Financial Performance - The Company reported net sales of $394.6 million for Q2 fiscal 2026, a decrease of 12.8% compared to $452.5 million in Q2 fiscal 2025[99] - Gross profit for Q2 fiscal 2026 was $59.9 million, representing a gross profit margin of 15.2%, down from 18.9% in the same period last year[102] - Adjusted EBITDA for the second quarter of fiscal 2026 was $39.6 million, or 10.0% of net sales, down from $60.2 million, or 13.3% of net sales, in the same quarter of the prior fiscal year[117] - Net income for the three months ended October 31, 2025, was $6.1 million, compared to $27.7 million for the same period in the prior year[119] - Adjusted EPS per diluted share for the three months ended October 31, 2025, was $0.76, compared to $2.08 for the same period in the prior year[119] - Adjusted EBITDA for the first six months of fiscal 2026 was $81.9 million, or 10.3% of net sales, down from $123.1 million, or 13.5% of net sales, in the same period of the prior fiscal year[117] Expenses and Charges - The Company incurred $1.5 million in pre-tax restructuring charges during Q2 fiscal 2026, related to workforce reductions and facility closures[97] - General and administrative expenses increased by 20.4% in Q2 fiscal 2026, primarily due to expenses associated with the pending Merger and digital transformation initiatives[104] - The effective income tax rates for the three- and six-month periods ended October 31, 2025, were 31.5% and 27.6%, compared to 21.9% and 23.5% in the prior year periods[105] Market Conditions - Builder sales decreased by 19.7% in Q2 fiscal 2026 compared to the same period last year, reflecting challenges in the new construction market[100] - Remodeling sales decreased by 7.0% in Q2 fiscal 2026, driven by lower in-store traffic and a shift towards more affordable products[99] - The unemployment rate increased to 4.4% as of September 2025, impacting consumer sentiment and spending[101] - The company expects a softer repair and remodel market and a decline in larger ticket remodel purchases for the remainder of fiscal 2026[120] Cash Flow and Debt - Cash and cash equivalents totaled $52.1 million at October 31, 2025, representing a $3.9 million increase from April 30, 2025[125] - Total long-term debt (including current maturities) was $370.8 million as of October 31, 2025[125] - Cash provided by operations in the first six months of fiscal 2026 was $44.3 million, down from $52.7 million in the same period of the prior year[125] - Cash flow from operations and accumulated cash are expected to be sufficient to support working capital requirements and fund capital expenditures for the remainder of fiscal 2026[133] - Cash flow from operations is expected to be sufficient to support working capital requirements and service existing debt obligations for the remainder of fiscal 2026[133] Strategic Initiatives - The Company entered into a Merger Agreement with MasterBrand on August 5, 2025, which is expected to affect its operational focus[91] - The company will continue to invest in digital transformation and automation during fiscal 2026[121] - The company will not be providing or updating previously issued financial guidance due to the proposed merger[122] - The company has authorized an additional stock repurchase program of up to $125 million, although it does not currently expect to repurchase additional shares due to the terms of the merger agreement[132] Tariff Impact - The Company estimates that the unmitigated tariff impact represents approximately 4-4.5% of annualized net sales, with variations by product category[92]

Financial Performance - Net sales for Q2 FY2026 decreased by $57.8 million, or 12.8%, to $394.6 million compared to the same quarter last fiscal year[3] - Net income for Q2 FY2026 was $6.1 million, or 1.5% of net sales, down from $27.7 million, or 6.1% of net sales, in the same quarter last fiscal year[3] - Adjusted EBITDA for Q2 FY2026 decreased by $20.6 million, or 34.1%, to $39.6 million, representing 10.0% of net sales, compared to 13.3% of net sales in the same quarter last fiscal year[3] - Year-to-date net sales for FY2026 decreased by $113.9 million, or 12.5%, to $797.7 million compared to the same period last fiscal year[5] - Year-to-date net income for FY2026 was $20.7 million, or 2.6% of net sales, down from $57.3 million, or 6.3% of net sales, in the same period last fiscal year[5] - Adjusted EPS per diluted share for Q2 FY2026 was $0.76, down from $2.08 in the same quarter last fiscal year[3] - Net income for the three months ended October 31, 2025, was $6,097,000, compared to $27,686,000 for the same period in 2024, reflecting a decrease of 78%[26] - Adjusted EBITDA for the six months ended October 31, 2025, was $81,878,000, down from $123,084,000 in 2024, representing a decline of 33.5%[26] - Net sales for the three months ended October 31, 2025, were $394,637,000, compared to $452,482,000 in 2024, indicating a decrease of 12.7%[26] - Free cash flow for the six months ended October 31, 2025, was $24,014,000, down from $30,141,000 in 2024, a reduction of 20.5%[32] - Adjusted net income for the three months ended October 31, 2025, was $11,170,000, compared to $32,048,000 in 2024, a decrease of 65.1%[30] - The net income margin for the three months ended October 31, 2025, was 1.5%, down from 6.1% in 2024[26] - Adjusted EBITDA margin for the three months ended October 31, 2025, was 10.0%, compared to 13.3% in 2024, reflecting a decline of 24.8%[26] Cash Flow and Liquidity - Cash provided by operating activities for the first six months of FY2026 was $44.3 million, with free cash flow totaling $24.0 million[8] - As of October 31, 2025, the Company had $52.1 million in cash and $315.2 million available under its revolving credit facility[7] Merger and Restructuring - The Company is focused on closing the merger transaction with MasterBrand, Inc. to expand its product portfolio and innovation capabilities[2] - The company incurred merger-related expenses of $6,484,000 for the three months ended October 31, 2025, related to the pending merger with MasterBrand, Inc.[28] - Restructuring charges for the three months ended October 31, 2025, totaled $1,458,000, associated with workforce reductions and facility closures[28] Tariff Impact - The estimated unmitigated tariff impact is approximately 4-4.5% of the Company's annualized net sales, varying by product category[2] Leverage Ratio - The company reported a net leverage ratio of 1.90 as of October 31, 2025, calculated as net debt of $318,719,000 divided by Adjusted EBITDA of $167,421,000[34]

Core Insights - American Woodmark Corporation reported a significant decline in net sales and net income for the second quarter of fiscal 2026, reflecting ongoing challenges in the new construction and remodel markets [4][5][8] - The company is actively implementing measures to mitigate the impacts of tariffs and lower demand, including cost reductions and supplier negotiations [4][6] Financial Highlights for Second Quarter Fiscal 2026 - Net sales decreased by $57.8 million, or 12.8%, to $394.6 million compared to the same quarter last fiscal year [5][6] - Net income fell to $6.1 million, or $0.42 per diluted share, down from $27.7 million, or $1.79 per diluted share, in the same quarter last year [5][7] - Adjusted EBITDA decreased by $20.6 million, or 34.1%, to $39.6 million, representing 10.0% of net sales [7][8] Year-to-Date Financial Highlights for Fiscal 2026 - For the first six months, net sales decreased by $113.9 million, or 12.5%, to $797.7 million compared to the same period last fiscal year [8] - Year-to-date net income was $20.7 million, or $1.42 per diluted share, down from $57.3 million, or $3.68 per diluted share, in the prior year [8][9] - Adjusted EBITDA for the first half of fiscal 2026 decreased by $41.2 million, or 33.5%, to $81.9 million, or 10.3% of net sales [8][9] Balance Sheet and Cash Flow - As of October 31, 2025, the company had $52.1 million in cash and access to $315.2 million under its revolving credit facility [10] - Cash provided by operating activities for the first six months was $44.3 million, with free cash flow totaling $24.0 million [11][10] - The company repurchased 209,757 shares, approximately 1.4% of shares outstanding, for $12.4 million during the first half of fiscal 2026 [11] Strategic Focus - The company is focused on closing the merger transaction with MasterBrand, Inc., which is expected to enhance its product portfolio and innovation capabilities [4][9] - Management is taking steps to address the impacts of tariffs, estimating an unmitigated tariff impact of approximately 4-4.5% of annualized net sales [4][6]

Group 1 - Merion Road Capital Management's Small Cap Fund returned 5.0% in Q3 2025, underperforming the Russell 2000 Index which returned 12.4% [1] - The long-only portfolio of Merion Road achieved a return of 10.1%, outperforming the S&P 500's return of 8.1% [1] - The strong performance of Kratos significantly contributed to the portfolio's results [1] Group 2 - American Woodmark Corporation (NASDAQ:AMWD) experienced a one-month return of -25.78% and a 52-week loss of 50.80% [2] - As of November 20, 2025, AMWD's stock closed at $47.84 per share, with a market capitalization of $696.98 million [2] - Merion Road Capital Management purchased shares in AMWD following its merger announcement with Masterbrand (MBC), highlighting identified synergies of $90 million relative to approximately $490 million in EBITDA, representing an 18% increase [3] - MBC management is one year into the acquisition of Supreme and reports that integration is on track, with AMWD's standardized product offering making manufacturing adjustments easier compared to Supreme's high-end products [3]

Group 1 - The P/E ratio is a tool for long-term shareholders to assess market performance against historical earnings and industry standards [4] - American Woodmark has a lower P/E ratio compared to the Building Products industry average of 27.86, suggesting potential undervaluation [5] - A low P/E ratio can indicate either undervaluation or weak growth prospects, necessitating caution in interpretation [7] Group 2 - The P/E ratio should be considered alongside other financial metrics, industry trends, and qualitative factors for a comprehensive analysis [7]

Core Insights - Shareholders of MasterBrand, Inc. (NYSE: MBC) are expected to benefit significantly from the deal with American Woodmark Corporation (AMWD) due to AMWD's recent investments in a new ERP cloud solution [1] Group 1: Company Overview - MasterBrand, Inc. is positioned to gain from strategic partnerships and technological advancements in the industry [1] - American Woodmark Corporation has made recent investments aimed at enhancing operational efficiency through a new ERP cloud solution [1] Group 2: Financial Analysis - The analysis includes a focus on cash flow statements and unlevered free cash flow figures, which are critical for assessing the financial health of companies [1] - Financial models may incorporate various metrics such as cost of capital, cost of debt, WACC, share count, and net debt to evaluate investment opportunities [1]

Group 1 - Shareholders of MasterBrand, Inc. (NYSE: MBC) are expected to benefit significantly from the deal with American Woodmark Corporation (AMWD) due to AMWD's recent investments in a new ERP cloud solution [1] - The article emphasizes the importance of cash flow statements and unlevered free cash flow figures in evaluating companies [1] - The author mentions a focus on companies with a long history of financial reporting, avoiding growth stocks in favor of established firms [1] Group 2 - The analysis includes various financial metrics such as cost of capital, cost of debt, WACC, share count, and net debt to assess company performance [1] - Trading multiples studied include EV/FCF, net income, and EV/EBITDA, which are crucial for valuation [1] - The author provides access to a database with over 15,000 DCF models ranked by margin of safety and upside potential, indicating a comprehensive approach to investment analysis [1]

Group 1 - The Ademi Firm is investigating American Woodmark for possible breaches of fiduciary duty and other legal violations related to its transaction with MasterBrand [1] - In the transaction, shareholders of American Woodmark will receive 5.150 shares of MasterBrand common stock for each share they own [1]

Financial Performance - Net sales for the first quarter of fiscal 2026 were $403.0 million, a decrease of $56.1 million or 12.2% compared to the same period in fiscal 2025[98]. - Gross profit for the first quarter of fiscal 2026 was $67.5 million, with a gross profit margin of 16.7%, down from 20.2% in the same period of fiscal 2025, representing a 350 basis point decrease[100]. - The Company earned net income of $14.6 million, or 3.6% of net sales, compared to $29.6 million, or 6.5% of net sales, in the same period of the prior year[95]. - Adjusted EBITDA for the first quarter of fiscal 2026 was $42.2 million, representing 10.5% of net sales, down from $62.9 million or 13.7% of net sales in the prior year[118]. - For the first quarter of fiscal 2026, net income (GAAP) was $14.6 million, a decrease of 50.7% from $29.6 million in the same quarter of the prior year[115]. Sales and Market Trends - Builder sales decreased by 18.6% in the first quarter of fiscal 2026 compared to the same period in fiscal 2025, influenced by an 8.1% decrease in single-family housing starts[99]. - The company expects a softer repair and remodel market and a decline in larger ticket remodel purchases, alongside macroeconomic concerns such as declining consumer sentiment and growing inflation risk[121]. - The Company expects a softer repair and remodel market and a decline in larger ticket remodel purchases for the remainder of fiscal 2026[121]. Expenses and Costs - General and administrative expenses increased by $1.4 million or 6.6% during the first quarter of fiscal 2026, primarily due to $2.8 million of merger-related expenses[103]. - The effective income tax rate for Q1 fiscal 2026 was 25.8%, compared to 25.0% in the same period of the prior fiscal year[104]. Cash Flow and Debt - Cash and cash equivalents totaled $54.9 million as of July 31, 2025, reflecting a $6.7 million increase from April 30, 2025, primarily due to $33.1 million of cash provided by operations[125]. - Total long-term debt was $372.3 million as of July 31, 2025[125]. - The Company has a $500 million revolving loan facility and a $200 million term loan facility, with approximately $315.2 million available under the revolving facility as of July 31, 2025[127]. - The Company expects cash flow from operations and accumulated cash to be sufficient to support working capital requirements and service existing debt obligations for the remainder of fiscal 2026[133]. Mergers and Acquisitions - The Company entered into a Merger Agreement with MasterBrand, Inc. on August 5, 2025, which will result in the Company becoming a wholly owned subsidiary of MasterBrand[91]. - The company will not be providing or updating previously issued financial guidance due to the proposed merger with MasterBrand[123]. Investment and Future Plans - The company plans to continue investing in digital transformation and automation throughout fiscal 2026[122]. - The Company reported net cash used by investing activities was $8.1 million in the first three months of fiscal 2026, compared to $11.4 million in the same period of fiscal 2025[130]. - Net cash used by financing activities was $18.2 million in the first three months of fiscal 2026, down from $27.6 million in the comparable period of the prior fiscal year[131]. Other Economic Indicators - The unemployment rate remained consistent at 4.2% as of July 2025, compared to 4.3% in July 2024[93]. - Mortgage interest rates were unchanged at approximately 6.7% in July 2025 compared to the same period in the prior year[93]. - The inflation rate as of July 2025 was 2.7%, down from 2.9% in July 2024[94].

[THE MERGER](index=2&type=section&id=ARTICLE%20I) This article details the merger's closing procedures and legal mechanics, ensuring the Company continues as the surviving corporation [Closing](index=2&type=section&id=Section%201.1%20Closing) This section outlines the closing procedures for the merger, specifying that it will occur remotely on the third business day following the satisfaction or waiver of all conditions in Article VII - The merger's closing will take place remotely via electronic exchange of documents on the **third Business Day** after conditions in Article VII are satisfied or waived[21](index=21&type=chunk) [The Merger Mechanics](index=2&type=section&id=Section%201.2%20The%20Merger) This section details the legal and structural aspects of the merger, including the Company's continuation as the surviving corporation and the amendment of its organizational documents - Merger Sub will merge into the Company, with the Company continuing as the Surviving Corporation and becoming a wholly-owned Subsidiary of Parent[22](index=22&type=chunk) - The merger becomes effective upon the State Corporation Commission of Virginia (SCC) issuing its certificate of merger, or a later agreed-upon date[23](index=23&type=chunk) - At the Effective Time, the Company's articles of incorporation and bylaws will be amended and restated to be the same as Merger Sub's, retaining 'American Woodmark Corporation' as the name[25](index=25&type=chunk) [CERTAIN GOVERNANCE MATTERS](index=2&type=section&id=ARTICLE%20II) This article addresses post-merger governance, covering Parent's identity, headquarters, board composition, CEO continuity, and pre-merger operational autonomy [Parent's Identity Post-Merger](index=2&type=section&id=Section%202.1%20Name%20and%20Trading%20Symbol) This section confirms that Parent's corporate name and stock exchange ticker symbol will remain unchanged after the merger - Parent's name ('MasterBrand, Inc.') and NYSE ticker symbol ('MBC') will not be affected by the merger[27](index=27&type=chunk) [Parent's Headquarters](index=2&type=section&id=Section%202.2%20Headquarters%3B%20Other%20Locations) This section specifies that Parent's headquarters will remain at its current location post-merger - Parent's headquarters will remain in Beachwood, OH, from and after the Effective Time[28](index=28&type=chunk) [Board Composition](index=2&type=section&id=Section%202.3%20Parent%20Board%20of%20Directors) This section details the post-merger composition of the Parent Board of Directors, including the number of directors and the designation of Company representatives - At the Effective Time, the Parent Board will consist of **eleven (11) directors**: **eight (8)** designated by Parent and **three (3)** designated by the Company[29](index=29&type=chunk) - Company Designees must meet NYSE independence requirements and Parent's corporate governance standards[29](index=29&type=chunk) [CEO Continuity](index=2&type=section&id=Section%202.4%20Parent%20Chief%20Executive%20Officer) This section confirms the continuation of Parent's current Chief Executive Officer and President after the merger - R. David Banyard, Jr. will continue to serve as the Chief Executive Officer and President of Parent after the Effective Time[33](index=33&type=chunk) [Pre-Merger Operational Autonomy](index=2&type=section&id=Section%202.5%20No%20Control) This section clarifies that the agreement does not grant any party control over another's operations or decision-making prior to the merger's effective time - Nothing in this Article II grants any Party control over another Party's operations, business, or decision-making prior to the Effective Time[34](index=34&type=chunk) [EFFECT ON CAPITAL STOCK OF THE MERGER; EXCHANGE OF CERTIFICATES](index=2&type=section&id=ARTICLE%20III) This article details the conversion of Company capital stock into Parent stock, fractional share treatment, and exchange procedures, excluding appraisal rights [Capital Stock Conversion](index=2&type=section&id=Section%203.1%20Effect%20on%20Capital%20Stock%20of%20the%20Company%20and%20Merger%20Sub) This section details the conversion of Company Common Stock into Parent Common Stock and Merger Sub stock into Surviving Corporation stock upon the merger's effectiveness - Each share of Company Common Stock will be canceled and converted into the right to receive **5.15 shares of Parent Common Stock** (Merger Consideration)[36](index=36&type=chunk) - Each share of Merger Sub common stock will convert into one validly issued, fully paid, and non-assessable share of common stock of the Surviving Corporation[36](index=36&type=chunk) [Exchange Ratio Adjustments](index=2&type=section&id=Section%203.2%20Certain%20Adjustments) This section provides for appropriate adjustments to the Exchange Ratio and other dependent items in the event of certain capital structure changes by Parent or the Company prior to the merger - The Exchange Ratio will be adjusted for reclassifications, stock splits, recapitalizations, or stock dividends on Parent or Company Common Stock to maintain the intended economic effect[39](index=39&type=chunk) [Treatment of Fractional Shares](index=2&type=section&id=Section%203.3%20Fractional%20Shares) This section specifies that no fractional shares of Parent Common Stock will be issued; instead, holders will receive cash proceeds from the aggregated sale of such fractional shares - No fractional shares of Parent Common Stock will be issued; instead, the Exchange Agent will aggregate and sell them on NYSE, distributing proportionate cash proceeds to holders[40](index=40&type=chunk) [Appraisal Rights Exclusion](index=2&type=section&id=Section%203.4%20No%20Appraisal%20Rights) This section explicitly states that holders of Company Common Stock will not have appraisal rights in connection with the merger, in accordance with Virginia law - No appraisal rights will be available to holders of Company Common Stock in connection with the Merger, as per Section 13.1-730 of the VSCA[41](index=41&type=chunk) [Exchange Procedures for Company Stock](index=2&type=section&id=Section%203.5%20Exchange%20of%20Company%20Common%20Stock) This section details the process for exchanging Company Common Stock for the Merger Consideration, including the role of the Exchange Agent, handling of dividends, and procedures for lost certificates - Parent will appoint an Exchange Agent and deposit Parent Common Stock and cash (for dividends) into an Exchange Fund for distribution to Company stockholders[43](index=43&type=chunk) - Holders of Company Common Stock (both certificated and book-entry) will receive Parent Common Stock, cash in lieu of fractional shares, and any dividends upon surrender of certificates or automatically for book-entry shares[44](index=44&type=chunk)[46](index=46&type=chunk) - Any undistributed Exchange Fund amounts remaining after **12 months** will be delivered to Parent, and Parent, Merger Sub, Surviving Corporation, and the Exchange Agent retain the right to deduct and withhold taxes from payments[51](index=51&type=chunk)[56](index=56&type=chunk) [Post-Merger Asset Vesting](index=2&type=section&id=Section%203.6%20Further%20Assurances) This section obligates the Surviving Corporation to take any necessary actions after the merger to fully vest its rights, title, and interest in the acquired assets - The Surviving Corporation's agents are authorized to take all necessary actions post-Effective Time to vest, perfect, or confirm its rights, title, or interest in acquired assets[57](index=57&type=chunk) [Treatment of Company Equity Awards](index=2&type=section&id=Section%203.7%20Stock-Based%20Awards) This section details how Company stock options, restricted stock units (RSUs), performance stock units (PSUs), and restricted stock tracking units (RSTUs) will be converted into Parent equity awards or cash upon the merger - Outstanding Company Stock Options will be assumed by Parent and converted into Assumed Stock Options for Parent Common Stock, with adjusted share numbers and exercise prices; performance-based vesting conditions will cease[58](index=58&type=chunk)[59](index=59&type=chunk) - Company RSUs with automatic accelerated vesting will convert into Parent Common Stock shares; other Company RSUs will become Assumed RSUs for Parent Common Stock with existing terms[60](index=60&type=chunk)[61](index=61&type=chunk) - Company PSUs will convert into Assumed PSUs for Parent Common Stock, with performance-based vesting conditions ceasing and achievement determined based on actual or superior performance levels[62](index=62&type=chunk)[63](index=63&type=chunk) - Company RSTUs will be assumed by Parent as cash-settled Assumed RSTUs, based on Parent Common Stock, with performance metrics determined at the superior level[64](index=64&type=chunk) - Parent will assume all obligations under Company Stock Plans for the Assumed Equity Awards and will file a registration statement for the Parent Common Stock subject to these awards[66](index=66&type=chunk) [REPRESENTATIONS AND WARRANTIES OF THE COMPANY](index=2&type=section&id=ARTICLE%20IV) This article details the Company's representations and warranties covering its corporate status, capitalization, authority, compliance, financials, and key business aspects [Company's Corporate Status and Subsidiaries](index=2&type=section&id=Section%204.1%20Organization%3B%20Good%20Standing%3B%20Corporate%20Power%3B%20Company%20Subsidiaries) This section represents that the Company and its material subsidiaries are duly organized, validly existing, in good standing, and possess the necessary corporate power to conduct their businesses - The Company is a duly incorporated, validly existing, and in good standing corporation in Virginia, with the requisite corporate power to operate its assets and business[71](index=71&type=chunk) - Each material Company Subsidiary is duly organized, validly existing, and in good standing in its jurisdiction, with the necessary power to conduct its business[73](index=73&type=chunk) [Company's Capital Structure](index=2&type=section&id=Section%204.2%20Company%20Capitalization) This section details the Company's authorized and outstanding capital stock, including common and preferred shares, equity awards, and the ownership structure of its subsidiaries Company Capitalization as of August 1, 2025 | Category | Amount | | :------- | :----- | | Authorized Company Common Stock | **40,000,000 shares** | | Authorized Company Preferred Stock | **2,000,000 shares** | | Issued & Outstanding Company Common Stock | **14,558,035 shares** | | Reserved for Outstanding Company RSUs | **164,504 shares** | | Reserved for Outstanding Company PSUs (max performance) | **325,467 shares** | | Reserved for Outstanding Company Stock Options (max performance) | **61,560 shares** | | Reserved for Future Awards | **1,180,297 shares** | - All issued and outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid, non-assessable, and free of preemptive rights[77](index=77&type=chunk) - The Company owns all outstanding Equity Securities in each Company Subsidiary, free and clear of any Liens (with specified exceptions)[80](index=80&type=chunk) [Company's Authority and Compliance](index=2&type=section&id=Section%204.3%20Authority%3B%20Execution%20and%20Delivery%3B%20Enforceability%3B%20State%20Takeover%20Statutes%3B%20No%20Rights%20Plan) This section affirms the Company's corporate authority to execute the agreement and consummate the merger, subject to stockholder approval, and confirms the absence of applicable takeover statutes or rights plans - The Company has the necessary corporate power and authority to execute and deliver this Agreement and consummate the transactions, subject to Company Stockholder Approval[82](index=82&type=chunk) - The Company Board unanimously approved and adopted the Agreement and recommended it to Company Stockholders[84](index=84&type=chunk) - No 'Takeover Laws' or anti-takeover provisions in the Company's organizational documents, nor any 'poison pill' or similar agreements, are applicable to the Merger[85](index=85&type=chunk) [Regulatory and Contractual Compliance](index=2&type=section&id=Section%204.4%20No%20Conflicts%3B%20Consents%20and%20Approvals) This section represents that the Company's entry into and performance of the agreement will not conflict with its governing documents, applicable laws, or material contracts, and lists the required governmental and third-party consents - The Company's execution and performance of the Agreement will not conflict with its Constituent Documents, applicable Laws, or breach Company Material Contracts, subject to Company Stockholder Approval and specified filings/consents[86](index=86&type=chunk) - Required filings and consents include the Joint Proxy Statement, Articles of Merger, SEC filings (including Form S-4), HSR Clearance, and other governmental approvals listed in the Company Disclosure Schedule[88](index=88&type=chunk) [Company's Public Filings and Financials](index=2&type=section&id=Section%204.5%20SEC%20Documents%3B%20Financial%20Statements%3B%20Related-Party%20Transactions.) This section asserts the accuracy, completeness, and compliance of the Company's SEC filings and financial statements with GAAP and relevant regulations, and confirms the absence of undisclosed related-party transactions - All Company SEC Documents filed since **April 30, 2023**, materially complied with the Securities Act, Exchange Act, and Sarbanes-Oxley Act, and contained no material misstatements or omissions[89](index=89&type=chunk) - The Company SEC Financial Statements were prepared in accordance with GAAP and fairly present the Company Entities' consolidated financial position and results of operations[91](index=91&type=chunk) - The Company maintains effective internal control over financial reporting and disclosure controls and procedures, compliant with Sarbanes-Oxley Act and NASDAQ rules[92](index=92&type=chunk)[93](index=93&type=chunk) [Liabilities and Business Continuity](index=2&type=section&id=Section%204.6%20No%20Undisclosed%20Liabilities%3B%20Absence%20of%20Certain%20Changes%20or%20Events) This section represents that the Company has no material undisclosed liabilities and that its business has been conducted in the ordinary course without a Company Material Adverse Effect since the last balance sheet date - No Company Entity has any material liabilities that would be required to be reflected or reserved against in the Company's consolidated audited balance sheet, except those disclosed, incurred in the ordinary course, or related to the merger[99](index=99&type=chunk) - Since the Company Balance Sheet Date (**April 30, 2025**), Company Entities have conducted their businesses in all material respects in the ordinary course, and no Company Material Adverse Effect has occurred[102](index=102&type=chunk) [Legal Actions and Orders](index=2&type=section&id=Section%204.7%20Actions) This section states that there are no pending or threatened material legal actions or investigations against the Company or its personnel that would result in a Company Material Adverse Effect - There are no pending or threatened Actions or investigations against any Company Entity or its officers, directors, employees, or agents that would reasonably be expected to result in a Company Material Adverse Effect[103](index=103&type=chunk) [Legal and Permit Compliance](index=2&type=section&id=Section%204.8%20Compliance%20with%20Laws%3B%20Permits) This section represents that the Company Entities have conducted their businesses in compliance with all applicable laws and hold all necessary permits, without material adverse effect - Company Entities have conducted their businesses in compliance with all applicable Laws and hold all Permits required for their operations, except where non-compliance would not result in a Company Material Adverse Effect[104](index=104&type=chunk)[105](index=105&type=chunk) [Sanctions and Anti-Corruption Compliance](index=2&type=section&id=Section%204.9%20Sanctions%20and%20Anti-Corruption) This section represents the Company's material compliance with Customs and Trade Laws, Sanctions, and Anti-Corruption Laws since December 31, 2019, and the absence of related investigations or violations - Since **December 31, 2019**, Company Entities and their personnel have been in material compliance with Customs and Trade Laws and Sanctions, and no Company Entity is a Sanctioned Person[106](index=106&type=chunk) - The Company and its Subsidiaries have implemented and maintain policies and procedures reasonably designed to ensure compliance with applicable Anti-Corruption Laws[109](index=109&type=chunk) [Employee Benefit Plan Compliance](index=2&type=section&id=Section%204.10%20Employee%20Benefit%20Plans%3B%20ERISA) This section represents that the Company's material employee benefit plans are qualified, compliant with ERISA and the Code, and that the merger will not trigger adverse financial consequences related to these plans - Each Company Benefit Plan intended to be qualified under Section 401(a) of the Code is qualified, and all Company Benefit Plans comply with their terms, ERISA, the Code, and other applicable Laws, except for non-compliance that would not result in a Company Material Adverse Effect[113](index=113&type=chunk) - No Company Benefit Plan is a defined benefit plan, multiemployer plan, or multiple employer plan[114](index=114&type=chunk) - The merger will not trigger severance, accelerate payments, or result in 'excess parachute payments' under Section 280G(b)(1) of the Code for any current or former employee, director, or officer[120](index=120&type=chunk) [Labor Relations and Employment Practices](index=3&type=section&id=Section%204.11%20Labor%20Matters) This section represents the Company's absence of collective bargaining agreements, labor disputes, and material compliance with employment laws and practices - No Company Entity is party to or negotiating any Collective Bargaining Agreement, and no employees are represented by a labor union[123](index=123&type=chunk) - Since **December 31, 2022**, there have been no labor union organizing activities, and no material labor disputes, unfair labor practice charges, or strikes are pending or threatened[125](index=125&type=chunk)[126](index=126&type=chunk) - Each Company Entity is in material compliance with all applicable Laws respecting employment and employment practices[127](index=127&type=chunk) [Environmental Compliance](index=3&type=section&id=Section%204.12%20Environmental%20Matters) This section represents the Company's compliance with environmental laws and permits, and the absence of material environmental claims or hazardous material releases - Company Entities are in compliance with all applicable Environmental Laws and hold all necessary Environmental Permits, except where non-compliance would not result in a Company Material Adverse Effect[131](index=131&type=chunk)[132](index=132&type=chunk) - No material Environmental Claims are pending or threatened, and no material Release or threatened Release of Hazardous Materials has occurred since **December 31, 2022**[131](index=131&type=chunk)[133](index=133&type=chunk) [Asset and Real Property Ownership](index=3&type=section&id=Section%204.13%20Title%20to%20Assets%3B%20Real%20Property) This section represents that the Company Entities have good and valid title to their tangible assets and real property, free and clear of material liens, with specified exceptions - Each Company Entity owns good and valid title to all tangible assets reflected on the most recent audited balance sheet (with exceptions for ordinary course dispositions) and Company Owned Real Property, free and clear of Liens (except Permitted Liens), except where non-compliance would not result in a Company Material Adverse Effect[137](index=137&type=chunk)[138](index=138&type=chunk) - Each Company Entity has a good, valid, subsisting, and enforceable leasehold interest or license for Company Leased Real Property, free and clear of subtenancies and other occupancy rights, options, and Liens (except Permitted Liens)[139](index=139&type=chunk) [Tax Compliance](index=3&type=section&id=Section%204.14%20Taxes) This section represents the Company's timely filing of all material tax returns, payment of taxes, and the absence of material tax claims, audits, or liens - Each Company Entity has timely filed all income and other material Tax Returns, which were true, correct, and complete, and has timely paid all material Taxes or established adequate reserves[141](index=141&type=chunk) - There are no pending or threatened claims, investigations, audits, or deficiencies for material Taxes, and no Liens for material Taxes on Company assets (except Permitted Liens)[142](index=142&type=chunk) - No Company Entity is or has been a member of an affiliated tax group (other than one where a Company Entity is the common parent) or has material liability for taxes of other persons[143](index=143&type=chunk) [Company's Key Agreements](index=3&type=section&id=Section%204.15%20Company%20Material%20Contracts) This section identifies and represents the status of the Company's material contracts, confirming their validity, enforceability, and the absence of material breaches or defaults - The Company Disclosure Schedule lists all Company Material Contracts, which include agreements required by SEC, contracts with top customers/suppliers, capital expenditure contracts over **$2,000,000**, and contracts limiting competition or involving significant indebtedness[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - Each Company Material Contract is in full force and effect, valid, and binding, and neither the Company nor, to its knowledge, any other party is in material breach or default[156](index=156&type=chunk) [Company's Intellectual Property](index=3&type=section&id=Section%204.16%20Intellectual%20Property) This section represents the Company's ownership, validity, and non-infringement of its intellectual property, and the absence of material claims against it - A Company Entity is the sole and exclusive owner of all Company Intellectual Property, free and clear of Liens (except Permitted Liens), and all Company Registered Intellectual Property is subsisting, valid, and enforceable in all material respects[157](index=157&type=chunk) - There are no material Actions pending or threatened against any Company Entity alleging infringement or challenging the ownership, validity, scope, or enforceability of any Company Intellectual Property[158](index=158&type=chunk) - The operation of the Company Entities' businesses does not infringe, misappropriate, or violate any third-party Intellectual Property, and the Company takes reasonable actions to protect trade secrets[159](index=159&type=chunk) [IT Assets and Data Privacy](index=3&type=section&id=Section%204.17%20Information%20Technology%3B%20Data%20Protection) This section represents the sufficiency and security of the Company's IT assets and its material compliance with privacy and data protection requirements - The Company IT Assets are materially sufficient for business operations, and the Company has implemented commercially reasonable security programs to protect IT assets and confidential information[160](index=160&type=chunk) - Company Entities are in material compliance with all applicable Privacy Requirements, and there have been no material security breaches or unauthorized access to Company IT Assets or confidential information since **December 31, 2022**[162](index=162&type=chunk)[164](index=164&type=chunk) [Company's Insurance Coverage](index=3&type=section&id=Section%204.18%20Insurance) This section represents that the Company maintains all required insurance policies, which are in full force and effect, with paid premiums and no material breaches or claims - All Company Policies are in full force and effect, with paid premiums and full limits, and no Company Entity is in breach or default, except where non-compliance would not result in a Company Material Adverse Effect[166](index=166&type=chunk) - No Company Entity has received written notice of cancellation, denial of coverage, or premium increase, and there are no pending actions against any insurance carrier[166](index=166&type=chunk) [Product Safety and Liability](index=3&type=section&id=Section%204.19%20Product%20Warranties%20and%20Liabilities) This section represents the absence of material product recalls or significant product liability claims against the Company since December 31, 2022 - Since **December 31, 2022**, there have been no material product recalls, retrofit campaigns, or post-sale warnings issued or considered, and no circumstances are expected to result in such actions[168](index=168&type=chunk) - No material Actions or investigations are pending or threatened regarding product repair, replacement, damages, or personal/property injury, other than routine warranty claims[169](index=169&type=chunk) [Financial Advisor Fees](index=3&type=section&id=Section%204.20%20Broker's%20Fees) This section identifies the Company's financial advisor and confirms that no other brokers or finders are owed fees in connection with the merger - Jefferies LLC is the Company's sole financial advisor for the transaction, and its fees and expenses will be paid by the Company[170](index=170&type=chunk) [Fairness Opinion](index=3&type=section&id=Section%204.21%20Opinion%20of%20Company%20Financial%20Advisor) This section states that the Company Board received a fairness opinion from its financial advisor regarding the Exchange Ratio - The Company Board received an opinion from Jefferies LLC that the Exchange Ratio is fair, from a financial point of view, to the holders of Converted Shares[171](index=171&type=chunk) [Limitation of Representations and Reliance](index=3&type=section&id=Section%204.22%20No%20Other%20Representations%20or%20Warranties%3B%20No%20Reliance) This section clarifies that the representations and warranties in Article IV are the Company's sole and exclusive representations, and the Company disclaims reliance on any unstated information from Parent or Merger Sub - The representations and warranties in Article IV are the Company's sole and exclusive representations; all other express or implied warranties are expressly disclaimed[172](index=172&type=chunk) - The Company acknowledges it has relied solely on the representations and warranties in Article V and its own independent investigation, not on any other information provided by Parent or Merger Sub[174](index=174&type=chunk) [REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB](index=3&type=section&id=ARTICLE%20V) This article details Parent's and Merger Sub's representations and warranties covering their corporate status, capitalization, authority, compliance, financials, and key business aspects [Parent's Corporate Status and Subsidiaries](index=3&type=section&id=Section%205.1%20Organization%3B%20Good%20Standing%3B%20Corporate%20Power%3B%20Parent%20Subsidiaries) This section represents that Parent and Merger Sub, along with Parent's material subsidiaries, are duly organized, validly existing, in good standing, and possess the necessary corporate power to conduct their businesses - Parent is a duly incorporated, validly existing, and in good standing Delaware corporation, and Merger Sub is a duly incorporated, validly existing, and in good standing Virginia corporation, both with requisite power to operate[177](index=177&type=chunk) - Each material Parent Subsidiary is duly organized, validly existing, and in good standing in its jurisdiction, with the necessary power to conduct its business[180](index=180&type=chunk) [Parent's Capital Structure and Merger Sub Operations](index=3&type=section&id=Section%205.2%20Parent%20and%20Merger%20Sub%20Capitalization%3B%20Operations%20of%20Merger%20Sub%3B%20Ownership%20of%20Company%20Common%20Stock) This section details Parent's authorized and outstanding capital stock, Merger Sub's limited operational history, and confirms that Parent and Merger Sub do not beneficially own Company Equity Securities Parent Capitalization as of August 1, 2025 | Category | Amount | | :------- | :----- | | Authorized Parent Common Stock | **750,000,000 shares** | | Authorized Parent Preferred Stock | **60,000,000 shares** | | Issued & Outstanding Parent Common Stock | **131,829,964 shares** | | Parent Common Stock in Treasury | **5,099,040 shares** | | Reserved for Outstanding Parent Stock Options | **1,329,982 shares** | | Reserved for Outstanding Parent Performance Share Awards (max performance) | **2,563,312 shares** | | Reserved for Outstanding Parent RSUs | **3,105,858 shares** | | Reserved for Future Awards | **7,134,657 shares** | - Merger Sub has not conducted any business or operations other than in connection with this Agreement and the transactions contemplated hereby since its incorporation[187](index=187&type=chunk) - None of Parent, Merger Sub, or their respective Subsidiaries beneficially own any Equity Securities of the Company or hold any rights to acquire or vote them (other than pursuant to this Agreement)[188](index=188&type=chunk) [Parent's Authority and Enforceability](index=3&type=section&id=Section%205.3%20Authority%3B%20Execution%20and%20Delivery%3B%20Enforceability) This section affirms Parent's and Merger Sub's corporate authority to execute the agreement and consummate the merger, subject to Parent Stockholder Approval and Parent's adoption of the agreement as Merger Sub's sole stockholder - Parent and Merger Sub have the necessary corporate power and authority to execute and deliver this Agreement and consummate the transactions, subject to Parent Stockholder Approval and Parent's adoption of the Agreement as Merger Sub's sole stockholder[190](index=190&type=chunk) - The Parent Board unanimously approved and declared advisable this Agreement and the consummation of the Merger, the Parent Stock Issuance, and other transactions, and recommended the Parent Stock Issuance to stockholders[191](index=191&type=chunk) [Regulatory and Contractual Compliance](index=3&type=section&id=Section%205.4%20No%20Conflicts%3B%20Consents%20and%20Approvals) This section represents that Parent's and Merger Sub's entry into and performance of the agreement will not conflict with their governing documents, applicable laws, or material contracts, and lists the required governmental and third-party consents - Parent's and Merger Sub's execution and performance of the Agreement will not conflict with their Constituent Documents, applicable Laws, or breach Parent Material Contracts, subject to stockholder approvals and specified filings/consents[193](index=193&type=chunk)[194](index=194&type=chunk) - Required filings and consents include the Joint Proxy Statement, Certificate of Merger, SEC filings (including Form S-4), HSR Clearance, and other governmental approvals listed in the Company Disclosure Schedule[195](index=195&type=chunk) [Parent's Public Filings and Financials](index=3&type=section&id=Section%205.5%20SEC%20Documents%3B%20Financial%20Statements%3B%20Related-Party%20Transactions.) This section asserts the accuracy, completeness, and compliance of Parent's SEC filings and financial statements with GAAP and relevant regulations, and confirms the absence of undisclosed related-party transactions - All Parent SEC Documents filed since **December 31, 2022**, materially complied with the Securities Act, Exchange Act, and Sarbanes-Oxley Act, and contained no material misstatements or omissions[196](index=196&type=chunk)[197](index=197&type=chunk) - The Parent SEC Financial Statements were prepared in accordance with GAAP and fairly present the Parent Entities' consolidated financial position and results of operations[198](index=198&type=chunk) - Parent maintains effective internal control over financial reporting and disclosure controls and procedures, compliant with Sarbanes-Oxley Act and NYSE rules[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) [Liabilities and Business Continuity](index=3&type=section&id=Section%205.6%20No%20Undisclosed%20Liabilities%3B%20Absence%20of%20Certain%20Changes%20or%20Events) This section represents that Parent has no material undisclosed liabilities and that its business has been conducted in the ordinary course without a Parent Material Adverse Effect since the last balance sheet date - No Parent Entity has any material liabilities that would be required to be reflected or reserved against in Parent's consolidated audited balance sheet, except those disclosed, incurred in the ordinary course, or related to the merger[207](index=207&type=chunk) - Since the Parent Balance Sheet Date, Parent Entities have conducted their businesses in all material respects in the ordinary course, and no Parent Material Adverse Effect has occurred[209](index=209&type=chunk) [Legal Actions and Orders](index=3&type=section&id=Section%205.7%20Actions) This section states that there are no pending or threatened material legal actions or investigations against Parent or its personnel that would result in a Parent Material Adverse Effect - There are no pending or threatened Actions or investigations against any Parent Entity or its officers, directors, employees, or agents that would reasonably be expected to result in a Parent Material Adverse Effect[210](index=210&type=chunk) [Legal and Permit Compliance](index=3&type=section&id=Section%205.8%20Compliance%20with%20Laws%3B%20Permits) This section represents that Parent Entities have conducted their businesses in compliance with all applicable laws and hold all necessary permits, without material adverse effect - Parent Entities have conducted their businesses in compliance with all applicable Laws and hold all Permits required for their operations, except where non-compliance would not result in a Parent Material Adverse Effect[211](index=211&type=chunk)[213](index=213&type=chunk) [Sanctions and Anti-Corruption Compliance](index=3&type=section&id=Section%205.9%20Sanctions%20and%20Anti-Corruption) This section represents Parent's material compliance with Customs and Trade Laws, Sanctions, and Anti-Corruption Laws since December 14, 2022, and the absence of related investigations or violations - Since **December 14, 2022**, Parent Entities and their personnel have been in material compliance with Customs and Trade Laws and Sanctions, and no Parent Entity is a Sanctioned Person[214](index=214&type=chunk) - Parent and its Subsidiaries have implemented and maintain policies and procedures reasonably designed to ensure compliance with applicable Anti-Corruption Laws[217](index=217&type=chunk) [Employee Benefit Plan Compliance](index=3&type=section&id=Section%205.10%20Employee%20Benefit%20Plans%3B%20ERISA) This section represents that Parent's material employee benefit plans are qualified, compliant with ERISA and the Code, and that the merger will not trigger adverse financial consequences related to these plans - Each Parent Benefit Plan intended to be qualified under Section 401(a) of the Code is qualified, and all Parent Benefit Plans comply with their terms, ERISA, the Code, and other applicable Laws, except for non-compliance that would not result in a Parent Material Adverse Effect[220](index=220&type=chunk) - No Parent Benefit Plan is a defined benefit plan, multiemployer plan, or multiple employer plan[221](index=221&type=chunk) - The merger will not trigger severance, accelerate payments, or result in 'excess parachute payments' under Section 280G(b)(1) of the Code for any current or former employee, director, or officer[223](index=223&type=chunk) [Labor Relations and Employment Practices](index=3&type=section&id=Section%205.11%20Labor%20Matters) This section represents Parent's absence of collective bargaining agreements, labor disputes, and material compliance with employment laws and practices - No Parent Entity is party to or negotiating any Collective Bargaining Agreement, and no employees are represented by a labor union[224](index=224&type=chunk) - Since **December 31, 2022**, there have been no labor union organizing activities, and no material labor disputes, unfair labor practice charges, or strikes are pending or threatened[226](index=226&type=chunk)[227](index=227&type=chunk) - Each Parent Entity is in material compliance with all applicable Laws respecting employment and employment practices[228](index=228&type=chunk) [Environmental Compliance](index=3&type=section&id=Section%205.12%20Environmental%20Matters) This section represents Parent's compliance with environmental laws and permits, and the absence of material environmental claims or hazardous material releases - Parent Entities are in compliance with all applicable Environmental Laws and hold all necessary Environmental Permits, except where non-compliance would not result in a Parent Material Adverse Effect[231](index=231&type=chunk)[233](index=233&type=chunk) - No material Environmental Claims are pending or threatened, and no material Release or threatened Release of Hazardous Materials has occurred since **December 14, 2022**[231](index=231&type=chunk)[234](index=234&type=chunk) [Asset and Real Property Ownership](index=3&type=section&id=Section%205.13%20Title%20to%20Assets%3B%20Real%20Property) This section represents that Parent Entities have good and valid title to their tangible assets and real property, free and clear of material liens, with specified exceptions - Each Parent Entity owns good and valid title to all tangible assets reflected on the most recent audited balance sheet (with exceptions for ordinary course dispositions) and Parent Owned Real Property, free and clear of Liens (except Permitted Liens), except where non-compliance would not result in a Parent Material Adverse Effect[237](index=237&type=chunk)[239](index=239&type=chunk) - Each Parent Entity has a good, valid, subsisting, and enforceable leasehold interest or license for Parent Leased Real Property, free and clear of subtenancies and other occupancy rights, options, and Liens (except Permitted Liens)[240](index=240&type=chunk) [Tax Compliance](index=3&type=section&id=Section%205.14%20Taxes) This section represents Parent's timely filing of all material tax returns, payment of taxes, and the absence of material tax claims, audits, or liens - Each Parent Entity has timely filed all income and other material Tax Returns, which were true, correct, and complete, and has timely paid all material Taxes or established adequate reserves[241](index=241&type=chunk) - There are no pending or threatened claims, investigations, audits, or deficiencies for material Taxes, and no Liens for material Taxes on Parent assets (except Permitted Liens)[242](index=242&type=chunk) - No Parent Entity is or has been a member of an affiliated tax group (other than one where a Parent Entity is the common parent) or has material liability for taxes of other persons[244](index=244&type=chunk) [Parent's Key Agreements](index=3&type=section&id=Section%205.15%20Parent%20Material%20Contracts) This section identifies and represents the status of Parent's material contracts, confirming their validity, enforceability, and the absence of material breaches or defaults - Parent Material Contracts include Parent Specified Debt Agreements and other contracts required by SEC, contracts with top customers/suppliers, capital expenditure contracts over **$4,500,000**, and contracts limiting competition or involving significant indebtedness[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - Each Parent Material Contract is in full force and effect, valid, and binding, and neither Parent nor, to its knowledge, any other party is in material breach or default[255](index=255&type=chunk) [Parent's Intellectual Property](index=3&type=section&id=Section%205.16%20Intellectual%20Property) This section represents Parent's ownership, validity, and non-infringement of its intellectual property, and the absence of material claims against it - A Parent Entity is the sole and exclusive owner of all Parent Intellectual Property, free and clear of Liens (except Permitted Liens), and all Parent Registered Intellectual Property is subsisting, valid, and enforceable in all material respects[257](index=257&type=chunk) - There are no material Actions pending or threatened against any Parent Entity alleging infringement or challenging the ownership, validity, scope, or enforceability of any Parent Intellectual Property[258](index=258&type=chunk) - The operation of the Parent Entities' businesses does not infringe, misappropriate, or violate any third-party Intellectual Property, and Parent takes reasonable actions to protect trade secrets[259](index=259&type=chunk) [IT Assets and Data Privacy](index=3&type=section&id=Section%205.17%20IT) This section represents the sufficiency and security of Parent's IT assets and its material compliance with privacy and data protection requirements - The Parent IT Assets are materially sufficient for business operations, and Parent has implemented commercially reasonable security programs to protect IT assets and confidential information[260](index=260&type=chunk) - Parent Entities are in material compliance with all applicable Privacy Requirements, and there have been no material security breaches or unauthorized access to Parent IT Assets or confidential information since **December 31, 2022**[263](index=263&type=chunk)[264](index=264&type=chunk) [Financial Advisor Fees](index=3&type=section&id=Section%205.18%20Broker's%20Fees) This section identifies Parent's financial advisor and confirms that no other brokers or finders are owed fees in connection with the merger - Rothschild & Co. US Inc. is Parent's sole financial advisor for the transaction, and its fees and expenses will be paid by Parent[265](index=265&type=chunk) [Fairness Opinion](index=3&type=section&id=Section%205.19%20Opinion%20of%20Parent%20Financial%20Advisor) This section states that the Parent Board received a fairness opinion from its financial advisor regarding the Exchange Ratio - The Parent Board received an opinion from Rothschild & Co. US Inc. that the Exchange Ratio is fair, from a financial point of view, to Parent[266](index=266&type=chunk) [Limitation of Representations and Reliance](index=3&type=section&id=Section%205.20%20No%20Other%20Representations%20or%20Warranties%3B%20No%20Reliance) This section clarifies that the representations and warranties in Article V are Parent's and Merger Sub's sole and exclusive representations, and they disclaim reliance on any unstated information from the Company - The representations and warranties in Article V are the sole and exclusive ones made by Parent and Merger Sub; all other express or implied warranties are expressly disclaimed[268](index=268&type=chunk) - Parent and Merger Sub acknowledge they have relied solely on the representations and warranties in Article IV and their own independent investigation, not on any other information provided by the Company[269](index=269&type=chunk) [COVENANTS](index=3&type=section&id=ARTICLE%20VI) This article outlines pre-closing obligations for business conduct, regulatory filings, non-solicitation, and post-merger employee benefits and indemnification [Company's Pre-Closing Business Conduct](index=3&type=section&id=Section%206.1%20Conduct%20of%20Company%20Business%20prior%20to%20the%20Effective%20Time) This section outlines the Company's obligations to conduct its business in the ordinary course prior to the merger's effective time and lists specific actions that are prohibited without Parent's consent - The Company must use reasonable best efforts to conduct its business in the ordinary course, preserve its organization, assets, and relationships, and maintain all material Permits[271](index=271&type=chunk) - Without Parent's written consent, the Company is prohibited from actions such as amending Constituent Documents, issuing equity (with exceptions), incurring material indebtedness, selling material assets, or making significant capital expenditures[273](index=273&type=chunk)[274](index=274&type=chunk) - The Company is also restricted from increasing compensation/benefits, granting new equity awards (with exceptions), or terminating high-level employees without cause[275](index=275&type=chunk) [Parent's Pre-Closing Business Conduct](index=3&type=section&id=Section%206.2%20Parent%20Conduct%20of%20Business%20prior%20to%20the%20Effective%20Time) This section outlines Parent's obligations to conduct its business in the ordinary course prior to the merger's effective time and lists specific actions that are prohibited without the Company's consent - Parent must use reasonable best efforts to conduct its business in the ordinary course, preserve its organization, assets, and relationships, and maintain all material Permits[279](index=279&type=chunk) - Without the Company's written consent, Parent is prohibited from actions such as amending its Constituent Documents in a materially adverse way to Company Stockholders, issuing equity (with exceptions), or incurring material indebtedness (with exceptions)[280](index=280&type=chunk)[281](index=281&type=chunk) [SEC Filings and Stockholder Meetings](index=4&type=section&id=Section%206.3%20Preparation%20of%20the%20Form%20S-4%20and%20the%20Joint%20Proxy%20Statement%3B%20Information%20Supplied%3B%20Stockholders%20Meetings) This section details the joint responsibilities of Parent and the Company for preparing and filing the Form S-4 and Joint Proxy Statement, responding to SEC comments, and convening their respective stockholder meetings to obtain necessary approvals - Parent and the Company will jointly prepare and file the Joint Proxy Statement and Form S-4, ensuring compliance with SEC rules, and will include their respective recommendations (unless a Change of Recommendation occurs)[283](index=283&type=chunk) - Both parties will cooperate with SEC comments, provide reasonable review opportunities for documents, and use reasonable best efforts to cause the Form S-4 to become effective as soon as practicable[284](index=284&type=chunk) - The Company and Parent will set record dates and convene their respective Stockholders Meetings (Company Stockholders Meeting and Parent Stockholders Meeting) to seek necessary approvals, aiming for the same date[286](index=286&type=chunk)[288](index=288&type=chunk) [Company's Non-Solicitation Covenant](index=4&type=section&id=Section%206.4%20No%20Company%20Solicitation) This section prohibits the Company from soliciting alternative acquisition proposals and outlines the limited circumstances under which the Company Board may engage with unsolicited, bona fide superior proposals or change its recommendation - The Company must immediately cease all existing discussions and negotiations related to Company Acquisition Proposals and terminate data room access[293](index=293&type=chunk) - The Company may engage with unsolicited, bona fide Company Acquisition Proposals if the Board determines it is a Superior Company Acquisition Proposal and failure to act would breach fiduciary duties, subject to an Acceptable Company Confidentiality Agreement and prompt notification to Parent[295](index=295&type=chunk) - The Company Board is generally prohibited from making a Company Change of Recommendation, with specific exceptions for a Superior Company Acquisition Proposal or a Company Intervening Event, each requiring a **5-Business Day** negotiation period with Parent[298](index=298&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk) [Parent's Non-Solicitation Covenant](index=4&type=section&id=Section%206.5%20No%20Parent%20Solicitation) This section prohibits Parent from soliciting alternative acquisition proposals and outlines the limited circumstances under which the Parent Board may engage with unsolicited, bona fide superior proposals or change its recommendation - Parent must immediately cease all existing discussions and negotiations related to Parent Acquisition Proposals and terminate data room access[306](index=306&type=chunk) - Parent may engage with unsolicited, bona fide Parent Acquisition Proposals if the Board determines it is a Superior Parent Acquisition Proposal and failure to act would breach fiduciary duties, subject to an Acceptable Parent Confidentiality Agreement and prompt notification to the Company[308](index=308&type=chunk) - The Parent Board is generally prohibited from making a Parent Change of Recommendation, with specific exceptions for a Superior Parent Acquisition Proposal or a Parent Intervening Event, each requiring a **5-Business Day** negotiation period with the Company[311](index=311&type=chunk)[312](index=312&type=chunk)[314](index=314&type=chunk) [Material Event Notification](index=4&type=section&id=Section%206.6%20Notification%20of%20Certain%20Matters) This section requires Parent and the Company to promptly notify each other of any material events, communications from governmental authorities, or occurrences that could prevent or delay the merger or cause a condition to fail - Each party must promptly notify the other of any written notice from third parties alleging required consents, communications from Governmental Authorities (except those covered by Section 6.8), or events that could prevent/delay closing or cause a condition in Article VII to fail[318](index=318&type=chunk)[319](index=319&type=chunk) [Information Exchange and Access](index=4&type=section&id=Section%206.7%20Access%20to%20Information) This section outlines the reciprocal obligations of the Company and Parent to provide reasonable access to their properties, records, and personnel for due diligence and merger consummation, subject to confidentiality, legal restrictions, and privilege - The Company will provide Parent reasonable access to its properties, books, records, and personnel, and furnish information, subject to not disclosing trade secrets, violating laws/contracts, or jeopardizing attorney-client privilege[320](index=320&type=chunk) - Parent will provide the Company similar access to its information, subject to the same limitations regarding trade secrets, legal violations, and privilege[322](index=322&type=chunk) [Regulatory Approvals and Filings](index=4&type=section&id=Section%206.8%20Consents%2C%20Approvals%20and%20Filings%3B%20Other%20Actions) This section details the parties' commitment to cooperate and use reasonable best efforts to obtain all necessary consents, approvals, and filings from governmental authorities and third parties, particularly regarding antitrust matters, while setting limits on required divestitures - Parent and the Company will use reasonable best efforts to obtain all necessary consents, registrations, approvals, and permits from third parties and Governmental Authorities, including HSR Clearance, and will share Antitrust Laws filing fees equally[324](index=324&type=chunk) - Parent and Company will file HSR Act notices within **20 Business Days** and other required regulatory filings promptly, cooperating with authorities and taking reasonable actions as conditions to approval[325](index=325&type=chunk)[326](index=326&type=chunk) - Parent has primary responsibility for antitrust strategy, but neither party is required to take Regulatory Actions (e.g., divestitures) that would have a material adverse impact on their businesses or the expected benefits of the transaction[328](index=328&type=chunk)[329](index=329&type=chunk) [Post-Merger Indemnification and D&O Insurance](index=4&type=section&id=Section%206.9%20Director%20and%20Officer%20Indemnification%20and%20Insurance) This section ensures that Company directors and officers will continue to receive indemnification and be covered by directors' and officers' liability insurance for a period of six years after the merger, under terms no less favorable than existing policies - Parent will cause the Surviving Corporation to fulfill and honor existing Company Indemnification Agreements and maintain no less favorable indemnification and exculpation provisions in its Constituent Documents for **six years** post-merger[333](index=333&type=chunk) - The Company will purchase a prepaid 'tail' directors' and officers' liability insurance policy for **six years**, with coverage no less favorable than current policies, subject to a maximum aggregate premium of **300%** of the current annual premium[335](index=335&type=chunk) [Company Credit Facility Payoff](index=4&type=section&id=Section%206.10%20Financing) This section requires the Company to obtain and deliver a payoff letter for its existing credit facility prior to the closing date, ensuring its termination upon payment - The Company must cause the agent under the Existing Company Credit Facility to deliver an executed payoff letter prior to the Closing Date, detailing the Payoff Amount and ensuring the discharge of the facility and release of all Liens upon payment[340](index=340&type=chunk) [Stock Listing and Delisting](index=4&type=section&id=Section%206.11%20Stock%20Exchange%20Listing%3B%20Blue-Sky%20Laws%3B%20Delisting) This section outlines Parent's obligation to list its shares on NYSE and the Company's obligation to delist its shares from NASDAQ and terminate its SEC registration after the merger - Parent will use reasonable best efforts to cause the shares of Parent Common Stock to be listed on NYSE prior to the Effective Time[341](index=341&type=chunk) - The Company will use reasonable best efforts to delist Company Common Stock from NASDAQ and terminate its registration under the Exchange Act as soon as practicable following the Effective Time[343](index=343&type=chunk) [Insider Trading Compliance](index=4&type=section&id=Section%206.12%20Section%2016%20Matters) This section requires Parent and the Company to take actions to ensure that certain transactions by insiders related to the merger are exempt under Section 16(b) of the Exchange Act - Parent and the Company will use reasonable best efforts to exempt dispositions of Company Common Stock and acquisitions of Parent Common Stock by Section 16(a) reporting individuals under Rule 16b-3[344](index=344&type=chunk) [Employee Benefits Post-Merger](index=4&type=section&id=Section%206.13%20Employee%20Benefit%20Matters) This section details the treatment of Company employees' compensation and benefits post-merger, including salary, bonus, and service credit, and the termination and rollover of Company qualified plans - For **one year** post-merger, Continuing Employees will receive no less favorable annual base salary/wage and target cash bonus, substantially comparable aggregate employee benefits (excluding certain types), and no less favorable severance benefits[345](index=345&type=chunk) - Continuing Employees will be credited with prior Company service for vesting, eligibility, and benefit levels under Parent Plans (with exceptions to prevent duplication or for specific plan types)[347](index=347&type=chunk) - The Company will terminate its 401(a) qualified defined contribution plans (Company Qualified Plans) prior to closing, and Parent will designate a Parent Qualified Plan to accept direct rollovers of account balances, including participant loans[348](index=348&type=chunk)[350](index=350&type=chunk) [Equity Award Information](index=4&type=section&id=Section%206.14%20Stock%20Award%20Schedule) This section requires the Company to provide Parent with a detailed list of all outstanding Company Equity Awards prior to the anticipated closing date - The Company must provide Parent with a list of all outstanding Company Equity Awards, including holder identity, award type, number of shares, plan, grant date, and vesting terms, no later than **three Business Days** prior to the anticipated Closing Date[352](index=352&type=chunk) [Management of Stockholder Litigation](index=4&type=section&id=Section%206.15%20Stockholder%20Litigation) This section mandates prompt notification and cooperation between Parent and the Company in the event of stockholder litigation related to the merger, requiring mutual consent for any settlement - In the event of Stockholder Litigation related to the Merger, the Company or Parent must promptly notify the other party and provide a reasonable opportunity to participate in the defense and settlement, with mutual written consent required for settlement[353](index=353&type=chunk) [Tax Treatment of Merger](index=4&type=section&id=Section%206.16%20Certain%20Tax%20Matters) This section outlines the parties' intent for the merger to qualify as a tax-free reorganization under U.S. federal income tax purposes and their commitment to cooperate to achieve this 'Intended Tax Treatment' - The Parties intend for the Merger to qualify as a 'reorganization' under Section 368(a) of the Code and will use reasonable best efforts to achieve this 'Intended Tax Treatment'[355](index=355&type=chunk)[356](index=356&type=chunk) - Each Party will report the Merger consistent with the Intended Tax Treatment and promptly notify the other of any facts or circumstances that could reasonably be expected to prevent or impede this qualification[356](index=356&type=chunk)[357](index=357&type=chunk) [Post-Merger Board Appointments](index=4&type=section&id=Section%206.17%20Governance%20Matters) This section requires the Parent Board to take actions to increase its size and appoint three designated Company directors, effective immediately after the merger - Prior to the Effective Time, the Parent Board will increase its size to **eleven (11) directors** and appoint **three (3)** Company Directors (designated by the Company and reasonably acceptable to Parent) to fill the new vacancies[361](index=361&type=chunk) [Company Officer and Director Resignations](index=4&type=section&id=Section%206.18%20Company%20Resignations) This section obligates the Company to obtain resignations from its directors and officers, effective upon the merger's completion, without affecting their change of control rights or employment status - The Company will use reasonable efforts to obtain and deliver resignations from each director and officer of Company Entities, effective as of (but conditioned on) the Effective Time, without impacting change of control rights or employment status[362](index=362&type=chunk) [Takeover Law Mitigation](index=4&type=section&id=Section%206.19%20State%20Takeover%20Statutes) This section requires each party to take necessary actions to address any applicable state takeover laws to ensure the prompt consummation of the merger - If any Takeover Law becomes applicable to the Merger, each Party will grant approvals and take necessary actions to consummate the Merger promptly and eliminate or minimize the statute's effects[363](index=363&type=chunk) [Merger Sub's Obligations](index=4&type=section&id=Section%206.20%20Merger%20Sub) This section states Parent's responsibility to ensure Merger Sub performs all its obligations under the agreement and consummates the merger - Parent shall take all action necessary to cause Merger Sub to perform its obligations under this Agreement and to consummate the Merger and other contemplated transactions[365](index=365&type=chunk) [CONDITIONS TO THE MERGER](index=4&type=section&id=ARTICLE%20VII) This article outlines the conditions for merger consummation, including stockholder approvals, regulatory clearances, and SEC effectiveness, which must be satisfied or waived by both parties [Mutual Closing Conditions](index=4&type=section&id=Section%207.1%20Conditions%20to%20Obligations%20of%20Each%20Party) This section lists the conditions that must be satisfied or waived by both Parent and the Company before the merger can be consummated, including stockholder approvals, regulatory clearances, and SEC effectiveness - Mutual conditions for closing include obtaining Parent and Company Stockholder Approvals, NYSE listing for Parent Common Stock, absence of Legal Restraints, effectiveness of Form S-4, HSR Clearance, and other specified governmental approvals[367](index=367&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk) [Parent's Closing Conditions](index=4&type=section&id=Section%207.2%20Conditions%20to%20Obligations%20of%20Parent%20and%20Merger%20Sub) This section outlines the specific conditions that must be met or waived for Parent and Merger Sub to be obligated to consummate the merger, primarily focusing on the Company's representations, covenants, and the absence of adverse effects - Conditions for Parent and Merger Sub include the Company's representations and warranties being true and correct (with varying materiality thresholds), the Company's material performance of covenants, the absence of a Company Material Adverse Effect, and receipt of the Payoff Letter[373](index=373&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk) [Company's Closing Conditions](index=4&type=section&id=Section%207.3%20Conditions%20to%20Obligations%20of%20the%20Company) This section outlines the specific conditions that must be met or waived for the Company to be obligated to consummate the merger, primarily focusing on Parent's and Merger Sub's representations, covenants, and the absence of adverse effects - Conditions for the Company include Parent's and Merger Sub's representations and warranties being true and correct (with varying materiality thresholds), their material performance of covenants, and the absence of a Parent Material Adverse Effect[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk) [TERMINATION](index=4&type=section&id=ARTICLE%20VIII) This article details the circumstances for Agreement termination, its consequences, and the conditions for payment of termination fees and expense reimbursements [Termination Rights](index=4&type=section&id=Section%208.1%20Termination) This section details the various circumstances under which the Agreement may be terminated, including by mutual agreement, by either party under specific conditions (e.g., failure to close by Outside Date, legal restraints, or lack of stockholder approval), or unilaterally by Parent or the Company under certain conditions (e.g., superior acquisition proposals or material breaches) - The Agreement may be terminated by mutual written agreement of Parent and the Company[383](index=383&type=chunk) - Either party may terminate if the Closing does not occur by the Outside Date (**August 5, 2026**, extendable to **May 5, 2027** under certain conditions), if a final and non-appealable Legal Restraint exists, or if stockholder approvals are not obtained[384](index=384&type=chunk) - Parent may terminate if the Parent Board authorizes termination for a Superior Parent Acquisition Proposal (with fee), if the Company Board makes a Company Change of Recommendation, or for uncured material breaches by the Company[385](index=385&type=chunk)[386](index=386&type=chunk) - The Company may terminate if the Company Board authorizes termination for a Superior Company Acquisition Proposal (with fee), if the Parent Board makes a Parent Change of Recommendation, or for uncured material breaches by Parent/Merger Sub[386](index=386&type=chunk)[387](index=387&type=chunk) [Consequences of Termination](index=4&type=section&id=Section%208.2%20Effect%20of%20Termination) This section specifies that upon termination, the Agreement becomes void, and parties generally have no further liability, except for certain surviving provisions and liability for fraud or willful breach - Upon termination, the Agreement immediately becomes void, and no Party has further liability, except that specific sections (e.g., Section 6.7, 8.2, 8.3, and Article IX) survive, and liability for fraud or Willful Breach remains[388](index=388&type=chunk) [Termination Fees and Expenses](index=4&type=section&id=Section%208.3%20Termination%20Fee%3B%20Expense%20Reimbursements) This section outlines the conditions under which a termination fee is payable by either the Company or Parent, specifies the amounts, and addresses expense reimbursements and the nature of these fees as liquidated damages - A Company Termination Fee of **$25,000,000** is payable to Parent under conditions such as a Company Change of Recommendation or the consummation of an alternative Company Acquisition Proposal with