons, pursuant to which Mr. Simmons’ employment with the Company will terminate on the Closing Date of the Merger. The consulting agreement provides, among other things, that termination of Mr. Simmons’ employment on the Closing Date of the Merger will be treated as a termination without “cause” for purposes of Mr. Simmons’ employment agreement.

Other Named Executive Officers

Pursuant to the terms of the employment agreements with our other named executive officers, upon our termination of the applicable named executive officer’s employment without “cause” or by the applicable named executive officer for “good reason” (each as defined in the applicable employment agreement), subject to the named executive officer’s timely execution, and non-revocation, of a general release of claims in our favor and continued compliance with the restrictive covenants set forth in the named executive officer’s employment agreement and proprietary information and inventions agreement, (A) each of Messrs. Scully, Sharbaugh and Thakral would be entitled to receive: (i) cash amounts equal to (x) 1.5 times his annual base salary, payable in regular installments over an 18-month period in accordance with our regular payroll practices, and (y) a prorated portion of the named executive officer’s annual target bonus for the year in which termination occurs, payable in a lump sum within 30 days of his termination of employment, and (ii) monthly payments for up to an 18-month period equal to the COBRA premiums required to continue the group medical, dental and vision coverage in effect on the termination date for the applicable named executive officer and his dependents and (B) Dr. Johnston would be entitled to receive: (i) cash amounts equal to (x) 1.0 times his annual base salary, payable in regular installments over a 12-month period in accordance with our regular payroll practices, and (y) a prorated portion of his annual target bonus for the year in which termination occurs, payable in a lump sum within 30 days of his termination of employment, and (ii) monthly payments for up to a 12-month period equal to the COBRA premiums required to continue the group medical, dental and vision coverage in effect on the termination date for Dr. Johnston and his dependents. In addition, each of the foregoing named executive officers would be entitled to the actual bonus for the year prior to the year of termination, if not paid.

The terms of the employment agreements with our other named executive officers provide that during the employment of the applicable named executive officer and for an 18 month period following termination thereof (except for Dr. Johnston, which provides for a 12 month period following termination thereof), such named executive officer is prohibited from competing with our business and from soliciting our employees, customers or suppliers to terminate their employment or arrangements with the Company. Each named executive officer is also party to a proprietary information and inventions agreement which contains a perpetual confidentiality covenant and an intellectual property assignment provision in favor of the Company.

 

 

    

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As described above, in connection with, and effective subject to the closing of, the Merger, Thermo Fisher has entered into a consulting agreement with Mr. Sharbaugh, pursuant to which Mr. Sharbaugh’s employment with the Company will terminate on the Closing Date of the Merger. The consulting agreement provides, among other things, that termination of Mr. Sharbaugh’s employment on the Closing Date of the Merger will be treated as a termination without “cause” for purposes of Mr. Sharbaugh’s employment agreement.

Other Executive Officers

Pursuant to the terms of the employment agreements with all of our other executive officers except Mr. Donovan (who is not party to an employment agreement with us), upon our termination of the applicable executive officer’s employment without “cause” (or analogous termination circumstances set forth in the applicable employment agreement) or by the applicable executive officer for “good reason” (each as defined in the applicable employment agreement), subject to the executive officer’s timely execution, and non-revocation, of a general release of claims or timely execution of a settlement agreement, as applicable, in our favor and continued compliance with the restrictive covenants in the executive officer’s employment agreement and proprietary information and inventions agreement, (A) one executive officer would be entitled to receive: (i) cash amounts equal to (x) 1.5 times the executive officer’s annual base salary, payable in regular installments over an 18-month period in accordance with our regular payroll practices, and (y) a prorated portion of the executive officer’s annual target bonus (as defined in the applicable employment agreement) for the year in which termination occurs, payable in a lump sum within 30 days of the executive officer’s termination of employment, and (ii) monthly payments for up to an 18-month period equal to the COBRA premiums required to continue the group medical, dental and vision coverage in effect on the termination date for the executive officer and the executive officer’s dependents and (B) four executive officers would be entitled to receive: (i) cash amounts equal to (x) 1.0 times the executive officer’s annual base salary, payable in regular installments over a 12-month period in accordance with our regular payroll practices, and (y) a prorated portion of the executive officer’s annual target bonus for the year in which termination occurs, and, with respect to three of these executives, (ii) monthly payments for up to a 12-month period equal to the COBRA premiums required to continue the group medical, dental and vision coverage in effect on the termination date for the executive officer and the executive officer’s dependents. In addition, each of the foregoing other executive officers party to an employment agreement would be entitled to the actual bonus for the year prior to the year of termination, if not paid. We are not a party to an employment agreement with Mr. Donovan; however, we expect that Mr. Donovan would receive severance upon a termination without “cause” pursuant to our severance practice for certain senior employees without employment agreements, whereby such employees generally receive six to 12 months’ severance, depending on their length of service (and for employees with 15 or more years of service, generally 12 or more months’ severance), including reimbursement for the cost of COBRA premiums for a corresponding amount of time, in connection with certain terminations of employment, and that Mr. Donovan would also receive a prorated portion of his annual target bonus in connection with such termination.

The terms of the employment agreements with our other executive officers generally provide that during the employment of the applicable executive officer (except for the employee, customer and non-solicitation covenants in Ms. James’ employment agreement which are only applicable following a termination of employment) and for a 12 month period following termination thereof (except for Mr. Hartman, which provides for a 18 month period following termination thereof), such executive officer is prohibited from competing with our business and from soliciting our employees, customers or suppliers to terminate their employment or arrangements with the Company. Each executive officer is also party to a proprietary information and inventions agreement which contains a perpetual confidentiality covenant and an intellectual property assignment provision in favor of the Company.

For an estimate of the amounts that would be realized by each of our named executive officers upon a qualifying termination event under their employment agreements, see “Golden Parachute Compensation” below. The estimated aggregate value of the severance and other benefits described above that would be payable to our six executive officers who are not named executive officers, under their employment agreements or pursuant to our senior employee severance practice, as applicable, if the Effective Time occurred on November 30, 2021 and each executive officer experienced a termination without “cause” or, with respect to all but one of such executive officers, a resignation for “good reason,” on that date is $4,247,532. The foregoing estimate does not include the monthly payments of COBRA premiums with respect to one executive officer since such executive officer does not presently receive coverage through our group medical, dental or vision plans, and we have assumed that such executive officer will not be a participant in such plans as of the date of the executive officer’s qualifying termination. In addition, cash amounts for one executive officer based in the United Kingdom were converted from pounds sterling to U.S. dollars using an exchange rate of 1.384155 U.S. dollars per pound, based on the 30 day average exchange rate as of April 30, 2021.

Transaction Bonus Agreements

Prior to entering into the Merger Agreement, but in anticipation of consummation of the Merger, the Company entered into transaction bonus agreements with certain Company employees, including Mr. Donovan. Pursuant to the transaction bonus agreements, subject to the employee’s continued employment with the Company or its subsidiaries through the Closing Date of

 

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the Merger (and not having previously tendered a notice of resignation prior to the Closing Date of the Merger), the employee will be entitled to receive a transaction bonus, in an amount set forth in the employee’s transaction bonus agreement, which will be paid in a single lump-sum payment no later than the second regularly scheduled payroll date following the Closing Date of the Merger. Mr. Donovan is party to a transaction bonus agreement and is eligible to receive a transaction bonus in an amount equal to $125,000 pursuant to the terms of his transaction bonus agreement. The Company may enter into transaction bonus agreements with additional employees prior to the closing of the Merger.

Golden Parachute Compensation

In accordance with Item 402(t) of Regulation S-K of the Securities Act, the table below sets forth the compensation that is based on, or otherwise relates to, the Merger that will or may become payable to each named executive officer of the Company in connection with the Merger. For additional details regarding the terms of the payments and benefits described below, see the discussion under the caption “Interests of Our Directors and Executive Officers in the Merger” above.

The amounts shown in the table below are estimates based on several assumptions that may or may not actually occur or be accurate on the effective date of the Merger, including the assumptions described below and in the footnotes to the table, and do not reflect certain compensation actions that may occur prior to completion of the Merger. The calculations in the table below do not include amounts the named executive officers were already entitled to receive or were vested in as of May 12, 2021. In addition, these amounts assume that any time-vesting equity awards or other amounts that are expected to vest in accordance with their terms prior to November 30, 2021 vest, but do not attempt to forecast any additional equity or cash award grants, issuances or forfeitures that may occur, or future dividend equivalents that may be accrued, prior to the closing of the Merger. Several of the named executive officers would be entitled to the severance payments and benefits set forth in the table below in connection with a qualifying termination event pursuant to the terms of their employment agreements, which payments and benefits are not enhanced by the transaction, and would be payable to such named executive officer upon any qualifying termination event, regardless of whether the Merger has closed. For purposes of calculating such amounts, the value of Company Common Stock was based on the Merger Consideration ($47.50 per share) and the following assumptions were used:

 

 

the effective date of the Merger is November 30, 2021, which is the assumed date of the closing of the Merger solely for purposes of the disclosure in this section;

 

 

the employment of each named executive officer will have been terminated by Thermo Fisher or an affiliate without “cause” or due to a resignation for “good reason” (as such terms are defined in each named executive officer’s employment agreement, as applicable) (we refer to such a termination or resignation as a qualifying termination event), in either case immediately following the assumed Closing Date of the Merger on November 30, 2021;

 

 

each named executive officer’s base salary rate and annual target bonus remains unchanged from those in place as of May 12, 2021; and

 

 

each named executive officer holds only those equity awards that were outstanding and unvested on May 12, 2021, and PSUs are converted into Converted PSU Awards based on maximum level of performance (i.e., 200% of target performance).

 

 

 

    

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As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.

 

Name

   Cash(1)
($)
     Equity(2)
($)
     Perquisites/
Benefits(3)
($)
     Tax
Reimbursement
(4) ($)
     Total
($)(5)
 

David Simmons

     7,063,014        81,349,759        27,121        10,091,631        98,531,525  

Christopher Scully

     1,147,344        15,617,812        13,850               16,779,006  

William Sharbaugh

     1,309,009        18,777,204        20,939               20,107,152  

Anshul Thakral

     1,038,073        12,481,553        49,629               13,569,255  

David Johnston

     800,573        12,435,441        13,959               13,249,973  

 

(1)

The amount set forth in this column for Mr. Simmons represents the sum of (i) 2.0 times Mr. Simmons’ annual base salary for 2021 and (ii) 1.5 times Mr. Simmons’ annual target bonus for 2021. The amount set forth in this column for each of Messrs. Scully, Sharbaugh and Thakral represents the sum of (i) 1.5 times the executive officer’s annual base salary for 2021 and (ii) a prorated portion of the executive officer’s annual target bonus for 2021. The amount set forth in this column for Dr. Johnston represents the sum of (i) 1.0 times Dr. Johnston’s annual base salary for 2021 and (ii) a prorated portion of Dr. Johnston’s annual target bonus for 2021. The amount payable to each executive officer is a “double-trigger” payment, which means the amount will become payable only upon a qualifying termination of employment following the Effective Time. There are no severance arrangements that provide for “single-trigger” cash payments. In the case of each of Mr. Simmons and Mr. Sharbaugh, the amount also includes the maximum consulting fee that may be payable to such executive officer pursuant to the terms of his consulting agreement, as described above under “ — Consulting Agreement between Thermo Fisher and Certain Executive Officers” starting on page 33.

 

Name

  

Base Salary
Component of
Severance

($)

     Consulting Fee
($)
    

Bonus
Component of
Severance

($)

     Total
($)
 

David Simmons

     3,200,000        263,014        3,600,000        7,063,014  

Christopher Scully

     787,500               359,844        1,147,344  

William Sharbaugh

     789,548        86,526        432,935        1,309,009  

Anshul Thakral

     712,500               325,573        1,038,073  

David Johnston

     475,000               325,573        800,573  

 

(2)

Certain amounts reflected in this column relate to Options granted prior to the Company’s IPO in February 2020 pursuant to the 2017 Plan and are attributable to “single-trigger” arrangements (i.e., accelerated vesting of the awards is triggered by the closing of the Merger). As amounts in this table assume an effective date of the Merger of November 30, 2021, amounts reported in this column do not include any amounts that may be payable in connection with the Company’s May 2019 Dividend, which are expected to be paid in September 2021. For further discussion of the May 2019 Dividend, see the discussion above under the caption “ — 2019 Cash Dividend” starting on page 35. All other amounts reflected in the table relate to equity awards granted pursuant to the 2020 Plan and are attributable to “double-trigger” arrangements (i.e., accelerated vesting of the awards is triggered by the change in control that will occur upon closing of the Merger and a subsequent termination of the executive officer’s employment without “cause”). Amounts reflected in the table for equity awards granted pursuant to the 2020 Plan would not be eligible for accelerated vesting upon the executive officer’s resignation for “good reason.”

 

Name

  

Unvested 2017

Plan Options

(A)($)

    

Unvested 2020
Plan Options

(B)($)

    

Unvested PSUs

(B)($)

     Total
($)
 

David Simmons

     63,526,832        3,529,607        14,293,320        81,349,759  

Christopher Scully

     13,529,241        413,626        1,674,945        15,617,812  

William Sharbaugh

     16,264,430        497,634        2,015,140        18,777,204  

Anshul Thakral

     9,709,299        1,559,959        1,212,295        12,481,553  

David Johnston

     9,663,187        1,559,959        1,212,295        12,435,441  

 

  (A)

The amounts in this column include the Options that were granted under the 2017 Plan and were outstanding and unvested as of May 12, 2021 and are “single-trigger” payments.

  (B)

The amounts in these columns include the Options and PSUs, respectively, that were granted under the 2020 Plan and were outstanding and unvested as of May 12, 2021. These columns use the Merger Consideration (i.e., $47.50) for purposes of calculating the values of the Options and PSUs that are subject to double-trigger acceleration (following conversion into Converted Equity Awards). The amounts listed in the column in respect of PSUs are based on maximum level of performance (i.e., 200% of target performance), however, actual performance and the amounts payable in respect of the PSUs may be less if the PSUs are not converted based on maximum level of performance.

 

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(3)

Amounts in this column represent monthly payments equal to the COBRA premiums required for continuation of group medical, dental and vision benefits for the named executive officer and the named executive officer’s dependents for up to 24 months for Mr. Simmons, 18 months for each of Messrs. Scully, Sharbaugh and Thakral and 12 months for Dr. Johnston. The amount payable to each named executive officer is a “double-trigger” payment, which means the amount will become payable only upon a qualifying termination of employment following the Effective Time. There are no severance arrangements that provide for “single-trigger” payments for the cost of COBRA premiums.

(4)

Certain payments, awards, benefits or distributions made to Mr. Simmons in connection with the Merger could be subject to the excise tax imposed on “excess parachute payments” by the Code. Pursuant to the terms of his employment agreement, Mr. Simmons is entitled to a one-time reimbursement for all such excise taxes (including any penalties and interest), except for any excise taxes imposed as a result of the actual reimbursement or any payments that are made to Mr. Simmons pursuant to a new agreement with a third party entity that is not consented to by the Board. The amount listed in this column represents the estimated maximum amount of potential excise tax reimbursement that would be payable to Mr. Simmons. The actual amount to be paid to Mr. Simmons, if any, will not be determinable until after the Effective Time and will depend on a number of factors, including, among others, the actual effective date of the Merger, the date of Mr. Simmons’ termination, interest rates and tax rates. In addition, the estimate of the maximum “excess parachute payments” for purposes of these calculations does not take into account any mitigation for payments which could be shown (under the facts and circumstances) not to be contingent on a change-in-control or for any payments being made in consideration of non-competition agreements or as reasonable compensation. The amount payable to Mr. Simmons is a “single-trigger” payment (i.e., the reimbursement amount payable to Mr. Simmons in connection with the excise tax imposed on “excess parachute payments” is triggered by the closing of the Merger); however, a portion of such reimbursement amount may relate to “double-trigger” payments as described in the foregoing notes (1) through (3).

(5)

The total amount calculated in this column for Mr. Simmons assumes an excise tax reimbursement equal to the estimated maximum amount of such reimbursement, however, the total would be less if the actual excise tax reimbursement equals a smaller amount within the estimated range of $0 to $10,091,631.

Delisting and Deregistration of Company Common Stock

If the Merger is completed, the Company Common Stock will be delisted from the NASDAQ and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of the Company Common Stock.

Transaction Litigation

As of the filing of this Information Statement, the Company is not aware of any complaints filed or litigation pending related to the Merger.

Material United States Federal Income Tax Consequences of the Merger

The following is a summary of the material United States federal income tax consequences of the Merger generally applicable to holders of Company Common Stock who exchange their shares of Company Common Stock for cash pursuant to the Merger. The summary is based on the Code, applicable United States Treasury Regulations issued thereunder, judicial authority and administrative rulings and pronouncements, all of which are subject to change, possibly with retroactive effect. The discussion applies only to holders whose shares of Company Common Stock are held as capital assets (generally, property held for investment), and does not address the tax consequences that may be relevant to holders of Company Common Stock that are subject to special tax rules, such as insurance companies, United States expatriates, controlled foreign corporations, passive foreign investment companies, holders subject to the alternative minimum tax, tax-exempt organizations, broker-dealers, financial institutions, cooperatives, traders in securities that elect to mark to market, United States Holders whose functional currency is not the United States dollar, holders who hold Company Common Stock through pass-through entities for United States federal income tax purposes or as part of a hedge, straddle or conversion transaction, holders deemed to sell Company Common Stock under the constructive sale provisions of the Code, holders who exercise appraisal rights, or holders who acquired Company Common Stock pursuant to the exercise of employee stock options or otherwise as compensation. This summary does not address any aspect of state, local or foreign taxation, and does not address any United States federal taxation other than income taxation.

For purposes of this information statement, a “United States Holder” means a beneficial owner of Company Common Stock that is:

 

 

a citizen or individual resident of the United States,

 

 

a corporation (or any entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or any state thereof (including the District of Columbia),

 

 

an estate, the income of which is subject to United States federal income tax regardless of its source, or

 

 

a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect to be treated as a United States person.

The term “Non-United States Holder” refers to any beneficial owner of Company Common Stock, other than a partnership or other entity or arrangement treated as a partnership for United States federal income tax purposes, that is not a United States Holder.

 

 

    

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If a partnership or other any entity or arrangement treated as a partnership for United States federal income tax purposes is a holder of Company Common Stock, the United States federal income tax treatment of a partner in that partnership will generally depend upon the status of the partner and the activities of the partnership. Partners should consult their own tax advisors as to the particular United States federal income tax consequences of the Merger to them.

The United States federal income tax consequences set forth below are included for general informational purposes only and are based upon current law as of the date hereof. Because individual circumstances may differ, each holder of Company Common Stock should consult such holder’s own tax advisor to determine the applicability of the rules discussed below to such holder and the particular tax effects of the Merger, including the application and effect of United States federal, state, local and foreign tax laws.

United States Holders. The receipt of the Merger Consideration by a United States Holder in exchange for shares of Company Common Stock pursuant to the Merger will be a taxable transaction for United States federal income tax purposes (and also may be a taxable transaction under applicable state, local, foreign and other income tax laws). In general, for United States federal income tax purposes, a United States Holder who receives the Merger Consideration will recognize gain or loss in an amount equal to the difference between (x) the amount of cash the United States Holder receives (determined before deduction of any applicable withholding taxes) and (y) the adjusted tax basis of the surrendered shares of Company Common Stock. A United States Holder’s adjusted tax basis generally will equal the price the United States Holder paid for such shares, and if applicable, will have been reduced by return of capital distributions. Gain or loss will be calculated separately for each block of Company Common Stock converted in the Merger (generally shares acquired at the same cost in a single transaction). Such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the Company Common Stock has been held for more than one year as of the Effective Time. Long-term capital gains of non-corporate United States Holders may be eligible for reduced rates of taxation. The deductibility of capital losses is limited.

Non-United States Holders. Subject to the discussion below regarding backup withholding, a Non-United States Holder that receives cash for shares of Company Common Stock pursuant to the Merger generally will not be subject to United States federal income tax on any gain realized on the disposition, unless (i) such holder is an individual who is present in the United States for 183 or more days during the taxable year of the Merger and certain other conditions are met, (ii) the gain is effectively connected with the conduct of a trade or business in the United States by the Non-United States Holder (and, in the case of certain income tax treaties, is attributable to a permanent establishment or fixed base within the United States) or (iii) such holder owned, directly or under certain constructive ownership rules of the Code, more than 5% of the Company Common Stock at any time during the five-year period preceding the Merger, and the Company is or has been a “United States real property holding corporation” for United States federal income tax purposes at any time during the shorter of the five-year period preceding the Merger or the period that the Non-United States Holder held Company Common Stock. The Company believes it has not been a “United States real property holding corporation” for United States federal income tax purposes at any time during the five-year period preceding the Merger.

If you are a Non-United States Holder who is an individual and has been present in the United States for 183 or more days during the taxable year of the Merger and certain other conditions are satisfied, you will be subject to tax at a rate of 30% (or such lower rate as may be specified in an applicable income tax treaty) on any gain realized, which generally may be offset by certain United States source capital losses.

If you are a Non-United States Holder and your gain is effectively connected with a United States trade or business (and, in the case of certain income tax treaties, is attributable to a permanent establishment or fixed base within the United States), you will be subject to United States federal income tax on any gain realized on a net basis in the same manner as United States Holders. Non-United States Holders that are corporations may also be subject to a branch profits tax on their effectively connected income at a rate of 30% (or such lower rate as may be specified in an applicable income tax treaty), subject to adjustments.

Information Reporting and Backup Withholding. Cash consideration received by a United States Holder or a Non-United States Holder in the Merger may be subject to information reporting and backup withholding. To avoid backup withholding, a United States Holder that does not otherwise establish an exemption should complete and return to the applicable paying agent an Internal Revenue Service (“IRS”) Form W-9, certifying that such United States Holder is a United States person, that the taxpayer identification number provided is correct and that such United States Holder is not subject to backup withholding. A Non-United States Holder generally may establish an exemption from backup withholding by certifying its status as a non-United States person under penalties of perjury on an IRS Form W-8BEN or other applicable IRS Form W-8. Backup withholding is not an additional tax. Amounts so withheld can be credited against such holder’s federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

Holders should consult their tax advisors regarding the application of United States federal income tax laws and non-United States tax laws, including information reporting and backup withholding, to their particular situations.

 

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Regulatory Approvals

Under the Merger Agreement, we and the other parties to the Merger Agreement have agreed to use our respective reasonable best efforts to complete the transactions contemplated by the Merger Agreement including to obtain all necessary governmental approvals as promptly as reasonably practicable.

Under the HSR Act and related rules, certain transactions, including the Merger, may not be completed until notifications have been given and information furnished to the Antitrust Division and the FTC and all statutory waiting period requirements have been satisfied or early termination has been granted by the applicable agencies. On May 13, 2021, both the Company and Thermo Fisher filed their respective notification and report forms under the HSR Act and requested early termination of the initial 30-day waiting period under the HSR Act.

Under other applicable foreign antitrust laws and foreign investment laws, certain transactions, including the Merger, may not be completed until any requisite consent, non-action or expiration of any applicable waiting period is obtained.

As of the date of this information statement, the parties have not received all of the consents (including non-action or expiration of any applicable waiting period) under antitrust laws and foreign investment laws required by the Merger Agreement.

At any time before or after the Effective Time of the Merger, the Antitrust Division or the FTC could take action under the antitrust laws, including seeking to prevent the Merger, to rescind the Merger or to conditionally approve the Merger upon the divestiture of assets of the Company or Thermo Fisher or subject to regulatory conditions or other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the completion of the Merger or permitting completion subject to regulatory conditions. Private parties may also seek to take legal action under the antitrust laws under some circumstances. There can be no assurance that a challenge to the Merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.

 

 

    

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THE MERGER AGREEMENT

This section describes the material terms and conditions of the Merger Agreement. The description in this section and elsewhere in this information statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A and is incorporated by reference into this information statement. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. We encourage you to read the Merger Agreement carefully and in its entirety. This section is not intended to provide you with factual information about the Company. Such information can be found elsewhere in this information statement and in the public filings the Company makes with the SEC, which may be obtained by following the instructions set forth in the section entitled, “Where You Can Find More Information,” beginning on page 71.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement has been included to provide you with information regarding its terms. It is not intended to provide any other factual information about the Company, Thermo Fisher or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made by the parties thereto only for purposes of that agreement and as of specific dates; were made solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement (such disclosures include information that has been included in the Company’s public disclosures, as well as additional nonpublic information); may have been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to you. You should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or Thermo Fisher or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

Form of Merger

Upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub will be merged with and into the Company, whereupon the separate corporate existence of Merger Sub will cease, and the Company will continue as the surviving corporation and a wholly-owned subsidiary of Thermo Fisher.

Consummation and Effectiveness of the Merger

The Merger will become effective at such time as the certificate of merger has been duly filed with the Secretary of State of the State of Delaware, or at such other time as Thermo Fisher and the Company agree and specify in the certificate of merger. The closing of the Merger will take place at 10:00 a.m., New York City time, on a date to be specified and agreed by Thermo Fisher and the Company, which date will be no later than the third (3rd) business day after the satisfaction (or waiver by the party entitled thereto) of all conditions to the consummation of the Merger set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction (or waiver by the parties entitled to in accordance with the Merger Agreement) of such conditions), unless another time or date is agreed to in writing by Thermo Fisher, Merger Sub and the Company.

Consideration to be Received in the Merger

Subject to the terms and conditions of the Merger Agreement, at the Effective Time, (i) each issued and outstanding share of capital stock of Merger Sub will be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation, (ii) each issued and outstanding share of Company Common Stock that is owned by the Company, Thermo Fisher or Merger Sub or any other direct or indirect wholly owned subsidiary of the Company or of Thermo Fisher, in each case immediately prior to the Effective Time, will no longer be outstanding and will automatically be canceled and retired and will cease to exist, and no consideration will be delivered or deliverable in exchange therefor and (iii) each issued and outstanding share of Company Common Stock (other than shares described in clause (ii) and Appraisal Shares (as defined below)) will be converted into the right to receive the Merger Consideration and will be automatically canceled and retired and will cease to exist, and each holder of any such shares of Company Common Stock will cease to have any rights with respect thereto, except the right to receive the Merger Consideration in accordance with the Merger Agreement.

 

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At the Effective Time, each vested Option (including any Option that vests as a result of the Merger) will generally be canceled and converted into the right to receive the sum of (i) (A) the Merger Consideration less the applicable exercise price multiplied by (B) the number of shares of Company Common Stock subject to such Option and (ii) any remaining option bonus payments in respect of the Company’s May 2019 recapitalization dividend attributable to each such Option. At the Effective Time, each RSU that is held by a non-employee director of the Company (whether vested or unvested) will be canceled and converted into the right to receive (i) the Merger Consideration multiplied by (ii) the number of shares of Company Common Stock subject to such RSU. At the Effective Time, each unvested Option, each RSU (other than any RSU held by a non-employee director of the Company) and each PSU will generally be canceled and converted, based on an exchange ratio that preserves the award’s value, into an equity award of Thermo Fisher with substantially the same terms and conditions, including vesting terms and conditions and treatment in connection with certain terminations of employment consistent with Company’s applicable termination policy (except that any PSU will generally convert based on the greater of target and actual performance and will no longer be subject to performance-based vesting conditions).

Appraisal Shares

Shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by any person who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL (“Section 262”) (such shares, “Appraisal Shares”) will not be converted into the right to receive the Merger Consideration, but instead, at the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, will be canceled and retired and will cease to exist and will represent the right to receive only those rights provided under Section 262. However, if any such holder fails to perfect or otherwise waives, withdraws or loses the right to appraisal under Section 262 or a court of competent jurisdiction determines that such holder is not entitled to the relief provided by Section 262, then the right of such holder to receive those rights under and to be paid such consideration as is determined pursuant to Section 262, will cease and such Appraisal Shares will be deemed to have been converted as of the Effective Time into, and will represent only the right to receive, the Merger Consideration. If the surviving corporation makes any payment after the Effective Time with respect to Appraisal Shares to the holders thereof pursuant to such holders’ appraisal rights under Section 262, then any portion of the Merger Consideration relating to such Appraisal Shares held in the Exchange Fund (as defined below) will be delivered by the paying agent to the surviving corporation upon demand. The Company will provide prompt notice to Thermo Fisher of any demands received by the Company for appraisal of any shares of Company Common Stock, any withdrawals of any such demands or any other instruments served pursuant to the DGCL and received by the Company relating to the rights of appraisal of the holders of shares of Company Common Stock, and Thermo Fisher will have the right to participate in and direct all negotiations and proceedings with respect to such demands. Prior to the Effective Time, except with the prior written consent of Thermo Fisher, the Company will not make any payment with respect to, or settle or offer to settle, or otherwise negotiate any such demands, or agree to do any of the foregoing.

Procedures for Receiving Merger Consideration

Prior to the Effective Time, Thermo Fisher will select a bank or trust company reasonably acceptable to the Company to act as paying agent for the payment of the Merger Consideration and at or prior to the Effective Time, Thermo Fisher will deposit or cause to be deposited with the paying agent an amount in cash necessary to pay for the shares of Company Common Stock converted into the right to receive the Merger Consideration (such cash being hereinafter referred to as the “Exchange Fund”).

Promptly (and in any event no later than three business days) after the Effective Time, Thermo Fisher will direct the paying agent to mail to each holder of record of a non-certificated share or non-certificated shares, that immediately prior to the Effective Time represented outstanding shares of Company Common Stock (“Book-Entry Shares”, respectively) which were converted into the right to receive the Merger Consideration (i) a letter of transmittal (which will be in customary form and have such provisions as Thermo Fisher and the Company may reasonably agree prior to the Effective Time) and (ii) instructions for use in effecting the surrender of the Book-Entry Shares, as applicable, in exchange for the Merger Consideration.

With respect to Book-Entry Shares, upon the paying agent’s receipt of an “agent’s message” (or such other evidence as the paying agent may reasonably request), the holder of such Book-Entry Share will be entitled to receive the Merger Consideration in exchange for each share of Company Common Stock represented by such Book-Entry Share and such surrendered Book-Entry Share will be canceled.

Until surrendered, each Book-Entry Share will be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration. No interest will be paid or accrue on the cash payable to any holder of a Book-Entry Share.

 

 

 

    

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The Merger Consideration paid in accordance with the terms of the Merger Agreement upon the surrender of any Book-Entry Share will be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock that such Book-Entry Share represented immediately prior to the Effective Time. After the Effective Time, there will be no further registration of transfers on the stock transfer books of the surviving corporation of shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Book-Entry Shares are presented to the surviving corporation or the paying agent for any reason, they will be canceled and exchanged as provided in the Merger Agreement. No cash payment with respect to the Merger Consideration will be paid to the holder of any unsurrendered Book-Entry Share until the surrender of such Book-Entry Share in accordance with the Merger Agreement.

Any portion of the Exchange Fund that remains undistributed to the holders of Book-Entry Shares for one (1) year after the Effective Time will be delivered to Thermo Fisher, upon demand, and any former holder of Company Common Stock entitled to payment of Merger Consideration who has not complied with procedures for receiving Merger Consideration will thereafter look only to Thermo Fisher for payment of its claim for Merger Consideration, without any interest thereon. If any Book-Entry Share has not been surrendered for Merger Consideration prior to the four (4) year anniversary of the Effective Time (or, if earlier, immediately prior to the date on which the Merger Consideration in respect of such Book-Entry Share would otherwise, escheat to or become the property of any governmental entity), any such Merger Consideration in respect of such Book-Entry Share will, to the extent permitted by applicable law, become the property of the surviving corporation, free and clear of all claims or interest of any person previously entitled thereto. None of Thermo Fisher, Merger Sub, the surviving corporation or the paying agent will be liable to any person in respect of any cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

Each of the surviving corporation, Merger Sub, Thermo Fisher and the paying agent will be entitled to deduct and withhold from any amounts otherwise payable to any person pursuant to the Merger Agreement such amounts as may be required to be deducted and withheld under applicable law with respect to taxes. Any amounts so deducted or withheld and paid over to the appropriate taxing authority will be treated for all purposes as having been paid to the person in respect of which such deduction or withholding was made.

Certificate of Incorporation; Bylaws

At the Effective Time, (a) the certificate of incorporation of the surviving corporation will be amended and restated in its entirety to be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, and (b) the bylaws of the surviving corporation will be amended and restated in their entirety to be identical to the bylaws of Merger Sub as in effect immediately prior to the Effective Time, provided that, in each case, Thermo Fisher will, and will cause the surviving corporation to, assume all obligations with respect to indemnification, advancement of expenses and exculpation from liabilities, for acts or omissions that occur prior to the Effective Time now existing in favor of the current or former directors or officers of the Company or any subsidiary of the Company as provided in the certificate of incorporation or bylaws of the Company, as further described in “The Merger Agreement — Indemnification and Insurance”.

Representations and Warranties

The Merger Agreement contains customary representations and warranties of Thermo Fisher, Merger Sub and the Company, including representations and warranties relating to, among other things:

 

 

organization, good standing and similar company matters;

 

 

due authorization, execution, delivery and enforceability of the Merger Agreement;

 

 

absence of conflicts with the parties’ governing documents, applicable laws and contracts; and

 

 

absence of brokers’, finders’ and investment bankers’ fees or commissions.

In addition, the Merger Agreement contains the following customary representations and warranties of the Company relating to, among other things:

 

 

capitalization;

 

 

ownership of the Company’s subsidiaries;

 

 

inapplicability of certain takeover laws;

 

 

antitrust matters;

 

 

documents filed with the SEC, compliance with applicable SEC filing requirements and accuracy of information contained in such documents;

 

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compliance of financial statements with applicable accounting requirements and SEC rules and regulations and preparation in accordance with the United States generally accepted accounting principles, and the absence of certain undisclosed liabilities;

 

 

the Company and each of its subsidiaries has conducted its business in the ordinary course consistent with past practice since December 31, 2020 and since this date there has not been any change, event, effect, development or occurrence that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (as defined below);

 

 

filing of tax returns, payment of taxes and other tax matters;

 

 

labor matters;

 

 

employee benefits matters;

 

 

real and personal property;

 

 

material contracts, including top customers and suppliers;

 

 

absence of pending or, to the knowledge of the Company, threatened litigation that would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

 

 

since January 1, 2018, the continued effectiveness of certifications, CE markings, permissions, qualifications, registrations, marketing and emergency use authorizations, and consents of governmental entities or notified bodies in the European Union, including with respect to applicable health care laws;

 

 

compliance with laws, including compliance with anti-bribery and foreign corrupt practices laws and applicable regulatory laws, including health care laws, professional certification requirements or food and drug laws, in each case except as would not be reasonably expected to have a Company Material Adverse Effect;

 

 

environmental matters;

 

 

ownership and use of intellectual property;

 

 

cybersecurity and data privacy matters;

 

 

insurance;

 

 

affiliate transactions; and

 

 

the receipt of fairness opinions from J.P. Morgan;

The Merger Agreement also contains the following customary representations and warranties of Thermo Fisher and Merger Sub:

 

 

availability of funds to consummate the Merger;

 

 

the operations of Merger Sub;

 

 

Thermo Fisher’s lack of ownership of Company Common Stock and lack of arrangements between Thermo Fisher, Merger Sub or any of their affiliates, on the one hand, and the Company or any of its affiliates (including directors, officers or stockholders) on the other hand; and

 

 

absence of pending or, to the knowledge of Thermo Fisher, threatened litigation that would reasonably be expected to have, individually or in the aggregate, any change, effect, event, fact, development or occurrence that prevents or materially impairs or delays the consummation of the Merger and the other transactions contemplated by the Merger Agreement or the ability of Thermo Fisher or Merger Sub to perform its obligations under the Merger Agreement (a “Parent Material Adverse Effect”).

Certain of the representations and warranties in the Merger Agreement are qualified as to “materiality” or “Company Material Adverse Effect”. The Merger Agreement provides that a Company Material Adverse Effect means any change, event, effect, development or occurrence that (a) prevents or materially impairs or delays the consummation of the Merger and the other transactions contemplated by the Merger Agreement or the ability of the Company to perform its obligations under the Merger Agreement or (b) has or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, assets, condition (financial or otherwise), prospects or results of operations of the Company and its subsidiaries, taken as a whole, excluding, for purposes of clause (b), any effect to the extent it results from or arises out of:

 

 

general conditions in the industries in which the Company operates;

 

 

general economic or regulatory, legislative or political conditions or securities, credit, financial or other capital markets conditions (including changes generally in prevailing interest rates, currency exchange rates, credit market conditions and capital markets price levels or trading volumes), in each case in the United States or elsewhere in the world;

 

 

 

    

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any change or prospective change in applicable law or generally accepted accounting principles (or interpretation or enforcement thereof);

 

 

geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism;

 

 

any hurricane, tornado, flood, volcano, earthquake, epidemic, disease outbreak, public health event, pandemic (including COVID-19 and any worsening thereof (including any COVID-19 response)) or other natural or man-made disaster;

 

 

the failure of the Company to meet any internal or external projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics before, on or after the date of the Merger Agreement, or changes or prospective changes in the market price or trading volume of the Company Common Stock or the credit rating of the Company and/or its subsidiaries (provided, that the underlying facts or occurrences giving rise or contributing to such failure or change may, unless otherwise excluded, be taken into account in determining whether there has been a Company Material Adverse Effect);

 

 

the execution, announcement, performance or consummation of the Merger and the other transactions contemplated by the Merger Agreement, including the impact on relationships, contractual or otherwise, with customers, suppliers, distributors, partners, employees of governmental entities, or any proceeding brought by any Company stockholder (direct or derivative) in respect of the Merger Agreement, the Merger, the other transactions contemplated thereby, in each case to the extent resulting from or arising in connection with such announcement or consummation (provided, that this clause does not apply with respect to (a) any representation or warranty contained in the Merger Agreement to the extent that the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of the Merger Agreement or the consummation of the Merger and the other transactions contemplated by the Merger Agreement or the performance of obligations under the Merger Agreement, including the Merger and the other transactions contemplated by the Merger Agreement or (b) any closing condition related to the foregoing clause (a));

 

 

any action taken by the Company or its subsidiaries that is expressly required by the Merger Agreement (except as set forth in the Merger Agreement) or with Thermo Fisher’s written consent or at Thermo Fisher’s written request, or the failure to take any action by the Company or its subsidiaries if that action is expressly prohibited by the Merger Agreement (only to the extent that Thermo Fisher unreasonably withholds, conditions or delays consent to the taking of such action after receipt of the written request for such action from the Company); and

 

 

changes resulting or arising from the identity of, or any facts or circumstances relating to, Thermo Fisher, Merger Sub or any of their respective affiliates, including the financing obtained or to be obtained by Thermo Fisher, Merger Sub or any of their respective affiliates;

provided that, in the case of the first five bullets above, to the extent that the Company is disproportionately affected by such matters as compared with other participants in the industries in which the Company operates, the incremental disproportionate impact or impacts may be taken into account in determining whether there has been a Company Material Adverse Effect.

Conduct of Business by the Company Prior to Consummation of the Merger

Except for matters set forth on the confidential disclosure schedules or as otherwise expressly contemplated by the Merger Agreement or required by applicable law (including any COVID-19 response) except or with the prior written consent of Thermo Fisher (such consent not to be unreasonably withheld, delayed or conditioned), from the date of the Merger Agreement to the earlier of the termination of the Merger Agreement and the Effective Time, the Company will and will cause each of its subsidiaries to conduct its business in the ordinary course of business consistent with past practice in all material respects and use its commercially reasonable efforts to (A) preserve as substantially intact its organizations, assets, employees, authorizations, business and its existing relations with key customers, suppliers and other persons with whom the Company or its subsidiaries have significant business relationships and (B) use commercially reasonable efforts to keep available the services of its employees (subject to the Merger Agreement), in each case, consistent with past practice.

In addition, without limiting the generality of the foregoing, except for matters set forth on the confidential disclosure schedules or as otherwise expressly contemplated by the Merger Agreement or required by applicable law (including any COVID-19 response), from the date of the Merger Agreement to the earlier of the termination of the Merger Agreement and the Effective Time, the Company shall not, and shall not permit any of its subsidiaries to do, any of the following without the prior written consent of Thermo Fisher (such consent not to be unreasonably withheld, delayed or conditioned):

 

 

declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or any combination thereof) in respect of, any of its capital stock or other equity interests;

 

 

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split, combine or reclassify any of its capital stock or other equity interests;

 

 

directly or indirectly redeem, repurchase or otherwise acquire any equity interests in the Company or any subsidiary of the Company, except for (1) acquisitions of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay the exercise price of such Company Stock Options, (2) the withholding of shares of Company Common Stock to satisfy tax obligations with respect to Company Stock Options, Company RSUs or Company PSUs or (3) the acquisition by the Company of Company Stock Options, Company RSUs or Company PSUs in connection with the forfeiture of such awards, in the case of each of clauses (1), (2) and (3), in accordance with their respective terms in effect at such time;

 

 

issue, sell, register to issue or sell, encumber or grant, or amend any terms of, any equity interests, other than the issuance of shares of Company Common Stock upon the exercise of Company Stock Options, or the settlement of Company RSUs or Company PSUs, in each case outstanding as of April 15, 2021 or granted in accordance with the Merger Agreement and in accordance with their respective terms in effect at the time of such exercise or settlement;

 

 

amend its certificate of incorporation, bylaws or other comparable organizational documents or enter into any agreement with any of its stockholders in their capacity as such;

 

 

propose or adopt a plan of, or effect any, complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, other than the Merger;

 

 

acquire (A) in a single transaction or a series of related transactions, whether by merging or consolidating with, or by purchasing equity interests in or assets of, or by any other manner, any business or any corporation, partnership, limited liability company, joint venture, association or other business organization or division thereof or any other person or (B) any equity interests, assets or properties, in each case, the value or purchase price of which, individually exceeds $50,000,000 or in the aggregate exceeds $150,000,000 (other than acquisitions of supplies in the ordinary course of business consistent with past practice); provided, that the foregoing clauses (A) and (B) do not apply to any venture capital investment by the Company or any of its subsidiaries, and the Company and its subsidiaries are permitted to make venture capital investments for which the value of the applicable investment commitment does not individually exceed $25,000,000 or in the aggregate (taking into account all such investments following April 15, 2021) exceed $100,000,000; provided, further, that the aggregate value of such acquisitions and investments permitted pursuant to clauses (A) and (B) together may not exceed $200,000,000;

 

 

establish any person or entity that would constitute a Significant Subsidiary (as such term is defined in Rule 12b-2 under the Exchange Act) of the Company;

 

 

adopt, enter into, terminate or materially amend any collective bargaining, works council or other labor agreement (other than in the ordinary course of business) or Company Benefit Plan (as defined in the Merger Agreement), including any cash incentive bonus program (other than the entry into at-will offer letters or, for employees outside of the United States, employment agreements (i) with any individual who is not Senior Employee (as defined in the Merger Agreement) or (ii) containing standard terms for the jurisdiction, in each case, that do not contain or provide for any equity or equity-based compensation, change in control-based or retention payments or, for any individual who is a Senior Employee, severance), except as required by the terms of any Company Benefit Plan;

 

 

increase in any manner the compensation, bonus or fringe or other benefits of any employee, officer, director or other individual service provider of the Company or any subsidiary of the Company, other than increases in the ordinary course of business consistent with past practice for any such individual who is not a Senior Employee, except as required by the terms of any Company Benefit Plan;

 

 

take any action to accelerate the payment of any compensation or benefit under any Company Benefit Plan, except as required by the terms of any Company Benefit Plan;

 

 

with respect to any Company Benefit Plan, make any contributions or payments to any trust or other funding vehicle, except in the ordinary course of business consistent with past practice or as required by the terms of any Company Benefit Plan;

 

 

change any actuarial or other assumption used to calculate funding obligations with respect to any Company Benefit Plan or change the manner in which contributions are made or the basis on which contributions are calculated with respect to any Company Benefit Plan, except in the ordinary course of business consistent with past practice or as required by the terms of any Company Benefit Plan;

 

 

grant or agree to grant any change in control, severance, or retention compensation or benefits to any employee, officer, director or other service provider of the Company or any subsidiary of the Company, other than severance to the extent permitted by the Merger Agreement or as required by the terms of any Company Benefit Plan;

 

 

loan or advance any money or other property to any current or former employee, officer, director or other individual service provider of the Company or any subsidiary of the Company (other than advances of routine business expenses in the ordinary course of business or as required by the terms of any Company Benefit Plan);

 

 

    

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grant any equity or equity-based awards under any Company Benefit Plan or otherwise of the Company;

 

 

terminate the employment of any employee of the Company or any subsidiary of the Company with an annual base salary in excess of $400,000, other than due to such individual’s death, disability or for cause (each as determined by the Company in the ordinary course of business);

 

 

hire any individual who would have an annual base salary in excess of $400,000 (other than as a replacement hire or promotion receiving substantially similar terms of employment);

 

 

change its fiscal year or revalue any of its material assets or make any material change in accounting methods, principles or practices used by it, except as may be required by generally accepted accounting principles or by applicable law, including Regulation S-X under the Securities Act;

 

 

sell, lease, license or otherwise transfer to any person, in a single transaction or series of related transactions, any of its properties or assets (excluding any intellectual property) owned or licensed by it, the value or purchase price of which, individually or in the aggregate with all other transactions under this clause, exceeds $30,000,000, except (A) dispositions of obsolete, worn out or surplus assets or assets that are no longer used or useful in the conduct of the business of the Company or any of its subsidiaries, (B) transfers solely between or among the Company and its wholly owned subsidiaries or (C) pursuant to existing license agreements or other existing contracts as in effect on April 15, 2021 and disclosed pursuant to the Merger Agreement; provided, that, in no event will the Company or any of its subsidiaries sell, lease, license or otherwise transfer to any person certain specified equity interests held by the Company or its subsidiaries or their respective affiliates without the consent of Thermo Fisher;

 

 

incur, redeem, repurchase, prepay, unwind, settle, defease, guarantee, assume or otherwise become liable for or modify in any material respects the terms of any indebtedness, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any subsidiary of the Company or guarantee any debt securities of another;

 

 

make any loans, advances or capital contributions to, or investments in (including by purchase of stock or securities, property transfers or purchase of property or assets of any person or otherwise), any other person, other than (1) solely between any of the Company and any of its wholly owned subsidiaries or between any of such wholly owned subsidiaries, (2) extensions of trade credit and advances of expenses to employees, in each case in the ordinary course of business consistent with past practice, (3) advances of travel and similar expenses to directors and employees in the ordinary course of business consistent with past practice or (4) borrowings incurred under the Credit Agreement (as defined below) in an amount not in excess of the aggregate amount of the Company’s revolving credit facility in the aggregate;

 

 

make any capital expenditure or expenditures, or incur any obligations or liabilities or make any commitments in connection therewith other than in the ordinary course of business consistent with past practice in an amount that does not exceed $200,000,000 in the aggregate for the fiscal year ended December 31, 2021 and $200,000,000 in the aggregate for the fiscal year ended December 31, 2022;

 

 

renew, extend or voluntarily terminate, waive or release any material rights under, or materially amend or modify, any material contract disclosed pursuant to the Merger Agreement (a “Material Contract”) or any contract that would be a Material Contract if in effect on April 15, 2021;

 

 

enter into any contract that would be a Material Contract if in effect on April 15, 2021 other than, in the ordinary course of business consistent with past practice (other than, in the case of any contract that is, or would be, a Material Contract with a top fifteen supplier or service provider of the Company and its subsidiaries, if consummation of any of the Merger or other transactions contemplated by the Merger Agreement (alone or in combination with any other event) will conflict with, or result in any material violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a material right of, or result in, termination, cancelation or acceleration of any obligation, or give rise to any material increased, additional, accelerated or guaranteed rights or entitlements under, any provision of such contract);

 

 

settle or make a binding offer to settle any proceeding other than settlements that (1) require only payment by the Company or any subsidiary of the Company of cash amounts that (x) are specifically reserved against in respect of such proceeding in the most recent consolidated balance sheet of the Company and its subsidiaries included in the Company’s documents filed with the SEC prior to April 15, 2021 or (y) to the extent in excess of and/or not covered by clause (x), do not exceed $5,000,000 individually or $10,000,000 in the aggregate and (2) do not impose any restrictions on the business or operations of the Company or any subsidiary of the Company, involve any admission of any wrongdoing or involve any injunctive relief or involve any stockholder litigation (excluding any stockholder litigation in connection with the Merger and the other transactions contemplated by the Merger Agreement);

 

 

settle or offer to settle any material proceeding in respect of personal data or privacy and data security requirements or with any governmental entity in connection with any health care law or commence any comparable proceeding against a third party except as required by a governmental entity or under applicable law (excluding any stockholder litigation in connection with the Merger and the other transactions contemplated by the Merger Agreement);

 

 

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assign, sell, lease, license, dispose, cancel, abandon, grant rights to or fail to renew, maintain or diligently pursue applications for, or defend, any material Company intellectual property (or rights with respect thereto), except for grants of non-exclusive licenses and abandonments in the ordinary course of business consistent with past practice;

 

 

disclose to any third party, other than representatives of Thermo Fisher or under a confidentiality agreement, any material trade secrets included in the Company intellectual property in a way that results in the loss of intellectual property protection for such Company intellectual property;

 

 

(1) renew or extend any material rights under, or materially amend or modify in a manner materially less favorable to the Company than the terms of the existing lease, any lease for real property with an annual base rent in excess of $1,000,000 (a “Lease”), (2) enter into any contract that would be a Lease if in effect on April 15, 2021, (3) lease any material portion of any owned real property to any person or (4) acquire, directly or indirectly, any interest in any real property, in each case, other than in the ordinary course of business consistent with past practice or as provided in the Merger Agreement;

 

 

enter into any new material line of business or abandon or discontinue any material existing line of business;

 

 

engage in any transaction, or enter into any agreement, arrangement or understanding, with any affiliate of the Company or other person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC or otherwise enter into any affiliate transaction;

 

 

adopt or implement any stockholder rights plan or similar arrangement; or

 

 

authorize, commit or agree to take any of the foregoing actions.

Notwithstanding anything to the contrary set forth above, unless expressly prohibited in the bulleted list above (other than regarding capital expenditures and the entry into, extensions, amendments or modifications of vendor or supplier contracts or real estate leases), the Company and its subsidiaries may take actions that are outside of the ordinary course or not in accordance with past practice that are either (i) approved by or under the authority of the Company’s Pandemic Committee (consisting of the Chief Medical Officer, Chief Human Resources Officer and Head of Facilities and Real Estate, or their designees), or (ii) following prior consultation with Thermo Fisher to the extent reasonably practicable, in each case, to the extent reasonably necessary or advisable (A) to protect the health and safety of the Company’s or its subsidiaries’ employees or (B) in response to any applicable law, directive, guideline or recommendation, in the case of each of clause (A) and (B), arising out of, or otherwise related to, the COVID-19 pandemic (including any COVID-19 response).

Additionally, the Company has agreed to use commercially reasonable efforts to increase the limits under its cyber liability insurance policy; provided, that the Company will not be required to pay an amount in excess of $600,000 and in the event the Merger Agreement is terminated, any such insurance premium paid by the Company in connection with the foregoing will be reimbursed by Thermo Fisher.

Regulatory Filings; Efforts

Each party to the Merger Agreement will use its reasonable best efforts to take all appropriate actions to consummate the transactions contemplated by the Merger Agreement, including the Merger, and to eliminate every impediment under any antitrust law to close such transactions, including: (i) obtaining all necessary or advisable authorizations and consents from, making all necessary or advisable registrations, declarations and filings with and taking all reasonable steps as may be necessary or advisable to obtain any authorizations or consents from, or avoid a proceeding with, any governmental entity or other third party with respect to the Merger Agreement or the transactions contemplated thereby, including the Merger, including the expiration or termination of any applicable waiting period in respect of the HSR Act and other applicable antitrust law or foreign investment law; (ii) furnishing all information required to be furnished in connection with obtaining any such authorizations or consents from or making any filings with any governmental entity or other third party; (iii) defending or contesting any proceedings by any governmental entity or third party challenging the Merger Agreement or the consummation of the transactions contemplated thereby, including the Merger; and (iv) executing and delivering any additional instruments necessary to consummate the transactions contemplated by the Merger Agreement, including the Merger, and to fully carry out the purposes of the Merger Agreement.

Each party will, within twenty (20) business days of entering into the Merger Agreement (unless a different period is otherwise agreed by the parties), make any appropriate filing necessary pursuant to the HSR Act, and will also, as promptly as reasonably practicable, make all necessary or advisable filings pursuant to any other applicable foreign antitrust law or foreign investment law, to permit consummation of the transactions contemplated by the Merger Agreement. In relation to this, each party will supply as promptly as reasonably practicable any additional information and documentary material that may be requested by any such reviewing governmental entity with respect to the transactions contemplated by the Merger Agreement.

 

 

 

    

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Each of the Company and Thermo Fisher will, and will cause their respective affiliates to, furnish to the other party such necessary information and reasonable assistance as the other party may request in connection with its preparation of any filing or submission under the HSR Act or any other applicable antitrust law or foreign investment law, and will consult with one another, in good faith in connection with any inquiry, hearing, investigation, proceeding or litigation by, or negotiations with, any governmental entity relating to the Merger Agreement, the Merger, or any of the other transactions contemplated by the Merger Agreement.

Notwithstanding anything to the contrary, Thermo Fisher or any of its affiliates will not be required to, and the Company will not, and will cause its affiliates not to, without the prior written consent of Thermo Fisher, propose, negotiate, effect, agree to or commit to, or execute any settlements, undertakings (affirmative or otherwise), consent decrees, stipulations or other agreements with any governmental entity or any other person obligating Thermo Fisher, the Company, or any of their respective affiliates to take or commit to take any of the following actions: (i) sell, divest, license or otherwise convey or hold separate any asset or business of Thermo Fisher or the Company or their respective affiliates or terminate any existing relationship, contractual right or obligation of Thermo Fisher or the Company or their respective affiliates; (ii) create any relationship, contractual right or obligation of Thermo Fisher, the Company or any of their respective affiliates; or (iii) implement any limitations, prohibitions or restrictions affecting the business, operations or assets of Thermo Fisher, the Company or any of their respective affiliates or on the ability of Thermo Fisher or its affiliates to acquire, hold or exercise full rights of ownership of any equity interests in the surviving corporation or any of its subsidiaries (including the right to vote such equity interests) or to control the business, operations or assets of Thermo Fisher, the Company or any of their respective affiliates, except to the extent that any such actions set forth in (i) through (iii) above (each, a “Remedial Action”) is necessary to obtain a required regulatory approval, and that, (a) individually and in the aggregate with all other such Remedial Actions, involves assets or businesses of the Company and its subsidiaries that, in the aggregate, generated no more than 10% of the consolidated revenues of the Company and its subsidiaries for the fiscal year ended December 31, 2020 or (b) constitutes proposals, agreements, commitments or undertakings from Thermo Fisher to supply and provide Thermo Fisher’s products and services on commercially reasonable terms to the Company’s competitors, consistent with past practice, provided that such proposals, agreements, commitments or undertakings, individually or in the aggregate, would not have, and would not reasonably be expected to have, a substantial impact on the benefits that Thermo Fisher reasonably expects it and its subsidiaries to derive from the transactions contemplated by the Merger Agreement, including the Merger (each of (a) and (b), a “Permitted Remedial Action”).

Furthermore, the parties will not, and will cause their subsidiaries not to, enter into any merger, acquisition or similar transaction, or any agreement to effect any such transaction, for any business that competes directly and materially with the other party’s business, that will make it materially more difficult, or materially increase the time required, to (i) obtain the required regulatory approvals, or (ii) avoid a legal restraint.

Written Consent

Per the terms of the Merger Agreement, the Company was required to provide Thermo Fisher with a copy of the Written Consent immediately upon receipt of the Written Consent. The Written Consent was delivered to the Company on April 15, 2021 shortly after the execution of the Merger Agreement, and the Company provided a copy of the Written Consent to Thermo Fisher immediately after its receipt of the Written Consent.

No Solicitation

The Company has agreed that it will not, and will cause its subsidiaries and its and their respective directors, officers and employees not to, and will use its reasonable best efforts to cause its and their other representatives not to, directly or indirectly, from the date of the Merger Agreement until the earlier of the termination of the Merger Agreement and the Effective Time:

 

 

solicit, initiate, or knowingly encourage or knowingly take any other action to facilitate any inquiries regarding, or the submission of any proposal or offer that constitutes, or would reasonably be expected to lead to, any Company Takeover Proposal;

 

 

enter into, continue, knowingly encourage or otherwise participate in any discussions or negotiations regarding, or furnish to any person (other than Thermo Fisher or Merger Sub) any non-public information with respect to or in connection with any Company Takeover Proposal; or

 

 

execute or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, option agreement, merger agreement, joint venture agreement, partnership agreement or any other agreement or arrangement relating to any Company Takeover Proposal (other than certain acceptable confidentiality agreements).

 

 

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The Merger Agreement provides that the term “Company Takeover Proposal” means any inquiry, proposal or offer from any person or group (other than Thermo Fisher and its subsidiaries) relating to, in a single transaction or series of related transactions, any:

 

 

direct or indirect acquisition of 20% or more of the consolidated assets of the Company and its subsidiaries (based on the fair market value thereof) or to which 20% or more of the consolidated revenues or earnings of the Company and its subsidiaries are attributable;

 

 

direct or indirect acquisition of 20% or more of the outstanding Company Common Stock or the outstanding voting power of the Company (or any other equity interests representing such voting power giving effect to any right of conversion or exchange thereof);

 

 

tender offer or exchange offer that if consummated would result directly or indirectly in any person or group (or the stockholders of any person or group) (other than Thermo Fisher and its subsidiaries) beneficially owning 20% or more of the outstanding Company Common Stock or the outstanding voting power of the Company (or any other equity interests representing such voting power giving effect to any right of conversion or exchange thereof);

 

 

merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or other transaction involving the Company which would result in any person or group (or the stockholders of any person or group) (other than Thermo Fisher and its subsidiaries) beneficially owning, directly or indirectly, 20% or more of the outstanding Company Common Stock or the outstanding voting power of the Company or of the surviving entity in a merger involving the Company or the resulting direct or indirect parent of the Company or such surviving entity (or any equity interests representing such voting power giving effect to any right of conversion or exchange thereof); or

 

 

any combination of the foregoing.

For the avoidance of doubt, the Merger and the other transactions contemplated by the Merger Agreement will not be deemed a Company Takeover Proposal.

From and after the execution and delivery of the Merger Agreement, the Company will, and will cause its subsidiaries and its and their respective directors, officers and employees to, and will use reasonable best efforts to cause its and their other representatives to immediately cease all solicitation, encouragement, discussions and negotiations regarding any inquiry, proposal or offer pending on the date of the Merger Agreement that constitutes, or would reasonably be expected to lead to, a Company Takeover Proposal. In furtherance of this, promptly following execution of the Merger Agreement, the Company is required to:

 

 

request that each person and its representatives (other than Thermo Fisher) that has, prior to April 15, 2021, executed a confidentiality agreement in connection with such person’s consideration of making a possible Company Takeover Proposal, to promptly return or destroy all non-public confidential information previously furnished to such person; and

 

 

terminate access to any physical or electronic data rooms relating to a possible Company Takeover Proposal.

The Company will not, and will cause its subsidiaries and representatives not to, release any person from, or waive, amend or modify any provision of, or grant any permission under any “standstill” provision or similar provision with respect to any capital stock of the Company in any confidentiality or standstill agreement (or similar agreement) to which the Company or any of its subsidiaries is a party. However, the Company is permitted to grant waivers of, and not to enforce, any “standstill” or similar provision to the extent necessary to permit the party referred therein to submit an unsolicited Company Takeover Proposal to the Company Board on a confidential basis, subject to compliance with all other provisions of the Merger Agreement.

Continuing Employee Matters

The Merger Agreement provides that, for the period from the Effective Time through the first anniversary of the Effective Time, each employee of the Company or its subsidiaries who remains in the employment of the surviving corporation and its subsidiaries (each, a “Continuing Employee”) will receive (for Continuing Employees primarily based outside of the United States, subject to any requirements under applicable law) (i) a base salary or wage rate, as applicable, and incentive compensation opportunities (other than equity incentive compensation opportunities, which instead will be consistent with the opportunities applicable to similarly situated employees of Thermo Fisher and its subsidiaries) that, in each case, are not less favorable than as provided by the Company or its subsidiaries to such Continuing Employee immediately prior to the Effective Time and (ii) severance (based on severance arrangements as in effect on the date of the Merger Agreement and listed on the confidential disclosure schedules) and employee benefits (excluding defined benefit pension, post-employment health and welfare benefits, equity-based compensation and change of control, retention or other one-off awards) that are not less favorable in the aggregate to those that were provided by the Company or its subsidiaries to such Continuing Employee immediately prior to the Effective Time.

 

 

    

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The Merger Agreement also provides that, Thermo Fisher will, and will cause the surviving corporation and its subsidiaries to, cause any plans, programs, agreements or arrangements established or maintained by Thermo Fisher or any of its affiliates (including, after the Effective Time, the surviving corporation and its subsidiaries) (the “New Plans”) to recognize each Continuing Employee’s service with the Company or any of its subsidiaries and any of their respective predecessors (to the extent such service is recognized by the Company or such subsidiary), for purposes of eligibility, participation, vesting and levels of benefits; provided, however, that such service need not be recognized (i) for any purpose under any defined benefit pension plan or retiree welfare plan, (ii) to the extent that such recognition would result in any duplication of benefits, (iii) for purposes of any New Plan under which similarly situated employees of Thermo Fisher and its subsidiaries do not receive credit for prior service or (iv) for purposes of any New Plan that is grandfathered or frozen, either with respect to level of benefits or participation.

Further, the Merger Agreement provides that, with respect to any New Plan that is a welfare plan, Thermo Fisher will, and will cause the surviving corporation and its subsidiaries to, (i) waive all limitations as to preexisting conditions and exclusions with respect to participation and coverage requirements applicable to Continuing Employees to the extent such conditions and exclusions were satisfied or did not apply to such employees under the welfare plans of the Company and its subsidiaries prior to the Effective Time and (ii) provide each Continuing Employee with credit for any co-payments and deductibles paid prior to the Effective Time in satisfying any analogous deductible or out-of-pocket requirements to the extent applicable under any such plan.

If requested by Thermo Fisher not less than ten business days prior to the Closing Date, the Company will adopt resolutions and take such corporate action as necessary to terminate the Company Benefit Plans that are United States tax-qualified defined contribution plans (the “Company DC Plans”), effective as of the day prior to the Closing Date and contingent upon the occurrence of the Effective Time. If Thermo Fisher requests that any Company DC Plan be terminated, the applicable Continuing Employees will be eligible to participate, effective as of the Effective Time, in a tax-qualified defined contribution plan of Thermo Fisher or its subsidiaries (each such plan, a “Parent DC Plan”), it being agreed that there will be no gap in participation in a tax-qualified defined contribution plan for such Continuing Employees. Upon the distribution of the assets in the accounts under the Company DC Plans to the participants, Thermo Fisher will take any action necessary to permit the Continuing Employees to make rollover contributions of “eligible rollover distributions” from the applicable Company DC Plan to the applicable Parent DC Plan (including in cash or notes (in the case of loans)).

The Merger Agreement provides that, from and after the Effective Time, Thermo Fisher will, or will cause its subsidiaries (including the surviving corporation) to, assume and honor in accordance with their terms all of the Company Benefit Plans (including any change in control severance agreement or other arrangement that is a Company Benefit Plan), in each case, as in effect at the Effective Time, including with respect to any payments, benefits or rights arising as a result of the transactions contemplated by the Merger Agreement (either alone or in combination with any other event), it being understood that the foregoing will not limit the right of Thermo Fisher and its subsidiaries, including the surviving corporation, to amend any Company Benefit Plan in accordance with its terms. For the avoidance of doubt, for purposes of any Company Benefit Plan containing a definition of “change in control” or “change of control” (or similar term), the closing of the Merger will be deemed to constitute a “change in control” or “change of control” (or applicable term).

Pursuant to the Merger Agreement, if the closing of the Merger occurs prior to December 31, 2021, with respect to each cash incentive bonus program of the Company and its subsidiaries with a performance period that is in-cycle as of the closing of the Merger (each, a “Company Bonus Program”), following the closing of the Merger, (i) payments pursuant to such Company Bonus Program with respect to such performance period will be paid in the ordinary course of business consistent with past practice, and calculated excluding any Merger-related transaction costs, and (ii) Thermo Fisher will not make any modification to such Company Bonus Program with respect to such performance period in a manner that is detrimental to any participant therein.

The Merger Agreement provides that the foregoing provisions under this “— Continuing Employee Matters” section will be binding upon and will inure solely to the benefit of each of the parties to the Merger Agreement, and nothing in the provisions under this “— Continuing Employee Matters” section, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever (including any right to continued employment by or services with Thermo Fisher, the Company, the surviving corporation or any of their respective subsidiaries) under or by reason of such provisions. Further, none of the provisions under this “— Continuing Employee Matters” section will be construed as requiring Thermo Fisher or the surviving corporation to continue any specific plans, programs, agreements or arrangements or prohibit or limit the ability of Thermo Fisher, the surviving corporation or any of their subsidiaries from amending, modifying or terminating any plans, programs, agreements or arrangements.

 

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Indemnification and Insurance

As of the Effective Time, Thermo Fisher will, and will cause the surviving corporation to, assume all obligations with respect to indemnification, advancement of expenses and exculpation from liabilities, for acts or omissions that occur prior to the Effective Time now existing in favor of the current or former directors or officers (the “Indemnified Persons”) of the Company or any subsidiary of the Company as provided in the certificate of incorporation or bylaws of the Company or the organizational documents of any subsidiary of the Company (in each case, as in effect as of the date of the Merger Agreement and, in the case of any indemnification agreement set forth on the confidential disclosure schedules and of which the Company has made available to Thermo Fisher true, correct and complete copies), without further action, and such obligations will survive the Merger and will continue in full force and effect in accordance with their terms. Thermo Fisher will additionally, to the fullest extent permitted under applicable law that the surviving corporation could provide such indemnification to such Indemnified Persons pursuant to the DGCL and under the Company’s governing documents in effect as of the date of the Merger Agreement, cause the surviving corporation to, for a period of six (6) years following the Effective Time, indemnify and hold harmless each Indemnified Person with respect to all claims, liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in settlement or compromise) and expenses (including fees and expenses of legal counsel) in connection with the defense of any action (whether civil, criminal, administrative or investigative), of any type, whenever asserted, based on or arising out of (A) the fact that an Indemnified Person was a director or officer of the Company or such subsidiary or (B) acts or omissions by an Indemnified Person in the Indemnified Person’s capacity as a director, officer or agent of the Company or such subsidiary or taken at the request of the Company or such subsidiary (including in connection with serving at the request of the Company or such subsidiary as a director, officer, agent, trustee or fiduciary of another person (including any employee benefit plan)), in each case under clause (A) or (B), at, or at any time prior to, the Effective Time (including any action relating in whole or in part to the transactions contemplated by the Merger Agreement or relating to the enforcement of this provision or any other indemnification or advancement right of any Indemnified Person).

At or prior to the Effective Time, Thermo Fisher will, or will cause the surviving corporation in consultation with the Company to, obtain a prepaid (or “tail”) directors’ and officers’ liability insurance policy in respect of acts or omissions occurring at or prior to the Effective Time, covering each person currently covered by the Company’s or any of its subsidiary’s directors’ and officers’ liability insurance policies, with coverage for a period of six years following the Effective Time on terms with respect to such coverage and amounts no less favorable to the insureds than those of the Company’s policy in effect on April 15, 2021; provided, however, in no event will Thermo Fisher or the surviving corporation be required to spend an amount in excess of 450% of the most recent annual premium paid by the Company or any subsidiary of the Company for such insurance for its current fiscal year; provided, further, that, if the amount necessary to procure such prepaid (or “tail”) insurance coverage exceeds such maximum amount, Thermo Fisher or the surviving corporation, as the case may be, will only be obligated to provide as much coverage as may be obtained for such maximum amount. Thermo Fisher will cause the “tail” policy to be maintained in full force and effect, for its full term, and cause all obligations thereunder to be honored by the surviving corporation, and no other party shall have any further obligation to purchase or pay for insurance.

Financing Covenant; Company Cooperation

If reasonably requested by Thermo Fisher, the Company will, or will cause its subsidiaries to, deliver all notices of prepayment with respect to the loans and other extensions of credit outstanding under, and/or notices of termination of all commitments to extend credit under, that certain Credit Agreement dated January 13, 2021, between the Company, PPD Development, L.P., JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and a L/C Issuer and each lender and L/C issuer from time to time party thereto (as amended, supplemented or otherwise modified, the “Credit Agreement”) (in each case, contingent upon the occurrence of the closing). In addition, if reasonably requested by Thermo Fisher, the Company and its subsidiaries will use commercially reasonable efforts to obtain from the agent under the Credit Agreement prior to the Closing Date a customary payoff letter with respect to the obligations under the Credit Agreement (the “Payoff Letter”), in form and substance customary for transactions of this type which Payoff Letter will, among other things, include the payoff amount (and the daily accrual thereafter) and provide that liens (and guarantees), if any, granted in connection with the Credit Agreement relating to the assets, rights and properties of the Company and its subsidiaries securing such indebtedness will, upon the payment of the amount set forth in the Payoff Letter at the closing, be released and terminated (subject to delivery of funds as arranged by Thermo Fisher and the filing of appropriate UCC-3 termination statements and other termination filings).

To the extent reasonably requested by Thermo Fisher, the Company will, and will cause its subsidiaries to, issue at the time requested by Thermo Fisher (which time may be prior to the Closing Date) one or more notices, conditioned on the occurrence of the closing, to effect the optional redemption of all of the outstanding aggregate principal amount of the 4.625% Senior Notes due 2025 and 5.000% Senior Notes due 2028 in accordance with the terms of that certain Indenture dated as of June 5, 2020 (the “Indenture”) on (or, at the option of Thermo Fisher, following) the Closing Date (the “Redemption”). The Company and its subsidiaries will, or will cause their counsel to, furnish customary legal opinions in accordance with the Indenture in connection with any such Redemption.

 

 

    

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Prior to the Closing, the Company will use reasonable best efforts, and will cause its subsidiaries to use reasonable best efforts, and will use its reasonable best efforts to cause its and its subsidiaries’ respective officers, directors, employees, accountants, consultants, legal counsel, agents and other representatives (collectively, the “Company Representatives”) to, at Thermo Fisher’s sole cost and expense, provide such reasonable cooperation that is reasonably necessary and customary and reasonably requested by Thermo Fisher to assist Thermo Fisher in the arrangement of any bank financing and/or bond offerings for the purpose of financing the Merger, the fees and expenses incurred in connection therewith and the other transactions contemplated by the Merger Agreement, including any repayment or refinancing of debt contemplated by the Merger Agreement (the “Debt Financing”), including using reasonable best efforts to (i) provide such pertinent and customary financial and operating information regarding the Company as may be reasonably requested by Thermo Fisher in connection with the Debt Financing; provided that (I) the Company will only be obligated to deliver such information to the extent such information may be obtained from the books and records of the Company and (II) the Company will not be obligated to furnish certain excluded information and (ii) upon reasonable prior notice, assist with the preparation of materials for lender or investor presentations, bank information memoranda, prospectuses or offering memoranda and similar marketing or syndication documents required or to be used in connection with the Debt Financing.

Any requested cooperation in connection with the Debt Financing will not (A) unreasonably disrupt or interfere with the business or the operations of the Company or its subsidiaries or (B) cause competitive harm to the Company or its subsidiaries if the transactions contemplated by the Merger Agreement are not consummated. Additionally, cooperation is not required to the extent that it would (A) subject any of the Company’s or its subsidiaries’ respective directors, managers, officers, employees or Company Representatives to any actual or potential personal liability, (B) reasonably be expected to conflict with, or violate, the Company’s and/or any of its subsidiaries’ organizational documents or any law, or result in the contravention of, or violation or breach of, or default under, any contract to which the Company or any of its subsidiaries is a party, (C) cause any condition to the closing to not be satisfied or (D) cause any breach of the Merger Agreement. Further, neither the Company nor any subsidiary of the Company will be required to (1) pay any commitment or other similar fee or incur or assume any liability or other obligation in connection with any Debt Financing or the repayment or redemption of any indebtedness or be required to take any action that would subject it to actual or potential liability, to bear any cost or expense or to make any other payment or agree to provide any indemnity in connection with the Debt Financing or the repayment of the indebtedness or any information utilized in connection therewith (except that the Company and its subsidiaries will issue any notices required to be issued pursuant to the Redemption), (2) except in connection with the Redemption, deliver or obtain opinions of internal or external counsel, (3) provide access to or disclose information where the Company determines in good faith that such access or disclosure could jeopardize the attorney-client privilege or contravene any law or contract, or (4) waive or amend any terms of the Merger Agreement or any other contract to which the Company or its subsidiaries is party. Finally, none of the Company or any of its subsidiaries or their respective directors, officers or employees, acting in such capacity, will be required to execute, deliver or enter into or perform any agreement, document or instrument, with respect to the Debt Financing or, except with respect to notices issued pursuant to the Redemption, the prepayment or redemption of any indebtedness, or adopt any resolutions or take any other actions approving the agreements, documents and instruments pursuant to which the Debt Financing is obtained.

Thermo Fisher will indemnify and hold harmless each of the Company, its subsidiaries and their respective Company Representatives from and against any and all losses suffered or incurred by them in connection with the arrangement of the Debt Financing and the performance of their respective obligations with respect to the Debt Financing and the performance of their respective obligations under the Merger Agreement, except with respect to any actual and intentional fraud or willful and material breach by the Company or any of its subsidiaries (as determined by a court of competent jurisdiction in a final and nonappealable order). Thermo Fisher will, promptly upon written request of the Company, reimburse the Company and its subsidiaries for all reasonable and documented out-of-pocket costs and expenses incurred by the Company, its subsidiaries and their respective Company Representatives in connection with the Company’s, its subsidiaries’ and their respective Company Representatives’ cooperation and assistance in connection with the Debt Financing.

Obtaining the Debt Financing is not a condition to the closing, and none of Thermo Fisher’s or Merger Sub’s respective obligations under the Merger Agreement are conditioned in any manner upon Thermo Fisher or Merger Sub obtaining financing in respect of the transactions contemplated by the Merger Agreement.

Other Covenants and Agreements

The Merger Agreement contains other covenants and agreements, in which each of Thermo Fisher and the Company covenants or agrees to:

 

 

consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements, including any press conference or conference call with investors or analysts, with respect to the Merger and other transactions contemplated by the Merger Agreement, and shall not issue any such press release or make any such public statement without the prior written consent of the other party (not to be unreasonably withheld, conditioned or delayed), except as otherwise provided in the Merger Agreement; and

 

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notify each other, in writing, of certain events, including any notice or other communication (i) received from any person alleging that the consent, approval, permission of or waiver from such party is or may be required in connection with the Merger or other transactions contemplated by the Merger Agreement or (ii) received from any governmental entity in connection with the transactions contemplated by the Merger Agreement, if the subject matter of such communications would reasonably be expected to be material to the Company or the surviving corporation.

In addition, the Company will:

 

 

give Thermo Fisher, its counsel, financial advisors, auditors and other authorized representatives reasonable access during reasonable business hours to the offices, properties, books and records and other information concerning the business, properties and personnel of the Company and the subsidiaries of the Company as such persons may reasonably request;

 

 

cause the employees, counsel, financial advisors, auditors and other authorized representatives of the Company and the subsidiaries of the Company to reasonably cooperate with Thermo Fisher in its investigation of the Company and its subsidiaries, in each case, in connection with the consummation of the transactions contemplated by the Merger Agreement;

 

 

cause (i) all affiliate transactions, other than certain specified affiliate transactions or agreements that terminate pursuant to the applicable agreement at the Effective Time, to be terminated, in each case without further liability or obligation (contingent or otherwise) of any party thereunder, effective as of immediately prior to the closing and (ii) any and all liabilities of the Company and its subsidiaries in connection with such affiliate transactions to be extinguished with no payment or liability obligation of the Company or any of its subsidiaries outstanding as of the Closing, except for any liabilities or obligations that survive pursuant to the express terms of the applicable contract with respect to such affiliate transaction in effect as of the date of the Merger Agreement and as and to the extent set forth therein;

 

 

furnish Thermo Fisher and its representatives with any information, documents, work papers and other materials as reasonably requested in connection with tax-related matters (including with respect to due diligence and restructuring and integration planning), make its representatives available during normal business hours to provide explanations of such materials, reasonably cooperate with Thermo Fisher and its representatives in connection with such matters and consider in good faith any restructuring steps that Thermo Fisher requests the Company or any of its subsidiaries to consummate prior to the Closing;

 

 

promptly advise Thermo Fisher of any proceeding commenced or, to the knowledge of the Company, threatened by, a stockholder or holder of any equity interests of the Company against the Company or its directors or executive officers relating to the Merger or any of the other transactions contemplated by the Merger Agreement, and will keep Thermo Fisher reasonably informed, consult with Thermo Fisher regarding, and give Thermo Fisher the opportunity to participate in, the defense and settlement of any such proceeding and the Company and its representatives will not agree to or propose any settlement of any such proceeding without Thermo Fisher’s prior written consent;

 

 

take all steps as may be required to cause any dispositions of equity interests of the Company in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement by each individual who is subject to the reporting requirements of Section 16 of the Exchange Act with respect to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act;

 

 

prior to the Effective time, cooperate with Thermo Fisher and use its reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable laws and rules and policies of Nasdaq to enable the de-listing by the surviving corporation of the Company Common Stock from Nasdaq and the deregistration of the Company Common Stock and the suspension of the Company’s reporting obligations under the Exchange Act as promptly as practicable after the Effective Time; and

 

 

in consultation with Thermo Fisher, prepare and file with the SEC this information statement and, as promptly as reasonably practicable, and in any event within two days after, the later of receiving clearance from the SEC or the expiration of the 10-day period after filing in the event the SEC does not review the information statement, mail this information statement to its stockholders.

Conditions to Consummation of the Merger

The obligation of each party to consummate the Merger are subject to the satisfaction or, to the extent not prohibited by applicable law, waiver of, on or prior to the Closing Date, of the following conditions:

 

 

no applicable law or judgment or other legal or regulatory restraint or prohibition (in each case whether temporary, preliminary or permanent in nature) by a court of competent jurisdiction or other governmental entity, or agreement entered into by (or with the consent of) each party (i) restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger or the other transactions contemplated by the Merger Agreement or (ii) imposing any Remedial Action (other than a Permitted Remedial Action) being in effect;

 

 

    

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the expiration or termination of any applicable waiting period (including any extension thereof) under the HSR Act and all other required regulatory approvals having been obtained, in each case, without, except as otherwise agreed by Thermo Fisher in its sole discretion, the imposition of any Remedial Action (other than a Permitted Remedial Action);

 

 

the Written Consent having been obtained; and

 

 

this information statement having been mailed to the Company’s stockholders at least 20 business days prior to the Closing Date and the consummation of the Merger having been permitted by Section 14(c) of the Securities Exchange Act of 1934 (including Rule 14c-2 promulgated thereunder).

As of the date of this information statement, the Written Consent has been obtained.

The obligations of Thermo Fisher and Merger Sub to consummate the Merger are further subject to satisfaction of or, to the extent not prohibited by applicable law, waiver of, on or prior to the Closing Date, among other things, the following additional conditions:

 

 

the representations and warranties of the Company (i) related to the absence of a Company Material Adverse Effect since December 31, 2020, being true and correct as of the Closing Date as though made at and as of such date; (ii) related to fundamental portions of its capitalization representation being true and correct as of the Closing Date as though made at and as of such date in all but de minimis respects; (iii) related to organization, standing and power, corporate authority, lack of conflicts, brokers and opinion of the financial advisors being true and correct in all material respects as of the Closing Date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)) and (iv) all other representations and warranties of the Company being true and correct as of the Closing Date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)) and without regard to any “materiality”, “Company Material Adverse Effect” or similar qualifications and exceptions contained therein, other than for such failures to be true and correct that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

 

 

the Company having performed and complied in all material respects with obligations required to be performed by it under the Merger Agreement at or prior to the Effective Time; and

 

 

the receipt by Thermo Fisher and Merger Sub of a certificate dated the Closing Date signed by an executive officer of the Company on behalf of the Company stating that each of the two conditions specified above has been satisfied.

The obligation of the Company to consummate the Merger is further subject to satisfaction or, to the extent not prohibited by applicable law, waiver, as of the closing of the Merger of, among other things, the following additional conditions:

 

 

the representations and warranties of Thermo Fisher and Merger Sub (i) related to organization, standing and power, corporate authority and brokers being true and correct in all material respects as of the Closing Date as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)) and (ii) all other representations and warranties of Thermo Fisher and Merger Sub being true and correct (without regard to any “materiality”, “Parent Material Adverse Effect” or similar qualifications and exceptions contained therein) both at and as of the date of the Merger Agreement and at and as of the date of closing as though made at and as of such date (except to the extent such representation and warranty expressly relates to a specified date (in which case at and as of such specified date)), other than for such failures to be true and correct that have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect;

 

 

Thermo Fisher and Merger Sub having performed and complied in all material respects with all obligations required to be performed by them under the Merger Agreement as of the Effective Time; and

 

 

the receipt by the Company of a certificate dated the Closing Date signed by an executive officer of Thermo Fisher on behalf of Thermo Fisher stating that each of the two conditions specified above has been satisfied.

Termination of the Merger Agreement

The Merger Agreement may be terminated at any time prior to the Effective Time by the mutual written consent of Thermo Fisher, Merger Sub and the Company.

In addition, the Merger Agreement may be terminated by either Thermo Fisher or the Company:

 

 

if the Merger is not consummated on or before April 15, 2022 (the “Outside Date”), as may be extended pursuant to the terms of the Merger Agreement; provided, that the right to terminate the Merger Agreement under this clause is not available to a party if such party’s action or failure to act is a breach of the Merger Agreement and a principal cause of or directly resulted in the failure of the Merger to occur on or before the Outside Date; or

 

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if any legal restraint permanently (i) restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger or the other transactions contemplated by the Merger Agreement or (ii) imposing a Remedial Action (other than a Permitted Remedial Action) is in effect and is become final and non-appealable; provided, that the right to terminate the Merger Agreement under this clause is not available to a party if the failure of such party to perform any of its obligations under the Merger Agreement is a principal cause of or directly resulted in the issuance of such final, non-appealable legal restraint.

The Merger Agreement also may be terminated by either party if the other party breaches any of its representations or warranties or fails to perform any of its covenants or obligations contained in the Merger Agreement, which breach or failure to perform would give rise to the failure of a condition precedent to closing and cannot be cured prior to the Outside Date or, if capable of being cured, has not been cured prior to the earlier of (x) 30 days after the giving of written notice to the other party of such breach and (y) the Outside Date.

As of the date of this information statement, the Written Consent has been received.

The Merger Agreement also provided that Thermo Fisher could have terminated the Merger Agreement (i) if the Written Consent was not delivered to Thermo Fisher prior to 8:30 a.m., New York City time, on April 16, 2021 or (ii) prior to Thermo Fisher’s receipt of the Written Consent, if an Adverse Recommendation change had occurred; however, these termination provisions expired following delivery of the Written Consent on April 15, 2021.

The Merger Agreement also provided that the Company could have terminated the Merger Agreement, prior to receipt of the Written Consent, in order to enter into, concurrently with the termination of the Merger Agreement, a definitive written agreement providing for the consummation of a Superior Proposal; however, this termination provision expired following delivery of the Written Consent on April 15, 2021.

Termination Fees and Expenses

Fees Payable by the Company. The Company will pay Thermo Fisher (or its designee) a termination fee of $520,354,225 (the “Termination Fee”) in the following circumstances:

 

 

if the Merger Agreement is terminated by the Company, prior to Thermo Fisher’s receipt of the Written Consent, in order to enter into, concurrently with the termination of the Merger Agreement, a definitive written agreement providing for the consummation of a Superior Proposal; however, this termination provision expired following delivery of the Written Consent on April 15, 2021;

 

 

if the Merger Agreement is terminated by Thermo Fisher, prior to receipt of the Written Consent, if an Adverse Recommendation Change has occurred; however, this termination provision expired following delivery of the Written Consent on April 15, 2021; or

 

 

if a Company Takeover Proposal (whether or not conditional and whether or not withdrawn) is made, proposed or communicated to the Company Board, any committee of the Company Board or management of the Company, or is publicly made, proposed or communicated publicly, or any person or group publicly proposes or announces an intention to make a Company Takeover Proposal (whether or not conditional and whether or not withdrawn) and thereafter the Merger Agreement is terminated:

 

   

by either Thermo Fisher or the Company, if the Merger is not consummated on or before the Outside Date, as may be extended pursuant to the terms of the Merger Agreement;

 

   

by Thermo Fisher, if the Company breaches any of its representations or warranties or fails to perform any of its covenants or obligations contained in the Merger Agreement, which breach or failure to perform would give rise to the failure of a condition precedent to closing and cannot be cured prior to the Outside Date or, if capable of being cured, has not been cured prior to the earlier of (x) 30 days after the giving of written notice to the Company of such breach and (y) the Outside Date;

 

   

by Thermo Fisher, if the Written Consent is not delivered to Thermo Fisher prior to 8:30 a.m., New York City time, on April 16, 2021; however, this termination provision expired following delivery of the Written Consent on April 15, 2021; and

within 12 months of such termination any Company Takeover Proposal is consummated or the Company enters into a definitive agreement providing for the consummation of any Company Takeover Proposal, in each case whether or not involving the same Company Takeover Proposal or the person or group making the Company Takeover Proposal referred to in this clause; provided that for purposes of this subclause, all references in the definition of the term Company Takeover Proposal (as defined in “The Merger Agreement — No Solicitation”, beginning on page 52) to “20%” will deemed to be references to “50.1%.”

 

 

    

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Expenses: Except as otherwise provided in the Merger Agreement, all fees and expenses incurred in connection with this Agreement, the Merger and the other transactions contemplated by the Merger Agreement will be paid by the party incurring such fees or expenses, whether or not the Merger and the other transactions contemplated by the Merger Agreement are consummated, except that any filing fees paid relating to the Debt Financing or in connection with filings made pursuant to the HSR Act or other antitrust law or foreign investment law will be paid by Thermo Fisher.

Additionally, if Thermo Fisher had terminated the Merger Agreement because the Written Consent was not delivered to Thermo Fisher prior to 8:30 a.m., New York City time, on April 16, 2021, then the Company would have been required to pay to Thermo Fisher (or its designee) promptly upon delivery of written demand by Thermo Fisher to the Company but in no event later than three (3) business days after the date such demand was delivered, all reasonable and documented out-of-pocket fees and expenses (including all due diligence fees, all filing and printing fees and all fees and expenses of counsel, accountants, investment bankers, experts and consultants) (“Parent Expenses”) incurred prior to such termination by Thermo Fisher, Merger Sub or their respective affiliates in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement; provided that the Company would not have been obligated to pay for Parent Expenses in excess of $75,000,000. However, this expense reimbursement provision expired following delivery of the Written Consent on April 15, 2021.

Superior Proposal and Change of Recommendation

Notwithstanding the restrictions described above if, at any time after the execution of the Merger Agreement and prior to obtaining the Written Consent, the Company or any of its representatives had received a bona fide, written Company Takeover Proposal, which Company Takeover Proposal did not result from a breach of the Merger Agreement, then in response to such Company Takeover Proposal (i) the Company and its representatives could have contacted such person or group to clarify the terms and conditions thereof or to request that such Company Takeover Proposal made orally be made in writing and (ii) if the Company Board had determined in good faith, after consultation with the Company’s outside legal counsel and financial advisor, that such Company Takeover Proposal constituted or would reasonably be expected to lead to a Superior Proposal and that the failure to take such action would reasonably be expected to be inconsistent with the Company’s directors’ fiduciary duties under applicable law, the Company could have entered into an acceptable confidentiality agreement with such person or group and thereafter furnished information with respect to the Company to such person or group and its representatives, provided the Company also would have been required to make such information available to Thermo Fisher, and could have also engaged in or otherwise participated in discussions or negotiations with such person or group and its representatives regarding such proposal.

The Company will promptly, and in no event more than 24 hours after the Company’s knowledge of its receipt of a Company Takeover Proposal, (i) advise Thermo Fisher in writing of receipt of the Company Takeover Proposal, and (ii) provide to Thermo Fisher a copy of such Company Takeover Proposal (including any material written documents related thereto) (or if oral, a written description thereof). The Company must keep Thermo Fisher reasonably informed on a reasonably prompt basis of any material developments with respect to any such Takeover Proposal (including any material changes thereto, and including by providing copies of any materially revised or material new documents evidencing or delivered in connection with such Company Takeover Proposal).

Except for the exceptions set forth below, which are now no longer applicable, neither the Company Board nor any committee thereof will (A) approve, recommend, cause or permit the Company to enter into any agreement for the acquisition of the Company, or authorize, resolve, agree or propose to take any such action or (B) take any of the following actions constituting an “Adverse Recommendation Change”:

 

 

withdraw, withhold, qualify or modify in a manner adverse to Thermo Fisher or Merger Sub (or publicly propose to do so), the recommendation that the holders of shares of Company Common Stock vote in favor of adopting the Merger Agreement and directing that the Merger Agreement be submitted to the Company’s stockholders for adoption, or authorize, resolve or agree to take any such action;

 

 

adopt, endorse, approve or recommend (or publicly propose to do so), or submit to the vote of any securityholders of the Company, any Company Takeover Proposal, or authorize, resolve or agree to take any such action; and

 

 

fail to recommend against any Company Takeover Proposal that is a tender offer or exchange offer within 10 business days after the commencement thereof.

Notwithstanding the restrictions set forth above at any time prior to obtaining the Written Consent, which was obtained on April 15, 2021, the Company Board could have (i) made an Adverse Recommendation Change if the Company Board had determined in good faith (after consultation with its outside legal counsel and financial advisor) that, as a result of an Intervening Event (as defined below), failure to make such Adverse Recommendation Change would be inconsistent with the Company’s directors’ fiduciary duties under applicable law or (ii) made an Adverse Recommendation Change, entered into a definitive written

 

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agreement providing for the consummation of a Superior Proposal and concurrently terminated the Merger Agreement and paid the Termination Fee to Thermo Fisher if the Company had received a Company Takeover Proposal after the date of the Merger Agreement for which the Company Board had determined in good faith (after consultation with its outside legal counsel and financial advisor) that such Company Takeover Proposal constituted a Superior Proposal and that the failure to take such actions would be inconsistent with the Company’s directors’ fiduciary duties under applicable law; provided, however, that the Company Board and any committee thereof could not have taken any action set forth above unless, prior to taking such action:

 

 

the Company had provided written notice to Thermo Fisher (a “Notice of Adverse Recommendation Change”) advising Thermo Fisher that the Company Board or any such committee intended to take such action and the reasons therefor;

 

 

in the case of any Notice of Adverse Recommendation Change provided in connection with an Intervening Event, such notice contained a reasonably detailed description of such event;

 

 

in the case of any Notice of Adverse Recommendation Change provided in connection with a Company Takeover Proposal, such notice specified the material terms and conditions of the Superior Proposal, identifying the person or group making it and included a copy of such proposal;

 

 

four business days had elapsed following Thermo Fisher’s receipt of such Notice of Adverse Recommendation Change, subject to extension;

 

 

if requested by Thermo Fisher, the Company had negotiated, and had caused its representatives to negotiate, in good faith with Thermo Fisher and its representatives during such four business day period, as extended, to enable Thermo Fisher to propose in writing a binding offer to change the terms of the Merger Agreement such that it would cause such Superior Proposal to no longer constitute a Superior Proposal; and

 

 

in consideration of such negotiations, the Company Board had determined in good faith (after consultation with its outside legal counsel and financial advisor) that (a) failure to effect the Adverse Recommendation Change would be inconsistent with the Company’s directors’ fiduciary duties under applicable law or (b) such Company Takeover Proposal continued to constitute a Superior Proposal.

The Merger Agreement provides that the term “Superior Proposal” means any bona fide written Company Takeover Proposal made by a third party or group that is not solicited in violation of the Merger Agreement that the Company Board has determined in its good faith judgment, after consultation with its financial advisors and outside legal counsel, (x) is reasonably capable of being consummated on the terms proposed, taking into account all financial, legal, regulatory and other aspects of such Company Takeover Proposal, including all material conditions contained therein and for which financing (if required) is committed and is reasonably likely to be obtained, and (y) to be more favorable from a financial point of view to the Company’s stockholders, than the transactions contemplated by the Merger Agreement (taking into account any changes to the Merger Agreement proposed by Thermo Fisher in writing in a binding offer in response to such Company Takeover Proposal); provided that for purposes of the definition of “Superior Proposal”, the references to “20%” in the definition of Company Takeover Proposal (as defined in “The Merger Agreement — No Solicitation”, beginning on page 52) are deemed to be references to “50.1%”.

The Merger Agreement provides that the term “Intervening Event” means any event, development or change in circumstances (other than (1) a Company Takeover Proposal, (2) changes in the price of Company Common Stock, in and of itself (however, the underlying reasons for such changes may constitute an Intervening Event) or (3) the fact that, in and of itself, the Company exceeds any internal or published forecasts, projections, estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period (provided, however, the underlying reasons for such events may constitute an Intervening Event)) that was not known to or reasonably foreseeable by the Board or any committee thereof prior to the execution and delivery of the Merger Agreement.

The Company’s rights to engage in negotiations or discussions with third parties and to terminate the Merger Agreement as described above ceased on April 15, 2021 upon delivery of the Written Consent in accordance with the terms of the Merger Agreement.

Nothing contained in the Merger Agreement will prohibit the Company from taking and disclosing to the Company’s stockholders a position required by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act, in each case after commencement of a tender offer (within the meaning of Rule 14d-2 promulgated under the Exchange Act) and (ii) no disclosure that the Company Board may determine in good faith (after consultation with its outside legal counsel) that the Company is required to make under applicable Law will constitute a violation of the Merger Agreement; provided that in no event shall the Company Board make an Adverse Recommendation Change except in accordance with the Merger Agreement.

 

 

    

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Amendment and Waiver

The Merger Agreement may be amended, modified and supplemented in any and all respects only by an instrument in writing signed on behalf of each of the parties thereto. Any agreement on the part of a party to any extension or waiver with respect to the Merger Agreement is valid only if set forth in an instrument in writing signed on behalf of such party. At any time prior to the Effective Time, the parties to the Merger Agreement (treating Thermo Fisher and Merger Sub as one party for this purpose) may (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement or (iii) waive compliance by the other party with any of the agreements or conditions contained in the Merger Agreement. Notwithstanding the foregoing, there shall be made no amendment, modification or supplement to the Merger Agreement (x) after receipt of the Written Consent which requires further approval by the stockholders of the Company without the further approval of such stockholders or (y) after the Effective Time. The Written Consent was delivered on April 15, 2021 shortly after the execution of the Merger Agreement.

The failure of any party to the Merger Agreement to assert any of its rights under the Merger Agreement or otherwise shall not constitute a waiver of such rights.

Specific Performance; Jurisdiction

The parties to the Merger Agreement are entitled to an injunction or injunctions, or any other appropriate form of equitable relief, to prevent breaches of the Merger Agreement and to enforce specifically the performance of the terms and provisions of the Merger Agreement, without the necessity of proving actual damages or the inadequacy of monetary damages as a remedy (and each party to the Merger Agreement has waived any requirement for the securing or posting of any bond in connection with such remedy), this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties to the Merger Agreement has agreed not to assert that a remedy of specific enforcement is unenforceable, invalid or contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy for any such breach. Each party to the Merger Agreement agrees to irrevocably submit to the exclusive jurisdiction of the Chosen Courts for the purpose of any proceeding arising out of or relating to the Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement and has agreed that all claims with respect to such proceeding may be heard and determined exclusively in such court. The parties to the Merger Agreement agree that a final trial court judgment in any such proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

Governing Law

The Merger Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

 

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MARKET INFORMATION AND DIVIDENDS

 

MARKET INFORMATION AND DIVIDENDS

Company Common Stock began trading on the NASDAQ under the symbol “PPD” on February 6, 2020. Prior to that, there was no public market for Company Common Stock. As of May 21, 2021, 351,195,675 shares of Company Common Stock were issued and outstanding, held by approximately 53 stockholders of record.

Since the date of our initial public offering, we have not paid dividends on outstanding Company Common Stock. The terms of the Merger Agreement do not allow us to declare or pay a dividend between April 15, 2021 and the earlier of the consummation of the Merger or the termination of the Merger Agreement. Following the Merger there will be no further market for the Common Stock.

 

 

    

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APPRAISAL RIGHTS

 

APPRAISAL RIGHTS

The discussion of the provisions set forth below is not a complete summary regarding your appraisal rights under Delaware law and is qualified in its entirety by reference to Section 262 of the DGCL, which is attached to this information statement as Annex C. Stockholders intending to exercise appraisal rights should carefully review Annex C in its entirety. Failure to follow precisely any of the statutory procedures set forth in Section 262 of the DGCL will result in a termination or waiver of these rights. This summary does not constitute any legal or other advice, nor does it constitute a recommendation that you exercise your rights to demand appraisal under Section 262 of the DGCL.

Under the DGCL, holders of shares of Company Common Stock that have not consented to the adoption of the Merger Agreement (i.e., all holders other than the Majority Stockholders) have the right to demand appraisal of, and receive payment in cash for the “fair value” of, their shares of Company Common Stock, as determined by the Delaware Court of Chancery, together with interest, if any, on the amount determined to be the fair value, in lieu of the consideration they would otherwise be entitled to pursuant to the Merger Agreement, if they comply with the procedures set forth in Section 262 of the DGCL. This right is known as an appraisal right. Stockholders electing to exercise appraisal rights must comply precisely with the requirements of Section 262 in order to demand and perfect their rights. Strict compliance with the statutory procedures is required to demand and perfect appraisal rights under Section 262.

Section 262 of the DGCL is reprinted in its entirety as Annex C to this information statement. Set forth below is a summary description of Section 262 of the DGCL. The following is intended as a brief summary of the material provisions of statutory procedures pursuant to Section 262 of the DGCL required to be followed by a stockholder to demand and perfect appraisal rights. This summary, however, is not a complete statement of all applicable requirements or considerations and is qualified in its entirety by reference to the full text of Section 262 of the DGCL, which appears in Annex C to this information statement. All references in Section 262 and this summary to “stockholder” are to the record holder of the shares of Company Common Stock immediately prior to the Effective Time as to which appraisal rights are asserted. Failure to comply strictly with the procedures set forth in Section 262 of the DGCL will result in the loss of appraisal rights.

Under the DGCL, any stockholder who has not consented to the adoption of the Merger Agreement (i.e., all holders other than the Majority Stockholders), who holds shares of Company Common Stock on the date of making a demand for appraisal rights, who continuously holds such shares through the Effective Time, who has complied with the procedures set forth in Section 262 of the DGCL, and who has not consented to the adoption of the Merger Agreement will be entitled to have his, her or its shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of those shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, on the amount determined to be the fair value, unless such holder validly withdraws or otherwise loses such holder’s rights to appraisal.

Under Section 262 of the DGCL, where a merger agreement relating to a proposed merger is adopted by stockholders acting by written consent in lieu of a meeting of the stockholders, either the constituent corporation before the effective date of the merger or the surviving corporation, within 10 days after the effective date of the merger, must notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger and that appraisal rights are available for any or all shares of such class or series of stock, and must include in such notice a copy of Section 262 of the DGCL. This information statement constitutes such notice to the holders of shares of Company Common Stock entitled thereto, and Section 262 of the DGCL is attached to this information statement as Annex C. Any stockholder who wishes to exercise such appraisal rights or who wishes to preserve his, her or its right to do so should review the following discussion and Annex C carefully, because failure to timely and properly comply with the procedures specified will result in the loss of appraisal rights under the DGCL.

Holders of shares of Company Common Stock who desire to exercise their appraisal rights must submit to the Company a written demand for appraisal of their shares of Company Common Stock no later than 20 days after the date of mailing of this information statement (which includes the notice of written consent and appraisal rights), which mailing date is May 25, 2021. A demand for appraisal will be sufficient if it reasonably informs the Company of the identity of the stockholder making the demand and that such stockholder intends thereby to demand appraisal of such stockholder’s shares of Company Common Stock. If you wish to exercise your appraisal rights, you must be the record holder of such shares of Company Common Stock on the date the written demand for appraisal is made and you must continue to hold such shares of Company Common Stock through the Effective Time. Accordingly, a stockholder who is the record holder of shares of Company Common Stock on the date the written demand for appraisal is made, but who thereafter transfers such shares prior to the Effective Time, will lose any right to appraisal in respect of such shares.

 

 

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All written demands for appraisal of shares of Company Common Stock must be mailed or delivered to: PPD, Inc., 929 North Front Street, Wilmington, North Carolina 28401, Attention: General Counsel. Only a holder of record of shares of Company Common Stock is entitled to demand an appraisal of the shares registered in that holder’s name. A demand for appraisal should be executed by or on behalf of the holder of record, fully and correctly, as the stockholder’s name appears in the transfer agent’s records, and must state that the stockholder intends thereby to demand appraisal of the stockholder’s shares in connection with the Merger. The demand cannot be made by the beneficial owner if he or she is not the record holder of the shares of Company Common Stock. The beneficial holder must, in such cases, have the registered owner, such as a bank, brokerage firm, trust or other nominee, submit the required demand in respect of those shares of Company Common Stock. If you hold your shares of Company Common Stock through a bank, brokerage firm, trust or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm, trust or the other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee.

If shares of Company Common Stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, the demand for appraisal must be executed by the fiduciary in that capacity. If the shares of Company Common Stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner or owners. A record owner, such as a bank, brokerage firm, trust or other nominee, who holds shares of Company Common Stock as a nominee for others, may exercise his or her right of appraisal with respect to the shares of Company Common Stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares of Company Common Stock as to which appraisal is sought. Where the number of shares is not expressly stated, the demand will be presumed to cover all shares of Company Common Stock which are held in the name of such record owner. If you hold shares of Company Common Stock through a broker who, in turn, holds the shares through a central securities depository nominee, such as Cede & Co., a demand for appraisal of such shares of Company Common Stock must be made by or on behalf of the depository nominee and must identify the depository nominee as record holder. Any beneficial holder desiring appraisal who holds shares through a brokerage firm, bank or other financial institution is responsible for ensuring that the demand for appraisal is made by the record holder.

Within 10 days after the Effective Time, the surviving corporation in the Merger must give written notice that the Merger has become effective to each of the Company stockholders who is entitled to appraisal rights; provided, however, that if such notice is sent more than 20 days following the sending of this information statement, such notice need only be sent to each holder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with Section 262 of the DGCL.

At any time within 60 days after the Effective Time, any stockholder who has demanded an appraisal, but has not commenced an appraisal proceeding or joined a proceeding as a named party, may withdraw the demand and accept the consideration specified by the Merger Agreement for that stockholder’s shares of Company Common Stock by delivering to the surviving corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the Effective Time will require written approval of the surviving corporation. Unless the demand is properly withdrawn by the stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party within 60 days after the Effective Time, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, with such approval conditioned upon such terms as the Delaware Court of Chancery deems just. If the surviving corporation does not approve a request to withdraw a demand for appraisal when that approval is required, or, except with respect to any stockholder who withdraws such stockholder’s right to appraisal in accordance with the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the stockholder will be entitled to receive only the appraised value of such stockholder’s shares as determined in any such appraisal proceeding, which value could be less than, equal to or more than the consideration offered pursuant to the Merger Agreement.

Within 120 days after the Effective Time, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 and is entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of Company Common Stock held by all stockholders entitled to appraisal. A person who is the beneficial owner of shares of Company Common Stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition for appraisal. The surviving corporation has no obligation to file such a petition, has no present intention to file a petition and holders of shares of Company Common Stock should not assume that the surviving corporation will file a petition. Accordingly, it is the obligation of the holders of shares of Company Common Stock to initiate all necessary action to demand and perfect their appraisal rights in respect of shares of Company Common Stock, and to file any petitions in the Delaware Court of Chancery relating to an appraisal, within the time prescribed in Section 262. If no petition for appraisal is timely filed, the right to appraisal will cease.

 

 

    

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In addition, within 120 days after the Effective Time, any stockholder who has properly complied with the requirements of Section 262 of the DGCL will be entitled to receive from the surviving corporation, upon written request, a statement setting forth the aggregate number of shares of Company Common Stock not voted in favor of the Merger Agreement and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. The statement must be given within 10 days after such written request has been received by the surviving corporation or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A person who is the beneficial owner of shares of Company Common Stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, request from the surviving corporation such statement.

Upon the timely filing of a petition for appraisal in accordance with Section 262, a copy of the petition must be served upon the surviving corporation. Within 20 days after receiving service of a copy of the petition, the surviving corporation must file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares of Company Common Stock and with whom agreements as to the value of their shares of Company Common Stock have not been reached by the surviving corporation. The Delaware Register in Chancery, if ordered by the Delaware Court of Chancery, will give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving corporation and to the stockholders shown on the verified list. Such notice will also be given by one or more publications at least one day before the date of the hearing in a newspaper of general circulation in the City of Wilmington, Delaware, or such publication as the Delaware Court of Chancery deems advisable. The forms of the notices by mail and by publication shall be approved by the Delaware Court of Chancery, and the costs thereof shall be borne by the surviving corporation.

After notice to stockholders who have demanded appraisal, if such notice is ordered by the Delaware Court of Chancery, the Delaware Court of Chancery is empowered to conduct a hearing upon the petition and to determine those stockholders who have complied with Section 262 and who have become entitled to the appraisal rights provided by Section 262. In addition, if immediately before the Merger, the Company Common Stock is listed on a national securities exchange (which we expect to be the case), the Delaware Court of Chancery will dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares of Company Common Stock entitled to appraisal exceeds 1% of the outstanding shares of Company Common Stock, or (2) the value of the consideration provided in the Merger for such total number of shares of Company Common Stock exceeds $1 million.

After the Delaware Court of Chancery determines the stockholders entitled to appraisal of their shares of Company Common Stock, the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Delaware Court of Chancery will determine the fair value of the shares of Company Common Stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. When the fair value has been determined, the Delaware Court of Chancery will direct the payment of the fair value of such shares, together with interest, if any, by the surviving corporation. Payment will be made to each stockholder forthwith. Unless the Court in its discretion determines otherwise for good cause shown, interest from the Effective Time through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the Effective Time and the date of payment of the judgment. At any time before the entry of judgment in the proceeding, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid at that time.

You should be aware that an investment banking opinion as to the fairness from a financial point of view of the consideration to be received in a sale transaction, such as the Merger, is not an opinion as to fair value under Section 262. Although we believe that the Merger Consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the Merger Consideration. Moreover, we do not anticipate offering more than the Merger Consideration to any stockholder exercising appraisal rights and reserve the right to assert, in any appraisal proceeding, that, for purposes of Section 262, the “fair value” of a share of Company Common Stock is less than the Merger Consideration. In determining “fair value,” the Court is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court has stated that in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which were known or which could be ascertained as of the date of the Merger which throw any light on future prospects of the merged

 

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corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the Merger and not the product of speculation, may be considered.” In addition, the Delaware courts have decided that the statutory appraisal remedy, depending on factual circumstances, may or may not be a dissenting stockholder’s exclusive remedy.

Costs of the appraisal proceeding (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and imposed upon the parties participating in the appraisal proceeding by the Delaware Court of Chancery, as it deems equitable in the circumstances. Upon the application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts used in the appraisal proceeding, to be charged pro rata against the value of all shares of Company Common Stock entitled to appraisal.

If any stockholder who demands appraisal of his, her or its shares of Company Common Stock under Section 262 fails to perfect, or effectively withdraws or loses, his, her or its right to appraisal, as provided in the DGCL, the shares of Company Common Stock of such stockholder will be converted into the right to receive the consideration in respect thereof provided for in the Merger Agreement in accordance with the Merger Agreement, without interest and subject to any applicable withholding taxes. A stockholder will fail to perfect, or effectively lose or withdraw, his, her or its right to appraisal if no petition for appraisal is filed within 120 days after the Effective Date of the Merger, or if the stockholder delivers to the Company a written withdrawal of his, her or its demand for appraisal and an acceptance of the terms offered upon the Merger, except that any such attempt to withdraw made more than 60 days after the Effective Time will require the written approval of the Company. In addition, once a petition for appraisal is filed, the appraisal proceeding may not be dismissed as to any stockholder absent court approval, provided, however, that the foregoing shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the Merger within 60 days after the Effective Time.

Failure by any stockholder to comply fully with the procedures described above and set forth in Section 262 (a copy of which is included as Annex C to this information statement) may result in loss of the stockholder’s appraisal rights. In view of the complexity of Section 262 of the DGCL, the Company stockholders who may wish to dissent to the Merger and pursue appraisal rights should consult their legal and financial advisors.

To the extent there are any inconsistencies between the foregoing summary and Section 262 of the DGCL, Section 262 of the DCGL will govern.

 

 

    

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table and accompanying footnotes set forth information with respect to the beneficial ownership of Company Common Stock as of May 21, 2021 unless otherwise indicated below, by:

 

 

each person known by us to beneficially own more than 5% of our outstanding shares of common stock;

 

 

each of our directors;

 

 

each of our named executive officers; and

 

 

our directors and executive officers as a group.

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. A person is a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of the security, or “investment power,” which includes the power to dispose of or to direct the disposition of the security, or has the right to acquire such powers within 60 days of May 21, 2021. The percent of common stock calculations are based on the 351,195,675 shares of our common stock outstanding as of May 21, 2021.

Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, to our knowledge, the persons named in the table have sole voting and investment power with respect to their beneficially owned common stock.

 

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Except as otherwise indicated in the footnotes below, the address of each beneficial owner is c/o PPD, Inc., 929 North Front Street, Wilmington, North Carolina 28401.

 

     

Common Stock

Beneficially Owned

 

Name of Beneficial Owner

   Shares      Percentage  

5% Stockholders:

                 

H&F Investors(1)

     132,841,266        37.8    

Carlyle Investor(2)

     55,722,733        15.9    

GIC Investor(3)

     21,453,252        6.1    

Directors and Named Executive Officers:

                 

David Simmons(4)

     4,034,269        1.1    

Joe Bress(5)

             

Stephen Ensley(6)

             

Maria Teresa Hilado

     37,199        *

Colin Hill

     14,166        *

Jeffrey Kindler(7)

     115,823        *

P. Hunter Philbrick(6)

             

Allen Thorpe(6)

             

Stephen Wise(5)

             

William Sharbaugh(8)

     1,196,778        *  

Christopher Scully(9)

     412,959        *  

Anshul Thakral(10)

     292,963        *  

David Johnston(11)

     236,433        *  

All directors and executive officers as a group (19 persons)(12)

     7,154,028        2.0      

 

*

Indicates beneficial ownership of less than 1%.

(1)

Based on the Schedule 13G filed with the SEC on February 12, 2021. Hellman & Friedman Capital Partners VII, L.P. directly holds 52,884,036 shares of Common Stock, Hellman & Friedman Capital Partners VII (Parallel), L.P. directly holds 20,244,387 shares of Common Stock, HFCP VII (Parallel-A), L.P. directly holds 3,630,740 shares of Common Stock, H&F Executives VII, L.P. directly holds 359,372 shares of Common Stock, Hellman & Friedman Capital Partners VIII, L.P. directly holds 35,622,429 shares of Common Stock, Hellman & Friedman Capital Partners VIII (Parallel), L.P. directly holds 15,987,409 shares of Common Stock, HFCP VIII (Parallel-A), L.P. directly holds 3,021,286 shares of Common Stock, H&F Executives VIII, L.P. directly holds 934,469 shares of Common Stock, and H&F Associates VIII, L.P. directly holds 157,138 shares of Common Stock. The general partner of each of Hellman & Friedman Capital Partners VII, L.P., Hellman & Friedman Capital Partners VII (Parallel), L.P., HFCP VII (Parallel-A), L.P. and H&F Executives VII, L.P. (collectively, the “H&F VII Funds”) is Hellman & Friedman Investors VII, L.P. The general partner of Hellman & Friedman Investors VII, L.P. is H&F Corporate Investors VII, Ltd. The general partner of each of Hellman & Friedman Capital Partners VIII, L.P., Hellman & Friedman Capital Partners VIII (Parallel), L.P., HFCP VIII (Parallel-A), L.P., H&F Executives VIII, L.P. and H&F Associates VIII, L.P. (collectively, the “H&F VIII Funds”) is Hellman & Friedman Investors VIII, L.P. The general partner of Hellman & Friedman Investors VIII, L.P. is H&F Corporate Investors VIII, Ltd. A three member board of directors of each of H&F Corporate Investors VII, Ltd. and H&F Corporate Investors VIII, Ltd. has investment discretion over the shares held by the H&F VII Funds and the H&F VIII Funds, respectively. Each of the members of the boards of directors disclaims beneficial ownership of such shares. The address of each entity named in this footnote is c/o Hellman & Friedman LLC, 415 Mission Street, Suite 5700, San Francisco, California 94105.

(2)

Based on the Schedule 13G filed with the SEC on February 12, 2021. Reflects shares directly held by Carlyle Partners VI Holdings II, L.P. (the “Carlyle Investor”). Carlyle Group Management L.L.C. holds an irrevocable proxy to vote a majority of the shares of The Carlyle Group Inc., which is a publicly traded entity listed on Nasdaq. The Carlyle Group Inc. is the sole member of Carlyle Holdings II GP L.L.C., which is the managing member of Carlyle Holdings II L.L.C., which, with respect to the securities reported herein, is the managing member of CG Subsidiary Holdings L.L.C., which is the general partner of TC Group Cayman Investment Holdings, L.P., which is the general partner of TC Group Cayman Investment Holdings Sub L.P., which is the sole member of TC Group VI, L.L.C., which is the general partner of TC Group VI, L.P., which is the general partner of the Carlyle Investor. Accordingly, each of the foregoing entities may be deemed to share beneficial ownership of the securities held of record by the Carlyle Investor. The address of each of TC Group Cayman Investment Holdings, L.P. and TC Group Cayman Investment Holdings Sub L.P. is c/o Walkers, Cayman Corporate Center, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands. The address of each of the other entities named in this footnote is c/o The Carlyle Group Inc., 1001 Pennsylvania Avenue, NW, Suite 220 South, Washington, D.C. 20004.

 

 

    

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(3)

Based on the Schedule 13G filed with the SEC on February 12, 2021. Reflects shares directly held by Clocktower Investment Pte Ltd. (the “GIC Investor”). The GIC Investor shares the power to vote and the power to dispose of these shares with GIC Special Investments Pte. Ltd. (“GIC SI”), and GIC, both of which are private limited companies incorporated in Singapore. GIC SI is wholly owned by GIC and is the private equity investment arm of GIC. GIC is a fund manager and only has two clients – the Government of Singapore (“GoS”) and the Monetary Authority of Singapore (“MAS”). Under the investment management agreement with GoS, GIC has been given the sole discretion to exercise the voting rights attached to, and the disposition of, any shares managed on behalf of GoS. As such, GIC has the sole power to vote and power to dispose of 81,544 shares of Common Stock, par value $0.01 per share, of the Issuer beneficially owned by it. GIC shares power to vote and dispose of 26,700 shares of Common Stock, par value $0.01 per share, of the Issuer beneficially owned by it with MAS. The business address for each of the GIC Investor, GIC and GIC SI is 168 Robinson Road, #37-01 Capital Tower, Singapore 068912.

(4)

Includes 570,760 shares held by the 2015 Simmons Family Gift Trust U/A dated June 18, 2015 of which Mr. Simmons’ spouse is a Trustee, 669,999 shares held by the David S. Simmons Revocable Trust dated November 13, 2009 of which Mr. Simmons is a Trustee, 30,000 shares held by the David and Melissa Simmons Family Foundation, of which Mr. Simmons is a Trustee, 120,000 shares held by the Melissa B. Simmons Irrevocable Trust dated November 9, 2020 of which Mr. Simmons is a Trustee, and 2,643,510 shares issuable upon the exercise of Options exercisable within 60 days following May 21, 2021.

(5)

The address of each of Messrs. Bress and Wise is c/o The Carlyle Group Inc., 1001 Pennsylvania Avenue, NW, Suite 2200 South, Washington, D.C. 20004.

(6)

The address of each of Messrs. Ensley, Philbrick and Thorpe is c/o Hellman & Friedman LLC, 415 Mission Street, Suite 5700, San Francisco, California 94105.

(7)

Includes 18,500 shares held by the Jeffrey B. Kindler 2020 Irrevocable Trust of which Mr. Kindler’s spouse is a Trustee.

(8)

Includes 74,480 shares held by William Sharbaugh, III 2020 Grantor Retained Annuity Trust u/a 01/15/2020 of which Mr. Sharbaugh is a Trustee and 744,293 shares issuable upon the exercise of Options exercisable within 60 days following May 21, 2021.

(9)

Includes 386,959 shares issuable upon the exercise of Options exercisable within 60 days following May 21, 2021.

(10)

Includes 258,737 shares issuable upon the exercise of Options exercisable within 60 days following May 21, 2021.

(11)

Includes 201,026 shares issuable upon the exercise of Options exercisable within 60 days following May 21, 2021.

(12)

Includes 4,936,890 shares issuable upon the exercise of Options exercisable within 60 days following May 21, 2021 held by our current executive officers.

Other than the Merger Agreement, there are no arrangements, known to PPD, including any pledge by any person of securities of PPD or any of its parents, the operation of which may at a subsequent date result in a change in control of PPD.

 

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WHERE YOU CAN FIND MORE INFORMATION

 

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements, and other documents with the SEC. These reports contain additional information about the Company. Stockholders may read and copy any reports, statements or other information filed by the Company at the SEC’s Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. Please call the SEC at (800) SEC-0330 for further information on the operation of the Public Reference Room. The Company’s SEC filings are made electronically available to the public at the SEC’s website located at www.sec.gov. Stockholders can also obtain free copies of our SEC filings through the “Investor Relations” section of the Company’s website at https://investors.ppd.com/investor-relations. Our website address is being provided as an inactive textual reference only. The information provided on, or accessible through, our website, other than the copies of the documents listed or referenced below that have been or will be filed with the SEC, is not part of this information statement, and therefore is not incorporated herein by reference.

The SEC allows the Company to “incorporate by reference” information that it files with the SEC in other documents into this information statement. This means that the Company may disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this information statement. This information statement and the information that the Company files later with the SEC may update and supersede the information incorporated by reference. Such updated and superseded information will not, except as so modified or superseded, constitute part of this information statement.

The Company incorporates by reference each document it files under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial filing of this information statement and before the Effective Time. The Company also incorporates by reference in this information statement the following documents filed by it with the SEC under the Exchange Act:

 

PPD Filings:

  

Periods:

Annual Report on Form 10-K

  

Fiscal Year ended December 31, 2020

Quarterly Report on Form 10-Q

  

Fiscal Quarter ended March 31, 2021

The Company undertakes to provide without charge to each person to whom a copy of this information statement has been delivered, upon written or oral request, by first class mail or other equally prompt means within one business day of receipt of such request, a copy of any or all of the documents incorporated by reference in this information statement, other than the exhibits to these documents, unless the exhibits are specifically incorporated by reference into the information that this information statement incorporates. You may request a copy of these filings by telephone at (910) 251-0081 or by writing to us at:

Investor Relations

929 North Front Street

Wilmington, NC 28401

e-mail: Investors@ppd.com

Thermo Fisher and Merger Sub have supplied, and the Company has not independently verified, the information in this information statement relating to Thermo Fisher and Merger Sub.

Stockholders should not rely on information that purports to be made by or on behalf of the Company other than that contained in or incorporated by reference in this information statement. The Company has not authorized anyone to provide information on behalf of the Company that is different from that contained in this information statement. This information statement is dated May 25, 2021. No assumption should be made that the information contained in this information statement is accurate as of any date other than that date, and the mailing of this information statement will not create any implication to the contrary.

 

 

    

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Table of Contents

Annex A

 

[EXECUTION VERSION]

 

 

AGREEMENT AND PLAN OF MERGER

 

dated as of April 15, 2021,

 

among

 

THERMO FISHER SCIENTIFIC INC.,

 

POWDER ACQUISITION CORP.

 

and

 

PPD, INC.

 

 

 

 


Table of Contents

TABLE OF CONTENTS

 

         Page  
  ARTICLE I   
  The Merger   

SECTION 1.01.

  The Merger      A-1  

SECTION 1.02.

  Closing      A-1  

SECTION 1.03.

  Effective Time      A-1  

SECTION 1.04.

  Effects of Merger      A-2  

SECTION 1.05.

  Certificate of Incorporation and Bylaws      A-2  

SECTION 1.06.

  Directors and Officers      A-2  
  ARTICLE II   
  Effect on Capital Stock; Payment for Shares   

SECTION 2.01.

  Effect on Capital Stock      A-2  

SECTION 2.02.

  Payment of Merger Consideration      A-3  

SECTION 2.03.

  Equity Awards      A-5  

SECTION 2.04.

  Adjustments      A-7  
  ARTICLE III   
  Representations and Warranties of the Company   

SECTION 3.01.

  Organization, Standing and Power      A-8  

SECTION 3.02.

  Capital Structure      A-8  

SECTION 3.03.

  Company Subsidiaries; Equity Interests      A-9  

SECTION 3.04.

  Authority; Execution and Delivery; Enforceability      A-10  

SECTION 3.05.

  No Conflicts; Consents      A-11  

SECTION 3.06.

  SEC Documents; Undisclosed Liabilities; Internal Controls      A-11  

SECTION 3.07.

  Absence of Certain Changes or Events      A-13  

SECTION 3.08.

  Taxes      A-13  

SECTION 3.09.

  Labor Relations      A-14  

SECTION 3.10.

  Employee Benefits      A-15  

SECTION 3.11.

  Real and Personal Property      A-16  

SECTION 3.12.

  Contracts      A-17  

SECTION 3.13.

  Litigation      A-19  

SECTION 3.14.

  Compliance with Laws      A-20  

SECTION 3.15.

  Regulatory Compliance      A-20  

SECTION 3.16.

  Environmental Matters      A-21  

SECTION 3.17.

  Intellectual Property      A-22  

SECTION 3.18.

  Cybersecurity; Data Privacy      A-23  

SECTION 3.19.

  Insurance      A-24  

SECTION 3.20.

  Affiliate Transactions      A-25  

SECTION 3.21.

  Brokers and Other Advisors      A-25  

SECTION 3.22.

  Opinions of Financial Advisors      A-25  

SECTION 3.23.

  No Other Representations and Warranties      A-25  
  ARTICLE IV   
  Representations and Warranties of Parent and Merger Sub   

SECTION 4.01.

  Organization, Standing and Power      A-26  

SECTION 4.02.

  Merger Sub      A-26  

SECTION 4.03.

  Authority; Execution and Delivery; Enforceability      A-26  

 

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SECTION 4.04.

  No Conflicts; Consents      A-26  

SECTION 4.05.

  Available Funds      A-27  

SECTION 4.06.

  Brokers and Other Advisors      A-27  

SECTION 4.07.

  Ownership of Company Common Stock      A-27  

SECTION 4.08.

  Certain Arrangements      A-27  

SECTION 4.09.

  Litigation      A-27  

SECTION 4.10.

  No Other Representations and Warranties      A-28  
  ARTICLE V   
  Covenants Relating to Conduct of Business   

SECTION 5.01.

  Conduct of Business of the Company      A-28  

SECTION 5.02.

  No Solicitation; Adverse Recommendation Change      A-32  
  ARTICLE VI   
  Additional Agreements   

SECTION 6.01.

  Stockholder Consent; Preparation of the Information Statement      A-35  

SECTION 6.02.

  Access to Information; Confidentiality      A-36  

SECTION 6.03.

  Reasonable Best Efforts; Notification      A-37  

SECTION 6.04.

  Continuing Employee Matters      A-39  

SECTION 6.05.

  Indemnification      A-41  

SECTION 6.06.

  Fees and Expenses      A-42  

SECTION 6.07.

  Public Announcements      A-44  

SECTION 6.08.

  Affiliate Transactions      A-44  

SECTION 6.09.

  Certain Tax Matters      A-45  

SECTION 6.10.

  Stockholder Litigation      A-45  

SECTION 6.11.

  Section 16 Matters      A-45  

SECTION 6.12.

  Merger Sub and Surviving Corporation Compliance      A-45  

SECTION 6.13.

  Advice of Changes      A-45  

SECTION 6.14.

  Stock Exchange De-Listing; Exchange Act Deregistration      A-46  

SECTION 6.15.

  Resignation of Directors and Officers      A-46  

SECTION 6.16.

  Closing Indebtedness      A-46  

SECTION 6.17.

  Financing Assistance      A-47  
  ARTICLE VII   
  Conditions Precedent to the Merger   

SECTION 7.01.

  Conditions to Each Party’s Obligation      A-48  

SECTION 7.02.

  Conditions to Obligations of Parent and Merger Sub      A-49  

SECTION 7.03.

  Conditions to Obligations of the Company      A-49  
  ARTICLE VIII   
  Termination; Amendment and Waiver   

SECTION 8.01.

  Termination      A-50  

SECTION 8.02.

  Effect of Termination      A-51  

SECTION 8.03.

  Amendment; Extension; Waiver      A-52  
  ARTICLE IX   
  General Provisions   

SECTION 9.01.

  Nonsurvival of Representations and Warranties      A-52  

SECTION 9.02.

  Notices      A-52  

 

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SECTION 9.03.

  Definitions      A-53  

SECTION 9.04.

  Interpretation      A-60  

SECTION 9.05.

  Severability      A-61  

SECTION 9.06.

  Counterparts      A-61  

SECTION 9.07.

  Entire Agreement; Third-Party Beneficiaries; No Other Representations or Warranties      A-61  

SECTION 9.08.

  Governing Law      A-61  

SECTION 9.09.

  Assignment      A-61  

SECTION 9.10.

  Specific Enforcement; Jurisdiction      A-62  

SECTION 9.11.

  WAIVER OF JURY TRIAL      A-62  

SECTION 9.12.

  Financing Provisions      A-62  

 

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INDEX OF DEFINED TERMS

 

Defined Term

  

Location of Definition

$

   Section 9.04

Acceptable Confidentiality Agreement

   Section 9.03

Additional Stockholder

   Section 9.03

Adverse Recommendation Change

   Section 5.02(e)

affiliate

   Section 9.03

Affiliate Transaction

   Section 3.20

Agreement

   Preamble

Anti-Corruption Laws

   Section 3.14(c)

Antitrust Laws

   Section 9.03

Appraisal Shares

   Section 2.01(d)

Authorizations

   Section 3.14(b)

Bankruptcy and Equity Exception

   Section 3.04(a)

Book-Entry Shares

   Section 2.02(b)

Business Day

   Section 9.03

Certificate of Merger

   Section 1.03

Certificates

   Section 2.02(b)

cGMP

   Section 9.03

Chosen Courts

   Section 9.10(b)

Claim

   Section 6.05(a)

Closing

   Section 1.02

Closing Date

   Section 1.02

Code

   Section 9.03

Company

   Preamble

Company Acquisition Agreement

   Section 5.02(a)

Company Balance Sheet

   Section 3.06(d)

Company Benefit Plan

   Section 9.03

Company Board

   Recitals

Company Bonus Program

   Section 6.04(f)

Company Bylaws

   Section 3.01(a)

Company Charter

   Section 3.01(a)

Company Common Stock

   Recitals

Company DC Plans

   Section 6.04(d)

Company Disclosure Letter

   Article III

Company Intellectual Property

   Section 9.03

Company Material Adverse Effect

   Section 9.03

Company Preferred Stock

   Section 3.02(a)

Company PSU

   Section 9.03

Company Recommendation

   Section 3.04(b)

Company Registered Intellectual Property

   Section 3.17(a)

Company Representatives

   Section 6.17(a)

Company Restricted Share

   Section 9.03

Company RSU

   Section 9.03

Company SEC Documents

   Section 3.06(a)

Company Stock Option

   Section 9.03

Company Stock Plans

   Section 9.03

Company Stockholder Approval

   Section 3.04(b)

Company Takeover Proposal

   Section 9.03

Company Termination Fee

   Section 6.06(b)(iii)

Company Unvested Stock Option

   Section 2.03(a)(iii)

 

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Defined Term

  

Location of Definition

Company Vested Stock Option

   Section 2.03(a)(i)

Confidential Disclosure Agreement

   Section 6.02

Consent

   Section 3.05(b)

Continuing Employee

   Section 6.04(a)

Contract

   Section 9.03

control

   Section 9.03

Controlled Group

   Section 3.10(d)

Converted Exercise Price

   Section 2.03(a)(iii)

Converted PSU Award

   Section 2.03(a)(v)

Converted RSU Award

   Section 2.03(a)(iv)

Converted Stock Option Award

   Section 2.03(a)(iii)

Copyrights

   Section 9.03

COVID-19

   Section 9.03

COVID-19 Response

   Section 9.03

Credit Agreement

   Section 9.03

Debt Financing

   Section 6.17(a)

Designated Deferred Taxes

   Section 9.03

DGCL

   Recitals

Director RSU

   Section 2.03(a)(ii)

DOJ

   Section 6.03(c)

dollars

   Section 9.04

Effective Time

   Section 1.03

Electronic Delivery

   Section 9.06

Environmental Authorizations

   Section 3.16(a)

Environmental Claims

   Section 3.16(b)(i)

Environmental Law

   Section 3.16(b)(ii)

Equity Interests

   Section 3.02(a)

ERISA

   Section 3.10(c)

Exchange Act

   Section 9.03

Exchange Fund

   Section 2.02(a)

Exchange Ratio

   Section 2.03(a)(iii)

Excluded Information

   Section 6.17(b)

Excluded Shares

   Section 2.01(b)

Extended Outside Date

   Section 8.01(b)(i)

FCPA

   Section 3.14(c)

Financing Parties

   Section 9.03

FTC

   Section 6.03(c)

GCP

   Section 9.03

GLP

   Section 9.03

Governmental Entity

   Section 3.05(b)

Hazardous Materials

   Section 3.16(b)(iii)

Health Care Laws

   Section 3.15(a)

HSR Act

   Section 3.05(b)

Indebtedness

   Section 9.03

Indemnified Persons

   Section 6.05(a)

Indenture

   Section 9.03

Information Statement

   Section 6.01(b)

Intellectual Property

   Section 9.03

Intervening Event

   Section 9.03

IT Assets

   Section 9.03

Judgment

   Section 3.05(a)

 

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Defined Term

  

Location of Definition

JV Entity

   Section 9.03

knowledge

   Section 9.03

Law

   Section 3.05(a)

Lease

   Section 3.11(b)

Leased Real Property

   Section 3.11(b)

Legal Restraints

   Section 7.01(a)

Liens

   Section 9.03

Material Contract

   Section 3.12(a)

Material Customer

   Section 3.12(a)(ix)

Material Supplier

   Section 3.12(a)(x)

Measurement Date

   Section 3.02(a)

Merger

   Recitals

Merger Consideration

   Section 2.01(c)

Merger Sub

   Preamble

New Plans

   Section 6.04(b)

Notice of Adverse Recommendation Change

   Section 5.02(f)

Notified Bodies

   Section 3.14(b)

OSS

   Section 9.03

Outside Date

   Section 8.01(b)(i)

Owned Real Property

   Section 3.11(a)

Parent

   Preamble

Parent DC Plan

   Section 6.04(d)

Parent Expenses

   Section 6.06(c)

Parent Material Adverse Effect

   Section 9.03

Parent Stock Price

   Section 2.03(a)(iii)

Patents

   Section 9.03

Paying Agent

   Section 2.02(a)

Payoff Letter

   Section 6.16(a)

Permitted Liens

   Section 9.03

Permitted Remedial Action

   Section 6.03(d)

Person

   Section 9.03

Personal Data

   Section 9.03

Policy on Certain Terminations

   Section 9.03

Principal Stockholders

   Section 9.03

Privacy and Data Security Requirements

   Section 9.03

Proceeding

   Section 3.13

Process

   Section 9.03

Processing

   Section 9.03

Proxy Statement

   Section 6.01(b)

Qualifying Company Takeover Proposal

   Section 5.02(c)

Recent SEC Reports

   Article III

Release

   Section 3.16(b)(iv)

Remedial Action

   Section 6.03(d)

Representatives

   Section 9.03

Required Regulatory Approvals

   Section 9.03

Sarbanes-Oxley Act

   Section 3.06(b)

SEC

   Section 9.03

Section 262

   Section 2.01(d)

Securities Act

   Section 9.03

Senior Employee

   Section 9.03

Significant Subsidiary

   Section 3.03(a)

 

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Defined Term

  

Location of Definition

Specified Agreement

   Section 9.03

Stockholder Consent

   Section 6.01(a)

Subsidiary

   Section 9.03

Superior Proposal

   Section 9.03

Surviving Corporation

   Section 1.01

Tax Return

   Section 9.03

Taxes

   Section 9.03

Taxing Authority

   Section 9.03

Trade Secrets

   Section 9.03

Trademarks

   Section 9.03

Transactions

   Section 9.03

Voting Company Debt

   Section 3.02(c)

Voting Subsidiary Debt

   Section 3.03(c)

Written Consent

   Section 6.01(a)

 

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of April 15, 2021 (this “Agreement”), by and among Thermo Fisher Scientific Inc., a company organized under the laws of Delaware (“Parent”), Powder Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and PPD, Inc., a Delaware corporation (the “Company”). Unless expressly stated otherwise, Parent, Merger Sub and the Company are referred to in this Agreement individually as a “party” and collectively as the “parties”.

WHEREAS, the parties intend that at the Effective Time, Merger Sub will be merged with and into the Company (the “Merger”) upon the terms and subject to the conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), with the Company surviving the Merger and becoming a wholly owned subsidiary of Parent as a result of the Merger;

WHEREAS, the Board of Directors of the Company (the “Company Board”) has (i) determined that this Agreement and the Transactions, including the Merger, are in the best interests of the Company and its stockholders, (ii) approved and declared advisable this Agreement and the Transactions, including the Merger, in each case on the terms and subject to the conditions set forth in this Agreement, (iii) resolved to recommend that the holders of shares of common stock, par value $0.01 per share, of the Company (“Company Common Stock”), adopt this Agreement and (iv) directed that this Agreement be submitted to the Company’s stockholders for adoption by the Company’s stockholders entitled to vote thereon;

WHEREAS, the Board of Directors of Merger Sub has approved and declared advisable, and the Board of Directors of Parent has approved, this Agreement and the Transactions, including the Merger, in each case on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Transactions.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

The Merger

SECTION 1.01. The Merger. On the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL, Merger Sub shall be merged with and into the Company at the Effective Time. At the Effective Time, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation (the “Surviving Corporation”).

SECTION 1.02. Closing. The closing of the Merger (the “Closing”) shall take place at 10:00 a.m., New York City time, on a date to be specified and agreed by Parent and the Company, which date shall be no later than the third Business Day following the satisfaction (or waiver by the party entitled thereto) of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction (or waiver by the party entitled thereto) of such conditions), remotely via the electronic exchange of documents and signature pages, unless another time or date shall be agreed in writing by the parties hereto. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.

SECTION 1.03. Effective Time. Prior to the Closing, Parent, Merger Sub and the Company shall prepare, and on the Closing Date, Parent, Merger Sub and the Company shall file with the Secretary of State of the State of Delaware, a certificate of merger (the “Certificate of Merger”) executed in accordance with, and in such form as is required by, the relevant provisions of the DGCL, and shall make all other filings or recordings required

 

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under the DGCL to effectuate the Merger. The Merger shall become effective at such time as the Certificate of Merger is duly filed with such Secretary of State of the State of Delaware or at such other time as Parent and the Company shall agree and specify in the Certificate of Merger (the time the Merger becomes effective being referred to herein as the “Effective Time”).

SECTION 1.04. Effects of Merger. The Merger shall have the effects provided in this Agreement and as set forth in the applicable provisions, including Section 259, of the DGCL. Without limiting the generality of the foregoing, at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub will vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub will become the debts, liabilities and duties of the Surviving Corporation.

SECTION 1.05. Certificate of Incorporation and Bylaws. At the Effective Time, (a) the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time (except that references therein to the name of Merger Sub shall be replaced by references to Powder Acquisition Corp.), and (b) the bylaws of the Surviving Corporation shall be amended and restated in their entirety to be identical to the bylaws of Merger Sub as in effect immediately prior to the Effective Time (except that references therein to the name of Merger Sub shall be replaced by references to Powder Acquisition Corp.), in each case, subject to the requirements of Section 6.05 and until thereafter amended in accordance with applicable Law and the applicable provisions therein.

SECTION 1.06. Directors and Officers. (a) The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

(b) The officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be.

ARTICLE II

Effect on Capital Stock; Payment for Shares

SECTION 2.01. Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or any holder of any shares of Company Common Stock or any shares of capital stock of Merger Sub:

(a) Capital Stock of Merger Sub. Each issued and outstanding share of capital stock of Merger Sub shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $.001 per share, of the Surviving Corporation.

(b) Cancellation of Stock Owned by the Company, Parent or Merger Sub. Each share of Company Common Stock that is owned by the Company, Parent or Merger Sub or any other direct or indirect wholly owned Subsidiary of the Company or of Parent (such shares, “Excluded Shares”), in each case immediately prior to the Effective Time, shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefor.

(c) Conversion of Company Common Stock. Each issued and outstanding share of Company Common Stock (other than Excluded Shares and Appraisal Shares) shall be converted into the right to receive an amount in cash equal to $47.50, without interest and less any applicable withholding Taxes (the “Merger Consideration”). As of the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall

 

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automatically be canceled and retired and shall cease to exist, and each holder of any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration in accordance with Section 2.02.

(d) Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by any Person who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL (“Section 262”) (such shares, “Appraisal Shares”) shall not be converted into the right to receive the Merger Consideration as provided in Section 2.01(c), but instead, at the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, shall be canceled and retired and shall cease to exist and shall represent the right to receive only those rights provided under Section 262; provided, however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262 or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262, then the right of such holder to receive those rights under and to be paid such consideration as is determined pursuant to Section 262, shall cease and such Appraisal Shares shall be deemed to have been converted as of the Effective Time into, and shall represent only the right to receive, the Merger Consideration as provided in Section 2.01(c). If the Surviving Corporation makes any payment after the Effective Time with respect to Appraisal Shares to the holders thereof pursuant to such holders’ appraisal rights under Section 262, then any portion of the Merger Consideration relating to such Appraisal Shares held in the Exchange Fund shall be delivered by the Paying Agent to the Surviving Corporation upon demand. The Company shall give prompt notice to Parent of any demands received by the Company for appraisal of any shares of Company Common Stock, any withdrawals of any such demands or any other instruments served pursuant to the DGCL and received by the Company relating to the rights of appraisal of the holders of shares of Company Common Stock, and Parent shall have the right to participate in and direct all negotiations and Proceedings with respect to such demands. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, or otherwise negotiate any such demands, or agree to do any of the foregoing. Parent shall not, except with the prior written consent of the Company, require the Company to make any payment with respect to any demand for appraisal or offer to settle or settle any such demand that is not conditioned on consummation of the Merger.

SECTION 2.02. Payment of Merger Consideration. (a) Paying Agent. Prior to the Effective Time, Parent shall select a bank or trust company reasonably acceptable to the Company to act as paying agent (the “Paying Agent”) for the payment of the Merger Consideration as provided in Section 2.01(c). At or prior to the Effective Time, Parent shall deposit or cause to be deposited with the Paying Agent an amount in cash necessary to pay for the shares of Company Common Stock converted into the right to receive the Merger Consideration pursuant to Section 2.01(c) (such cash being hereinafter referred to as the “Exchange Fund”).

(b) Exchange Procedure. Promptly (and in any event no later than three Business Days) after the Effective Time, Parent shall direct the Paying Agent to mail to each holder of record of a certificate or certificates, or a non-certificated share or non-certificated shares, that immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the “Certificates” or “Book-Entry Shares”, respectively) which were converted into the right to receive the Merger Consideration pursuant to Section 2.01(c) (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent, and shall be in customary form and have such other provisions as Parent and the Company may reasonably agree prior to the Effective Time) and (ii) instructions for use in effecting the surrender of the Certificates or Book-Entry Shares, as applicable, in exchange for the Merger Consideration. Upon (A) in the case of a Certificate, surrender of such Certificate to the Paying Agent for cancellation, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Paying Agent or (B) in the case of Book-Entry Shares, receipt of an “agent’s message” by the Paying Agent (or such other evidence, if any, of the transfer as the Paying Agent may reasonably request), the holder of such Certificate or Book-Entry Share, as applicable, shall be entitled to receive in exchange therefor the Merger Consideration for each share of Company Common Stock theretofore

 

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represented by such Certificate or Book-Entry Share, as applicable, pursuant to Section 2.01(c), and the Certificate or Book-Entry Share, as applicable, so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Company Common Stock that is not registered in the transfer records of the Company, payment may be made to a Person other than the Person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such payment shall pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of such Certificate or establish to the reasonable satisfaction of Parent that such Tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.02, each Certificate or Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration in accordance with this Article II. No interest shall be paid or accrue on the cash payable to any holder of a Certificate or Book-Entry Share in accordance with the provisions of this Article II.

(c) No Further Ownership Rights in Company Common Stock. The Merger Consideration paid in accordance with the terms of this Article II upon the surrender of any Certificate or Book-Entry Share shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock that such Certificate or Book-Entry Share represented immediately prior to the Effective Time. After the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificates or Book-Entry Shares are presented to the Surviving Corporation or the Paying Agent for any reason, they shall be canceled and exchanged as provided in this Article II. No cash payment with respect to the Merger Consideration shall be paid to the holder of any unsurrendered Certificate Book-Entry Share until the surrender of such Certificate Book-Entry Share in accordance with this Section 2.02.

(d) Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the holders of Certificates or Book-Entry Shares for one (1) year after the Effective Time shall be delivered to Parent, upon demand, and any former holder of Company Common Stock entitled to payment of Merger Consideration who has not theretofore complied with this Article II shall thereafter look only to Parent for payment of its claim for Merger Consideration without any interest thereon.

(e) No Liability. None of Parent, Merger Sub, the Surviving Corporation or the Paying Agent shall be liable to any Person in respect of any cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate or Book-Entry Share has not been surrendered for Merger Consideration prior to the four (4) year anniversary of the Effective Time (or, if earlier, immediately prior to the date on which the Merger Consideration in respect of such Certificate or Book-Entry Share would otherwise escheat to or become the property of any Governmental Entity), any such Merger Consideration in respect of such Certificate or Book-Entry Share shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

(f) Investment of Exchange Fund. The Paying Agent shall invest any cash included in the Exchange Fund, as directed by Parent, on a daily basis. Any interest and other income resulting from such investments shall be paid to Parent. No such investment or any loss thereon shall affect the amounts payable pursuant to this Article II. Parent shall take actions necessary to ensure that the Exchange Fund includes at all times cash in an amount sufficient for the Paying Agent to pay the Merger Consideration in accordance with this Agreement.

(g) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Paying Agent, or, if the undistributed portion of the Exchange Fund has been returned to Parent pursuant to Section 2.02(d), by Parent, the posting by such Person of a bond in such reasonable and customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent or

 

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Parent, as applicable, shall deliver in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration.

(h) Withholding Rights. Each of the Surviving Corporation, Merger Sub, Parent and the Paying Agent shall be entitled to deduct and withhold from any amounts otherwise payable to any Person pursuant to this Agreement such amounts as may be required to be deducted and withheld under applicable Law with respect to Taxes. Any amounts so deducted or withheld and paid over to the appropriate Taxing Authority shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction or withholding was made.

SECTION 2.03. Equity Awards. (a) Prior to the Effective Time, the Company Board (or, if appropriate, any committee administering the Company Stock Plans) shall adopt such resolutions and take such other actions (including obtaining any required Consents) as may be required to effect the following, effective upon the Effective Time:

(i) except as otherwise agreed in writing between any holder of a Company Vested Stock Option, on the one hand, and Parent, on the other hand, each Company Stock Option that is outstanding and vested as of immediately prior to the Effective Time, including any such Company Stock Option that vests as a result of the occurrence of the Merger (a “Company Vested Stock Option”) shall, without any action on the part of Parent, the Company, the holder thereof or any other Person, be canceled, with the holder of such Company Vested Stock Option becoming entitled to receive with respect thereto solely an amount in cash, without interest, equal to the sum of (A) (x) the excess of (1) the Merger Consideration over (2) the exercise price per share of such Company Vested Stock Option, multiplied by (y) the number of shares of Company Common Stock subject to such Company Vested Stock Option as of immediately prior to the Effective Time and (B) any amount of the option bonus payment that the holder of such Company Stock Option is entitled to receive with respect to such Company Stock Option in connection with the Company’s May 2019 dividend recapitalization transaction that remains unpaid as of immediately prior to the Effective Time;

(ii) each Company RSU that is outstanding as of immediately prior to the Effective Time and that is held by a non-employee member of the Company Board (whether vested or unvested) (a “Director RSU”) shall, without any action on the part of Parent, the Company, the holder thereof or any other Person, be canceled, with the holder of such Director RSU becoming entitled to receive with respect thereto solely an amount in cash, without interest, equal to (A) the Merger Consideration multiplied by (B) the number of shares of Company Common Stock subject to such Director RSU as of immediately prior to the Effective Time;

(iii) each Company Stock Option that is outstanding and unvested as of immediately prior to the Effective Time, after giving effect to any vesting that would occur as a result of the occurrence of the Merger (a “Company Unvested Stock Option”), shall, without any action on the part of Parent, the Company, the holder thereof or any other Person, be canceled and converted into a stock option award (a “Converted Stock Option Award”) with substantially the same terms and conditions (including with respect to vesting) as were applicable to such Company Unvested Stock Option immediately prior to the Effective Time, (A) with respect to a number of shares of Parent common stock that is equal to the product (rounded down to the nearest whole share) of (x) the Exchange Ratio (as defined below) and (y) the total number of shares of Company Common Stock subject to such Company Unvested Stock Option as of immediately prior to the Effective Time and (B) with an exercise price per share that is equal to the quotient (rounded up to the nearest cent) of (x) the exercise price per share of such Company Unvested Stock Option as of immediately prior to the Effective Time divided by (y) the Exchange Ratio (the exercise price in this clause (B), the “Converted Exercise Price”). With respect to any fractional share of Parent common stock that would otherwise be included in a Converted Stock Option Award but for the rounding down to the nearest share of Parent common stock as described in the immediately foregoing sentence, the holder of the applicable Company Stock Option shall be entitled to receive a cash payment, without interest, equal to the product (rounded down to the nearest cent) of (I) the amount of such fractional share of Parent common

 

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stock and (II) the excess of (X) the Parent Stock Price over (Y) the Converted Exercise Price. For purposes of this Agreement, “Exchange Ratio” means a fraction, (1) the numerator of which is the Merger Consideration and (2) the denominator of which is the average closing price, rounded down to the nearest cent, per share of Parent common stock on the New York Stock Exchange for the consecutive period of ten (10) days immediately preceding (but not including) the Closing Date (the average closing price described in this clause (2), the “Parent Stock Price”);

(iv) each Company RSU that is not a Director RSU and that is outstanding as of immediately prior to the Effective Time (whether vested or unvested) shall, without any action on the part of Parent, the Company, the holder thereof or any other Person, be canceled and converted into a restricted stock unit award (a “Converted RSU Award”) with substantially the same terms and conditions (including with respect to vesting) as were applicable to such Company RSU immediately prior to the Effective Time, with respect to a number of shares of Parent common stock that is equal to the product (rounded up to the nearest whole share) of (x) the Exchange Ratio and (y) the total number of shares of Company Common Stock subject to such Company RSU as of immediately prior to the Effective Time; and

(v) each Company PSU that is outstanding and unvested as of immediately prior to the Effective Time shall, without any action on the part of Parent, the Company, the holder thereof or any other Person, be canceled and converted into a restricted stock unit award (a “Converted PSU Award”) with substantially the same terms and conditions (except that such restricted stock unit award shall no longer be subject to performance-based vesting conditions) as were applicable to such Company PSU immediately prior to the Effective Time, with respect to a number of shares of Parent common stock that is equal to the product (rounded up to the nearest whole share) of (x) the Exchange Ratio and (y) the total number of shares of Company Common Stock subject to such Company PSU based, except as set forth in Section 2.03 of the Company Disclosure Letter, on the greater of (1) the target level of performance applicable to such Company PSU and (2) the actual level of performance achieved as of immediately prior to the Effective Time, as determined by the Company Board in its reasonable discretion in accordance with the applicable plans and agreements after reasonable prior consultation with Parent.

(b) Following the Effective Time, Parent shall continue to honor the Company’s Policy on Certain Terminations as in effect on the date hereof, with respect to the Converted Stock Option Awards, Converted RSU Awards and Converted PSU Awards, which, for the avoidance of doubt, provides that, in the event of the termination of employment or services of the holder of a Converted Stock Option Award, Converted RSU Award, or Converted PSU Award, as applicable:

(i) by Parent or its Subsidiaries other than for Cause (as defined in the applicable Company Stock Plan and award agreement thereunder), and other than due to such holder’s Disability (as defined below), within 18 months following the Effective Time, such award shall immediately become fully vested upon such termination;

(ii) due to the holder’s death or Disability (as defined in the applicable Company Stock Plan and award agreement thereunder), in each case, at any time following the Effective Time, such award shall immediately become (x) fully vested upon such termination, in the case of a Converted Stock Option Award or Converted RSU Award, and (y) vested upon such termination with respect to a pro-rata portion thereof (calculated based on the number of days elapsed in the performance period that was previously applicable to such Converted PSU Award prior to such termination), in the case of a Converted PSU Award; or

(iii) due to the holder’s Retirement (as defined below), at any time following the Effective Time, (x) such award shall immediately become vested upon such termination with respect to a pro-rata portion thereof (calculated based on the number of days elapsed in the vesting period applicable to such Converted Stock Option Award or Converted RSU Award or the performance period that was previously applicable to such Converted PSU Award, as applicable, prior to such termination), and (y) in the case of a Converted Stock Option, the vested portion thereof shall remain exercisable for one year following such termination (but in no event beyond the expiration of the term of such Converted Stock Option). For purposes hereof,

 

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“Retirement” shall mean the termination of a holder’s employment or services (other than for Cause or due to the holder’s death or Disability) following the date on which (1) the holder attains the age of 55 years old and the number of completed years of the holder’s employment or services with the Surviving Corporation and its affiliates (and their respective predecessors) is at least 10 or (2) the holder attains the age of 60 years old and the number of completed years of the holder’s employment or services with the Surviving Corporation and its affiliates (and their respective predecessors) is at least five.

(c) The Surviving Corporation shall pay all amounts payable pursuant to Sections 2.03(a)(i), (ii) and (iii) as soon as reasonably practicable (but in any event no later than 10 Business Days) after the Effective Time; provided, however, that in the case of any such amounts that constitute non-qualified deferred compensation under Section 409A of the Code, the Surviving Corporation shall pay such amounts at the earliest time permitted under the terms of the applicable agreement, plan or arrangement that will not trigger a Tax or penalty under Section 409A of the Code. All amounts payable pursuant to Sections 2.03(a)(i), (ii) and (iii) shall be subject to any required withholding of Taxes and may be paid through the payroll system of the Surviving Corporation or, in the case of non-employee directors, such other method as the Company typically uses for payments to such Persons.

(d) Prior to the Effective Time, the Company shall take all actions necessary to provide that the Company shall not be required to deliver shares of Company Common Stock or any shares of capital stock of the Company to any Person pursuant to, upon exercise of, or in settlement of Company Stock Options, Company RSUs or Company PSUs, as applicable, after the Effective Time. Parent shall (i) assume all of the Company Stock Plans, including (A) all of the obligations of the Company with respect to the Company Stock Options, Company RSUs and Company PSUs, and (B) any remaining reserve of shares of Company Common Stock under the Company Stock Plans (as adjusted based on the Exchange Ratio), and (ii) take all corporate actions as may be necessary for the treatment of Company equity awards as described in this Section 2.03. No later than the Effective Time, Parent shall file one or more appropriate registration statements (on Form S-8, or any successor or other appropriate forms) with respect to shares of Parent common stock underlying the awards converted pursuant to this Section 2.03, and Parent shall maintain the effectiveness of each such registration statement for so long as the Converted Stock Option Awards, Converted RSU Awards, and Converted PSU Awards remain outstanding.

SECTION 2.04. Adjustments. Notwithstanding any provision of this Article II to the contrary, if between the date hereof and the Effective Time the outstanding shares of Company Common Stock shall have been changed into a different number of shares or a different class by reason of the occurrence or record date of any stock dividend, subdivision, reclassification, recapitalization, split, combination, exchange of shares or similar transaction, the Merger Consideration shall be appropriately adjusted to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination, exchange of shares or similar transaction; provided, that nothing in this Section 2.04 shall be construed to permit the Company to take any action with respect to its Equity Interests that is prohibited by the terms of this Agreement.

ARTICLE III

Representations and Warranties of the Company

Except as (a) specifically disclosed in the reports, schedules, forms, statements and other documents filed or furnished by the Company with the SEC since February 5, 2020 and publicly available on the internet website of the SEC prior to the date of this Agreement (other than any disclosures (i) contained in any section entitled “Risk Factors”, except to the extent such information consists of factual historical or current statements, (ii) set forth in any “Forward-Looking Statements” disclaimer or (iii) that are cautionary, non-specific, predictive or forward-looking in nature) (the “Recent SEC Reports”) or (b) set forth in the disclosure letter (it being understood that information contained in any section of the disclosure letter shall be deemed to be disclosed with respect to any other Section of this Agreement to the extent that it is readily apparent from the face of such disclosure that such

 

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information is applicable to such other Section of this Agreement) dated the date hereof and delivered by the Company to Parent and Merger Sub in connection with the execution of this Agreement (the “Company Disclosure Letter”), the Company represents and warrants to Parent and Merger Sub as follows:

SECTION 3.01. Organization, Standing and Power. (a) The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. The Company has made available to Parent true, correct and complete copies of the certificate of incorporation of the Company, as amended to the date of this Agreement (as so amended, the “Company Charter”), and the bylaws of the Company, as amended to the date of this Agreement (as so amended, the “Company Bylaws”). The Company Charter and the Company Bylaws are in full force and effect, and the Company is not in violation of any of their provisions.

(b) The Company has full power and authority necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its business as presently conducted, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company is duly licensed or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties and assets makes such qualification, licensing or good standing necessary, except where the failure to be so qualified, licensed or in good standing would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

SECTION 3.02. Capital Structure. (a) As of the date of this Agreement, the authorized capital stock of the Company consists of 2,000,000,000 shares of Company Common Stock and 100,000,000 shares of preferred stock, par value $0.01 per share (the “Company Preferred Stock”). At the close of business on April 9, 2021 (such date and time, the “Measurement Date”), (i) 350,949,890 shares of Company Common Stock were issued and outstanding (none of which were Company Restricted Shares), (ii) no shares of Company Preferred Stock were issued and outstanding, (iii) no shares of Company Common Stock were held by the Company in its treasury, (iv) 59,066,102 shares of Company Common Stock were reserved and available for issuance pursuant to the Company Stock Plans, of which (A) 18,983,205 shares of Company Common Stock were subject to outstanding Company Stock Options, (B) 1,119,532 shares of Company Common Stock were subject to outstanding Company RSUs and (C) 911,615 shares and 1,823,230 shares of Company Common Stock were subject to outstandi