Exhibit 10.1

 

 

 

 

MEDALLIA, INC.

(a Delaware corporation)

$500,000,000

0.125% CONVERTIBLE SENIOR NOTES DUE 2025

PURCHASE AGREEMENT

Dated: September 15, 2020

 

 

 

 

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MEDALIA, INC.

(a Delaware corporation)

$500,000,000

0.125% CONVERTIBLE SENIOR NOTES DUE 2025

PURCHASE AGREEMENT

September 15, 2020

BofA Securities, Inc.

Citigroup Global Markets Inc.

Wells Fargo Securities, LLC

KeyBanc Capital Markets Inc.

as Representatives of the several Initial Purchasers

 

c/o

BofA Securities, Inc.

One Bryant Park

New York, New York 10036

 

c/o

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

 

c/o

Wells Fargo Securities, LLC

500 West 33rd Street

New York, New York 10001

 

c/o

KeyBanc Capital Markets Inc.

127 Public Square, 4th Floor

Cleveland, Ohio 44114

Ladies and Gentlemen:

Medallia, Inc., a Delaware corporation (the “Company”), confirms its agreement
(the “Agreement”) with BofA Securities, Inc. (“BofA”), Citigroup Global Markets
Inc. (“Citigroup”), Wells Fargo Securities, LLC (“Wells Fargo”) and KeyBanc
Capital Markets Inc. (“KeyBanc”) and each of the other Initial Purchasers named
in Schedule A hereto (each, an “Initial Purchaser” and collectively, the
“Initial Purchasers,” which term shall also include any initial purchaser
substituted as hereinafter provided in Section 11 hereof), for whom BofA,
Citigroup, Wells Fargo and KeyBanc are acting as representatives (in such
capacity, the “Representatives”), with respect to (i) the sale by the Company
and the purchase by the Initial Purchasers, acting severally and not jointly, of
the respective principal amounts set forth in said Schedule A of $500,000,000
aggregate principal amount of the Company’s 0.125% Convertible Senior Notes due
2025 (the “Initial Securities”) and (ii) the grant by the Company to the Initial
Purchasers, acting severally and not jointly, of the option to purchase all or
any part of an additional $75,000,000 aggregate principal amount of its 0.125%
Convertible Senior Notes due 2025 (the “Option Securities” and, together with
the Initial Securities, the “Securities”). The Securities are to be issued
pursuant to an

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indenture dated as of September 18, 2020 (the “Indenture”) between the Company
and U.S. Bank National Association, as trustee (the “Trustee”). The Securities
will be convertible into cash, shares (the “Underlying Shares”) of common stock,
par value $0.001 per share, of the Company (the “Common Stock”), or a
combination of cash and Underlying Shares at the option of the Company, as set
forth in the Indenture.

In connection with the offering of the Initial Securities, the Company is
entering into capped call transactions with certain of the Initial Purchasers or
their respective affiliates or other financial institutions (collectively, the
“Option Counterparties”) pursuant to separate capped call confirmations (the
“Base Capped Call Confirmations”), each dated the date hereof, and in connection
with the issuance of any Option Securities, the Company and the Option
Counterparties may enter into additional capped call transactions (the
“Additional Capped Call Confirmations”) with each of the Option Counterparties
each to be dated the date on which the Initial Purchasers exercise their option
to purchase such Option Securities pursuant to Section 2(b) hereof. The Base
Capped Call Confirmations and the Additional Capped Call Confirmations are
referred to herein collectively as the “Capped Call Confirmations”.

The Company understands that the Initial Purchasers propose to make an offering
of the Securities on the terms and in the manner set forth herein and agrees
that the Initial Purchasers may resell, subject to the conditions set forth
herein, all or a portion of the Securities to purchasers (“Subsequent
Purchasers”) at any time after this Agreement has been executed and delivered.
The Securities are to be offered and sold through the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the “1933 Act”),
in reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities if such Securities are hereafter registered
under the 1933 Act or if an exemption from the registration requirements of the
1933 Act is available (including the exemption afforded by Rule 144A
(“Rule 144A”) of the rules and regulations promulgated under the 1933 Act (the
“1933 Act Regulations”) by the Securities and Exchange Commission (the
“Commission”)).

The Company has prepared and delivered to each Initial Purchaser copies of a
preliminary offering memorandum dated September 15, 2020 prior to the Applicable
Time (as defined below) (the “Preliminary Offering Memorandum”) and has prepared
and will deliver to each Initial Purchaser, on the date hereof or the next
succeeding day, copies of a final offering memorandum dated September 15, 2020
(the “Final Offering Memorandum”), each for use by such Initial Purchaser in
connection with its solicitation of purchases of, or offering of, the
Securities. “Offering Memorandum” means, with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (whether the
Preliminary Offering Memorandum or the Final Offering Memorandum, or any
amendment or supplement to either such document), including exhibits thereto and
any documents incorporated therein by reference, which has been prepared and
delivered by the Company to the Initial Purchasers, in the case of the
Preliminary Offering Memorandum prior to the Applicable Time, in connection with
their solicitation of purchases of, or offering of, the Securities. The Company
will prepare a final term sheet reflecting the final terms of the Securities, in
the form set forth in Schedule B hereto (the “Final Term Sheet”), and will
deliver such Final Term Sheet to the Initial Purchasers prior to the Applicable
Time in connection with their solicitation of purchases of, or offering of, the
Securities. The Company agrees that, unless it obtains the prior written consent
of the Representatives, it will not make any offer relating to the Securities by
any written materials other than the Offering Memorandum and the Issuer Written
Information. “Issuer Written Information” means (i) any writing intended for
general distribution to investors as evidenced by its being specified in
Schedule C hereto, including the Final Term Sheet, and (ii) any “road show” that
is a “written communication” within the meaning of the 1933 Act. “General
Disclosure Package” means the Preliminary Offering Memorandum and any Issuer
Written Information specified on Schedule C hereto and issued at or prior to
6:50 P.M., New York City time, on September 15, 2020 or such other time as
agreed by the Company and the Representatives (such date and time, the
“Applicable Time”).

 

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All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Offering
Memorandum (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Offering Memorandum; and all references in
this Agreement to amendments or supplements to the Offering Memorandum shall be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934 (the “1934 Act”) which is incorporated by reference in the
Offering Memorandum.

SECTION 1. Representations and Warranties.

(a) Representations and Warranties by the Company. The Company represents and
warrants to each Initial Purchaser as of the date hereof, the Applicable Time,
the Closing Time (as defined below) and any Option Closing Date (as defined
below), and agrees with each Initial Purchaser, as follows:

(i) General Disclosure Package; Rule 144A Eligibility. The Company hereby
confirms that it has authorized the use of the General Disclosure Package,
including the Preliminary Offering Memorandum and the Final Term Sheet, and the
Final Offering Memorandum in connection with the offer and sale of the
Securities by the Initial Purchasers. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same class as
securities listed on a national securities exchange registered under Section 6
of the 1934 Act, or quoted in a U.S. automated interdealer quotation system.

(ii) No Registration Required; No General Solicitation. Subject to compliance by
the Initial Purchasers with the representations and warranties of the Initial
Purchasers and the procedures set forth in Section 6 hereof, it is not necessary
in connection with the offer, sale and delivery of the offered Securities to the
Initial Purchasers and to each Subsequent Purchaser in the manner contemplated
by this Agreement, the General Disclosure Package and the Final Offering
Memorandum to register the Securities under the 1933 Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended. None of the
Company, its affiliates (as such term is defined in Rule 501(b) under the 1933
Act Regulations (each, an “Affiliate”)) or any person acting on its or any of
their behalf (other than the Initial Purchasers, as to whom the Company makes no
representation) has engaged, in connection with the offering of the offered
Securities, in any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the 1933 Act Regulations.

(iii) Accurate Disclosure. As of the Applicable Time, neither (A) the General
Disclosure Package nor (B) any Issuer Written Information, when considered
together with the General Disclosure Package, included, includes or will include
an untrue statement of a material fact or omitted, omits or will omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The Final Offering
Memorandum, as of its date, at the Closing Time or at any Option Closing Date,
did not, does not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The documents incorporated or deemed to be incorporated by reference in the
General Disclosure Package and the Final Offering Memorandum, when such
documents incorporated by reference were filed with the Commission, when read
together with the other information in the General Disclosure Package or the
Final Offering Memorandum, as the case may be, did not, does not and will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

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The representations and warranties in this subsection shall not apply to
statements in or omissions from the General Disclosure Package or the Final
Offering Memorandum made in reliance upon and in conformity with written
information furnished to the Company by any Initial Purchaser through the
Representatives expressly for use therein. For purposes of this Agreement, the
only information so furnished shall be the information in the first paragraph
under the heading “Plan of Distribution—Commissions and Discounts” and the
information in the first paragraph under the heading “Plan of Distribution—Price
Stabilization, Short Positions” in the Offering Memorandum (collectively, the
“Initial Purchaser Information”).

(iv) Incorporation of Documents by Reference. The documents incorporated or
deemed to be incorporated by reference in the Offering Memorandum, when they
became effective or at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the Commission
under the 1934 Act (the “1934 Act Regulations”).

(v) [RESERVED].

(vi) Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.

(vii) Authorization of the Indenture. The Indenture has been duly authorized by
the Company and, when duly executed and delivered by the Company and the
Trustee, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors’ rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).

(viii) Authorization of the Securities and the Underlying Shares. The Securities
have been duly authorized and, at the Closing Time, will have been duly executed
by the Company and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the purchase
price therefor as provided in this Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors’ rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture. Upon authentication, issuance and
delivery of the Securities in accordance with this the Indenture and this
Agreement, the Securities will be convertible into cash, Underlying Shares or a
combination thereof in accordance with the terms of the Securities; the maximum
number of Underlying Shares issuable upon conversion of the Securities (assuming
the Initial Purchasers exercise in full their option to purchase Option
Securities, and including the maximum number of shares of Common Stock that may
be issued upon conversions of Securities in connection with any “Make-Whole
Fundamental Change” or “Optional Redemption” and assuming “Physical Settlement”
of all such conversions (as such terms are defined in the Indenture)) (such
maximum number of shares of Common Stock, the

 

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“Conversion Shares”) has been duly authorized and reserved for issuance and,
when issued upon conversion of the Securities in accordance with the terms of
the Securities, such Conversion Shares will be validly issued, fully paid and
non-assessable, and the issuance of such Conversion Shares will not be subject
to any pre-emptive or similar rights.

(ix) Description of the Securities, the Indenture and the Common Stock. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the General Disclosure
Package and the Final Offering Memorandum. The Common Stock conforms to all
statements relating thereto contained or incorporated by reference in the
General Disclosure Package and the Final Offering Memorandum and such
description conforms to the rights set forth in the instruments defining the
same.

(x) Testing-the-Waters Materials. The Company has not engaged in any oral or
written communication with potential investors related to the offering of the
Securities (or any offering of securities that would be integrated with the
offer and sale of the Securities hereunder) undertaken in reliance on
Section 5(d) of the 1933 Act.

(xi) Company Not Ineligible Issuer. The Company is not an “ineligible issuer,”
as defined under Rule 405 under the 1933 Act.

(xii) Emerging Growth Company Status. From the time of the initial confidential
submission of the Company’s registration statement to the Commission for the
initial public offering of the Common Stock through the date hereof, the Company
has been and is an “emerging growth company,” as defined in Section 2(a) of the
1933 Act.

(xiii) Independent Accountants. Ernst & Young LLP, who certified the financial
statements and supporting schedules included or incorporated by reference in the
General Disclosure Package and the Final Offering Memorandum is an independent
registered public accounting firm as required by the 1933 Act, the 1933
Regulations, the 1934 Act, the 1934 Act Regulations and the Public Company
Accounting Oversight Board.

(xiv) Financial Statements. The financial statements included in the General
Disclosure Package and the Final Offering Memorandum, together with the related
schedules and notes, present fairly in all material respects the financial
position of the Company and its consolidated subsidiaries at the dates indicated
and the statement of operations, stockholders’ equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified; said
financial statements have been prepared in conformity with U.S. generally
accepted accounting principles (“GAAP”) applied on a consistent basis throughout
the periods involved except, in the case of unaudited interim financial
statements, subject to normal year-end audit adjustments and the exclusion of
certain footnotes as permitted by the applicable rules of the Commission. The
supporting schedules included or incorporated in the General Disclosure Package
and the Final Offering Memorandum, if any, present fairly in accordance with
GAAP the information required to be stated therein in all material respects. The
selected financial data and the summary financial information included or
incorporated by reference in the General Disclosure Package and the Final
Offering Memorandum present fairly in all material respects the information
shown therein and have been compiled on a basis consistent with that of the
audited financial statements included therein. Except as included therein, no
historical or pro forma financial statements or supporting schedules would be
required to be included in a registration statement relating to the offering of
the Securities, were the offering a registered offering on Form S-3 under the
1933 Act (a “Registration Statement”).

 

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(xv) No Material Adverse Change in Business. Except as otherwise stated therein,
since the respective dates as of which information is given in the General
Disclosure Package and the Final Offering Memorandum, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a “Material Adverse Effect”), (B) there have been
no transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its subsidiaries considered as one enterprise, and (C) there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.

(xvi) Good Standing of the Company. The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the General Disclosure
Package and the Final Offering Memorandum and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction (to the extent the concept of “good standing” is applicable in each
jurisdiction) in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.

(xvii) Good Standing of Subsidiaries. Each “significant subsidiary” of the
Company (as such term is defined in Rule 1-02 of Regulation S-X) (each, a
“Subsidiary” and, collectively, the “Subsidiaries”) has been duly organized and
is validly existing in good standing (to the extent such concept exists) under
the laws of the jurisdiction of its incorporation or organization, has corporate
or similar power and authority to own, lease and operate its properties and to
conduct its business as described in the General Disclosure Package and the
Final Offering Memorandum and is duly qualified to transact business and is in
good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good standing would
not result in a Material Adverse Effect. Except as otherwise disclosed in the
General Disclosure Package and the Final Offering Memorandum, all of the issued
and outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. The only subsidiaries of
the Company are (A) the subsidiaries listed on Exhibit 21 to the Company Annual
Report on Form 10-K for the fiscal year ended January 31, 2019 and (B) certain
other subsidiaries which, considered in the aggregate as a single subsidiary, do
not constitute a “significant subsidiary” as defined in Rule 1-02 of Regulation
S-X.

(xviii) Capitalization. The authorized, issued and outstanding shares of capital
stock of the Company as of July 31, 2020 are as set forth in the General
Disclosure Package and the Final Offering Memorandum in the column entitled
“Actual” under the caption “Capitalization”. The outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable. None of the outstanding shares of capital stock of the
Company were issued in violation of the preemptive or other similar rights of
any security holder of the Company.

(xix) Stock Plans. With respect to the stock options granted pursuant to the
stock-based compensation plans of the Company and any of its subsidiaries (the
“Company Stock Plans”), each grant of a stock option was made in accordance with
the terms of the Company Stock Plans and all applicable laws and regulatory
rules or requirements, including all applicable federal securities laws.

 

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(xx) Absence of Violations, Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is (A) in violation of its charter, bylaws or similar
organizational document, except, with respect to the Company’s subsidiaries, for
such violations that would not, singly or in the aggregate, result in a Material
Adverse Effect, (B) in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of them may be bound or to which any of the
properties or assets of the Company or any subsidiary is subject (collectively,
“Agreements and Instruments”), except for such defaults that would not, singly
or in the aggregate, result in a Material Adverse Effect, or (C) in violation of
any law, statute, rule, regulation, judgment, order, writ or decree of any
arbitrator, court, governmental body, regulatory body, administrative agency or
other authority, body or agency having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties, assets or operations
(each, a “Governmental Entity”), except for such violations that would not,
singly or in the aggregate, result in a Material Adverse Effect. The issue and
sale of the Securities and the execution, delivery and compliance by the Company
with this Agreement, the Indenture and the Securities and the consummation of
the transactions contemplated herein and therein and in the General Disclosure
Package (including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described therein under the caption
“Use of Proceeds”) and compliance by the Company with its obligations under this
Agreement, the Indenture and the Securities have been duly authorized by all
necessary corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or any subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches, defaults or
Repayment Events or liens, charges or encumbrances that would not, singly or in
the aggregate, result in a Material Adverse Effect), nor will such action result
in any violation of (i) the provisions of the charter, bylaws or similar
organizational document of the Company or any of its subsidiaries or (ii) any
law, statute, rule, regulation, judgment, order, writ or decree of any
Governmental Entity, except, in the case of clause (i) above, and with respect
to the Company’s subsidiaries in the case of clause (ii) above, for any
violation that would not, singly or in the aggregate, result in a Material
Adverse Effect and as would not have a Material Adverse Effect on the ability of
the Initial Purchasers or the Option Counterparties to consummate the
transactions contemplated by this Agreement. As used herein, a “Repayment Event”
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries.

(xxi) Absence of Labor Dispute. No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company,
is imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary’s principal
suppliers, manufacturers, partners, collaborators or contractors, which, in
either case, would result in a Material Adverse Effect.

(xxii) Absence of Proceedings. There is no action, suit, proceeding, inquiry or
investigation before or brought by any Governmental Entity now pending or, to
the knowledge of

 

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the Company, threatened, against or affecting the Company or any of its
subsidiaries, which would reasonably be expected to result in a Material Adverse
Effect, or which would reasonably be expected to materially and adversely affect
their respective properties or assets or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder.

(xxiii) [RESERVED].

(xxiv) Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign (other than as
may be required under the securities or blue sky laws of the various states, as
to which we need express no opinion) is necessary or required in connection with
the due authorization, execution and delivery of the Purchase Agreement or the
due execution, delivery or performance of the Indenture by the Company or for
the offering, issuance, sale or delivery of the Securities.

(xxv) Possession of Licenses and Permits. The Company and its subsidiaries
possess such permits, licenses, approvals, consents, exemptions and other
authorizations (collectively, “Governmental Licenses”) issued by the appropriate
Governmental Entities necessary to conduct the business now operated by them,
except where the failure so to possess would not, singly or in the aggregate,
result in a Material Adverse Effect. The Company and its subsidiaries are in
compliance with the terms and conditions of all Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate, result in
a Material Adverse Effect. The Company has fulfilled and performed all of its
material obligations with respect to the Governmental Licenses and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the Company as a holder of any permit, except where the failure to so fulfill
or perform, or the occurrence of such event, would not, singly or in the
aggregate, result in a Material Adverse Effect. Neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.

(xxvi) Title to Property. The Company and its subsidiaries have good and
marketable title to all real property owned by them and good title to all other
properties owned by them (other than intellectual property, which is addressed
separately below), in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any kind
except such as (A) are described in the General Disclosure Package and the Final
Offering Memorandum or (B) would not, singly or in the aggregate, result in a
Material Adverse Effect; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise, and
under which the Company or any of its subsidiaries holds properties described in
the General Disclosure Package or the Final Offering Memorandum, are in full
force and effect (subject to the effects of (i) bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar laws relating to or affecting rights or remedies of creditors generally;
(ii) the application of general principles of equity (including without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether enforcement is considered in proceedings at law
or in equity); and (iii) applicable law and public policy with respect to rights
to indemnity and contribution), with such exceptions as are not material, and
except as would not, singly or in the aggregate, result in a Material Adverse
Effect, neither the Company nor any such subsidiary has any notice of any claim
of any sort that has been asserted by anyone adverse to the rights of the
Company or any subsidiary under any of the leases or subleases mentioned above,
or affecting or questioning the rights of the Company or such subsidiary to the
continued possession of the leased or subleased premises under any such lease or
sublease.

 

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(xxvii) Possession of Intellectual Property. To its knowledge, the Company and
its subsidiaries own, or have obtained, valid, enforceable and adequate rights
and licenses to use all patents, patent rights, patent applications, inventions,
copyrights and other works of authorship, know how (including trade secrets and
other proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names, trade and service mark registrations,
trade names, designs, processes, licenses, computer programs, technical data and
information, registrations and applications for registrations of any of the
foregoing, and other intellectual property (collectively, “Intellectual
Property”) that are used to carry on the business of the Company as currently
conducted as disclosed in the General Disclosure Package and the Final Offering
Memorandum, including such Intellectual Property that is used in the
development, manufacture, operation and sale of any products and services sold,
by any of the Company or its subsidiaries. There are no material unreleased
liens or security interests which have been filed against any of the
Intellectual Property owned by the Company or any of its subsidiaries (the
“Company Intellectual Property”). Except as disclosed in the General Disclosure
Package and the Final Offering Memorandum: (A) there are no third parties who
have material rights to any Company Intellectual Property, including no liens,
security interests, or other encumbrances, other than licenses granted in the
ordinary course of business; (B) the Company has taken commercially reasonable
steps (1) to protect its information and trade secrets that it has chosen, in
the exercise of reasonable business judgement, to maintain as confidential and
trade secret and (2) to secure, maintain or safeguard the Company Intellectual
Property and its interests in the Company Intellectual Property, including the
execution of appropriate nondisclosure, confidentiality and invention assignment
agreements with its employees and contractors making material contributions to
Company Intellectual Property; (C) to the Company’s knowledge, there is no
infringement, misappropriation or violation by third parties of any Company
Intellectual Property as would reasonably be expected to be required to be
disclosed in the General Disclosure Package or the Final Offering Memorandum;
and (D) none of the Company Intellectual Property has been adjudged by a court
of competent jurisdiction invalid or unenforceable in whole or in part. Except
as disclosed in the General Disclosure Package and the Final Offering
Memorandum, there is no pending or threatened action, suit, proceeding or claim
by others: (1) challenging the Company’s rights in or to any Company
Intellectual Property other than office actions in the ordinary course of patent
and trademark prosecution, and the Company is unaware of any facts which would
form a reasonable basis for any such action, suit, proceeding or claim;
(2) challenging the validity, enforceability or scope of any Company
Intellectual Property, and the Company is unaware of any facts which would form
a reasonable basis for any such action, suit, proceeding or claim; or (3) to the
Company’s knowledge, asserting that the Company or any of its subsidiaries
infringes or otherwise violates, or would, upon the commercialization of any
product or service described in the General Disclosure Package or the Final
Offering Memorandum as under development, infringe or violate, any patent,
trademark, trade name, service name, copyright, trade secret or other
proprietary rights of others, and the Company and its subsidiaries are unaware
of any facts which would form a reasonable basis for any such action, suit,
proceeding or claim. To the knowledge of the Company, no employee, consultant,
or independent contractor of the Company is or has been in violation of any term
of any employment contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement, nondisclosure
agreement or any restrictive covenant to or with a former employer or
independent contractor where the basis of such violation relates to such
employee’s employment with the Company, actions undertaken while employed or
engaged with the Company, or the ownership by the Company of any Company

 

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Intellectual Property. To the Company’s knowledge, the Company and its
subsidiaries have complied with and have not received any written complaint from
any third party alleging material noncompliance with the terms of any agreement
pursuant to which Intellectual Property is currently licensed to the Company or
any subsidiary, and all such agreements are in full force and effect. To the
knowledge of the Company, there is no prior art that may render any patent
within the Company Intellectual Property invalid or that may render any patent
application within the Company Intellectual Property unpatentable that has not
been disclosed to the U.S. Patent and Trademark Office. To the knowledge of the
Company, there are no material defects in any of the patents or patent
applications within the Company Intellectual Property. Those patents comprising
Company Intellectual Property are subsisting and have not lapsed and the patent
applications comprising Company Intellectual Property are subsisting and have
not been abandoned, except in each case in the ordinary course in the exercise
of reasonable business judgment. Except as set forth in the General Disclosure
Package and the Final Offering Memorandum, the Company and its subsidiary are
not obligated or under any liability whatsoever to make any payment by way of
royalties, fees or otherwise to any owner or licensee of, or other claimant to,
any Intellectual Property, with respect to the use thereof or in connection with
the conduct of their respective businesses or otherwise, other than fees payable
pursuant to agreements for the license and use of Intellectual Property and
technology entered in the ordinary course of business. No technology employed by
the Company or its subsidiaries has, to the knowledge of the Company, been
obtained or is being used by the Company or its subsidiaries in violation of any
contractual or legal obligation binding on the Company, its subsidiaries, or any
of their officers, directors, employees, or contractors, or in violation of any
contractual rights of any persons.

(xxviii) Environmental Laws. (A) Neither the Company nor any of its subsidiaries
is in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products, asbestos-containing
materials or mold (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the
Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance with
their requirements and (C) there are no pending or, to the knowledge of the
Company, threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries, except in the case of each of (A), (B) and
(C) above, for any such matter as would not, singly or in the aggregate, result
in a Material Adverse Effect.

(xxix) Accounting Controls. The Company and its subsidiaries, considered as one
enterprise, maintain effective internal control over financial reporting (as
defined under Rule 13a-15 and 15d-15 under the 1934 Act Regulations) and a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management’s
general or specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; and (D) the
recorded accountability for assets is compared with

 

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the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Since the end of the Company’s most recent audited
fiscal year, there has been, to the Company’s knowledge, no material weakness in
the Company’s internal control over financial reporting (whether or not
remediated) (it being understood that this subsection shall not require the
Company to comply with Section 404 of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”) as of an earlier date than it would otherwise be required
to so comply under applicable law).

(xxx) Compliance with the Sarbanes-Oxley Act. The Company is in compliance with
all provisions of the Sarbanes-Oxley Act and all rules and regulations
promulgated thereunder or implementing the provisions thereof that are now in
effect and with which the Company is required to comply as of the date hereof.

(xxxi) Payment of Taxes. The Company and its subsidiaries have timely filed all
United States federal, state, local and foreign tax returns that are required to
have been filed or have requested extensions thereof (except where the failure
to file would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect) and have paid all taxes due and payable pursuant
to such returns, except for such taxes, if any, as are being contested in good
faith by appropriate proceedings and as to which adequate reserves have been
established by the Company in accordance with GAAP, or except where the failure
to pay would not reasonably be expected to have a Material Adverse Effect. No
tax deficiency has been determined adversely to the Company which has had (nor
does the Company have any notice or knowledge of any tax deficiency which could
reasonably be expected to have) a Material Adverse Effect.

(xxxii) Insurance. The Company and its subsidiaries carry or are entitled to the
benefits of insurance, with reputable insurers, in such amounts and covering
such risks as the Company reasonably believes is generally maintained by
companies of established repute, of comparable size and engaged in the same or
similar business, and all such insurance is in full force and effect. The
Company has no reason to believe that it or any of its subsidiaries will not be
able (A) to renew its existing insurance coverage as and when such policies
expire or (B) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted and at a cost
that would not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has been denied any insurance
coverage which it has sought or for which it has applied.

(xxxiii) Investment Company Act. The Company is not required, and after giving
effect to the offering and sale of the Securities and the application of the
proceeds thereof as described in the General Disclosure Package and the Final
Offering Memorandum and the transactions contemplated by the Capped Call
Confirmations, will not be required, to register as an “investment company”
under the Investment Company Act of 1940, as amended.

(xxxiv) Absence of Manipulation. Neither the Company nor, to the knowledge of
the Company, any affiliate of the Company has taken, nor will the Company or any
affiliate take, directly or indirectly, any action which is designed, or would
reasonably be expected, to cause or result in, or which constitutes, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or any Underlying Shares or to
result in a violation of Regulation M under the 1934 Act.

(xxxv) Foreign Corrupt Practices Act. For the past five (5) years, none of the
Company, any of its subsidiaries or, to the knowledge of the Company, any
director, officer, agent, employee, affiliate or other person acting on behalf
of the Company or any of its subsidiaries is

 

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aware of or has taken any action, directly or indirectly, that would result in a
violation by such persons of the U.S. Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”), or any other
applicable anti-bribery or anti-corruption laws (the “Anti-Corruption Laws”)
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the Anti-Corruption Laws and the Company
and, to the knowledge of the Company, its affiliates have conducted their
businesses in compliance with the Anti-Corruption Laws and have instituted and
maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith.

(xxxvi) Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions to which the Company is subject, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any Governmental Entity
(collectively, the “Money Laundering Laws”); and no action, suit or proceeding
by or before any Governmental Entity involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened.

(xxxvii) OFAC. For the past five (5) years, none of the Company, any of its
subsidiaries or, to the knowledge of the Company, any director, officer, agent,
employee, affiliate or representative of the Company or any of its subsidiaries
is an individual or entity (“Person”), or is more than 50 percent owned in the
aggregate by or acting on behalf of one or more Persons that are, currently the
subject of any sanctions administered or enforced by the United States
Government, including, without limitation, the U.S. Department of the Treasury’s
Office of Foreign Assets Control (“OFAC”), the United Nations Security Council,
the European Union, Her Majesty’s Treasury, or other relevant sanctions
authority (collectively, “Sanctions”), nor is the Company located, organized or
resident in a country or territory that is the subject of Sanctions, including,
without limitation, Crimea, Cuba, Iran, North Korea, and Syria; and the Company
will not directly or indirectly use the proceeds of the sale of the Securities,
or lend, contribute or otherwise make available such proceeds to any
subsidiaries, joint venture partners or other Person, to fund any activities of
its business (i) with any Person that, at the time of such funding, is a
designated subject of Sanctions, (ii) in or involving a country or territory
which at the time of such funding is the subject of comprehensive country-wide
or territory-wide Sanctions, or (iii) to its knowledge, in any other manner that
will result in a violation by any Person (including any Person participating in
the transaction, whether as underwriter, advisor, investor or otherwise) of
Sanctions.

The Company represents and covenants that, regardless of Sanctions, it will not,
directly or indirectly, use the proceeds of the transaction, or lend, contribute
or otherwise make available such proceeds to any subsidiary, joint venture
partner or other Person, to fund any activities of or business in or involving
Cuba or Iran. The aforementioned representation does not prohibit the Company
from doing, participating in or performing any activities or business in or
involving Cuba or Iran to the extent the Company is authorized to do so under
the Sanctions and other applicable laws.

 

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(xxxviii) Statistical and Market-Related Data. Any statistical and
market-related data included or incorporated by reference in the General
Disclosure Package or the Final Offering Memorandum are based on or derived from
sources that the Company believes, after reasonable inquiry, to be reliable and
accurate in all material respects and, to the extent required, the Company has
obtained the written consent to the use of such data from such sources.

(xxxix) No Rated Debt. No securities issued or guaranteed by, or loans to, the
Company are rated by any “nationally recognized statistical rating organization”
(as defined by the Commission in Section 3(a)(62) of the 1934 Act).

(xl) Data Privacy and Security Laws. Except as would not, individually or in the
aggregate, have a Material Adverse Effect, (A) the Company and its subsidiaries
are, and at all times in the past five (5) years were, in compliance with all
material respects with all applicable state, federal and international data
privacy and data security laws and regulations, including without limitation, as
applicable, HIPAA, the HITECH Act, the European Union General Data Protection
Regulation (“GDPR”) (EU 2016/679) and the California Consumer Privacy Act of
2018 (collectively, the “Privacy Laws”); and (B) the Company and its
subsidiaries have in place, comply with, and take appropriate steps reasonably
designed to ensure compliance in all material respects with their policies and
procedures relating to data privacy and security with respect to the collection,
storage, use, disclosure, handling, transfer and analysis of Personal Data.
“Personal Data” means (i) a natural person’s name, street address, telephone
number, e-mail address, photograph, social security number or tax identification
number, driver’s license number, passport number, credit card number, bank
information, or customer or account number; (ii) any information which would
qualify as “personally identifying information” under the Federal Trade
Commission Act, as amended; (iii) Protected Health Information as defined by
HIPAA; (iv) “personal data” as defined by GDPR; and (v) any other piece of
information that identifies such natural person. Except as would not,
individually or in the aggregate, have a Material Adverse Effect, neither the
Company nor any of its subsidiaries (X) have at any time in the past five
(5) years received written notice of any actual or reasonably likely material
liability of the Company or its subsidiaries relating to any violation of any
Privacy Laws, including, but not limited to any such liability relating to any
security or data privacy breaches suffered by the Company or its subsidiaries or
other unauthorized or improper access to, use of, or destruction of its Personal
Data owned or controlled by the Company or its subsidiaries; (Y) other than
pursuant to its compliance efforts in the ordinary course of business, is
currently conducting, subject to, or paying for, in whole or in part, any
material investigation, remediation, or other corrective action resulting from
the Company’s or its subsidiaries’ non-compliance with any Privacy Law; or
(Z) has in the past five (5) years been a party to any order, decree, settlement
agreement, or judgment from a governmental entity that imposes any obligation or
liability under any Privacy Law.

(xli) Cybersecurity; Data Protection. Except as would not, individually or in
the aggregate, have a Material Adverse Effect, (A) the IT Systems and Data
(defined below), have at all times during the past five (5) years, operated and
performed as is necessary for the operation of the business of the Company and
its subsidiaries as currently conducted and, to the knowledge of the Company, as
proposed to be conducted as described in the General Disclosure Package and the
Final Offering Memorandum, (B) the IT Systems and Data are not, to the knowledge
of the Company, infected by viruses, disabling code or other harmful code,
(C) there have been, to the knowledge of the Company, after reasonable inquiry,
no unauthorized uses of or access to the IT Systems and Data of any of the
Company’s or its subsidiaries’ information technology and computers, computer
systems, networks, servers, data communications lines, hardware, software, or
databases of Personal Data or confidential information (including the Personal
Data or other confidential information of their respective customers, employees,
suppliers, vendors and any

 

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third party data maintained, processed or stored by the Company and its
subsidiaries, and any such Personal Data or confidential information processed
or stored by third parties on behalf of the Company and its subsidiaries)
(collectively, “IT Systems and Data”), and (D) neither the Company nor its
subsidiaries have been notified of any security breach or security incident of
their IT Systems and Data. The Company and its subsidiaries have at all times in
the past five (5) years implemented and maintained reasonable controls,
policies, procedures, and technological safeguards designed to maintain and
protect the integrity, continuous operation, redundancy and security of their IT
Systems and Data reasonably consistent with applicable binding industry
standards, or as required by applicable laws.

(xlii) Absence of Integration. Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D) has, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the 1933 Act) that is or will be
integrated with the sale of the Securities in a manager that would require
registration of the Securities under the 1933 Act.

(b) Officer’s Certificates. Any certificate signed by any officer of the Company
or any of its subsidiaries delivered to the Representatives or to counsel for
the Initial Purchasers shall be deemed a representation and warranty by the
Company to each Initial Purchaser as to the matters covered thereby.

SECTION 2. Sale and Delivery to Initial Purchasers; Closing.

(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule A, the aggregate principal amount of
Initial Securities set forth in Schedule A, plus any additional principal amount
of Initial Securities which such Initial Purchaser may become obligated to
purchase pursuant to the provisions of Section 11 hereof, subject to such
adjustments as the Representatives in their discretion shall make to ensure that
any sales or purchases are in authorized denominations.

(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Initial Purchasers, severally
and not jointly, to purchase the Option Securities, at the price set forth in
Schedule A. The option hereby granted may be exercised in whole or in part from
time to time upon notice by the Representatives to the Company setting forth the
amount of Option Securities as to which the several Initial Purchasers are then
exercising the option and the time and date of payment and delivery for such
Option Securities; provided that any Option Closing Date (as defined below) must
occur during the 13-day period from, and including, the Closing Time (such
period, the “Option Closing Period”). Any such time and date of delivery (an
“Option Closing Date”) shall be determined by Representatives, but shall not be
later than five full business days after the exercise of said option, nor in any
event prior to the Closing Time; provided that such time and date fall within
the Option Closing Period. Option Securities may be purchased as provided in
this Section 2 solely for the purpose of covering sales of Securities in excess
of the principal amount of the Initial Securities. If the option is exercised as
to all or any portion of the Option Securities, each of the Initial Purchasers,
acting severally and not jointly, will purchase that proportion of the total
principal amount of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Initial
Purchaser bears to the total principal amount of Initial Securities, subject in
each case to such adjustments as the Representatives in their discretion shall
make to ensure that any sales or purchases are in authorized denominations.

 

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(c) Payment. Payment of the purchase price for, and delivery of certificates or
security entitlements for, the Initial Securities shall be made at the offices
of Davis Polk & Wardwell LLP, 1600 El Camino Real, Menlo Park, CA 94025, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 9:00 A.M. (New York City time) on the second (third, if the pricing occurs
after 4:30 P.M. (New York City time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 11),
or such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called “Closing Time”).

In addition, in the event that any or all of the Option Securities are purchased
by the Initial Purchasers, payment of the purchase price for, and delivery of
certificates or security entitlements for, such Option Securities shall be made
at the above-mentioned offices, or at such other place as shall be agreed upon
by the Representatives and the Company, on each Option Closing Date as specified
in the notice from the Representatives to the Company.

Payment shall be made to the Company by wire transfer of immediately available
funds to a bank account designated by the Company, against delivery to the
Representatives for the respective accounts of the Initial Purchasers of
certificates or security entitlements for the Securities to be purchased by
them. It is understood that each Initial Purchaser has authorized the
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. BofA, individually and not
as representative of the Initial Purchasers, may (but shall not be obligated to)
make payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Initial Purchaser whose funds have
not been received by the Closing Time or the relevant Option Closing Date, as
the case may be, but such payment shall not relieve such Initial Purchaser from
its obligations hereunder.

SECTION 3. Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:

(a) Delivery of Offering Memorandum. The Company has delivered to each Initial
Purchaser, without charge, as many copies of the Preliminary Offering Memorandum
(as amended or supplemented) thereto and documents incorporated by reference
therein as such Initial Purchaser reasonably requested, and the Company hereby
consents to the use of such copies. The Company will furnish to each Initial
Purchaser, without charge, such number of copies of the Final Offering
Memorandum thereto and documents incorporated by reference therein as such
Initial Purchaser may reasonably request.

(b) Notice and Effect of Material Events. If at any time prior to the completion
of resales of the Securities by the Initial Purchasers, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Initial Purchasers or for the Company, to amend or supplement
the General Disclosure Package or the Final Offering Memorandum in order that
the General Disclosure Package or the Final Offering Memorandum, as the case may
be, will not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
Subsequent Purchaser, the Company will promptly (A) give the Representatives
notice of such event and (B) prepare any amendment or supplement as may be
necessary to correct such statement or omission and, a reasonable amount of time
prior to any proposed use or distribution, furnish the Representatives with
copies of any such amendment or supplement; provided that the Company shall not
use or distribute any such amendment or supplement to which the Representatives
or counsel for the Initial Purchasers shall object in a timely manner. The
Company will furnish to the Initial Purchasers such number of copies of such
amendment or supplement as the Initial Purchasers may reasonably request.

 

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(c) Reporting Requirements. Until the completion of resales of the Securities by
the Initial Purchasers, the Company will file all documents required to be filed
with the Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations. The Company has given the
Representatives notice of any filings made pursuant to the 1934 Act or 1934 Act
Regulations within 48 hours prior to the Applicable Time; the Company will give
the Representatives notice of its intention to make any such filing from the
Applicable Time to the Closing Time and will furnish the Representatives with
copies of any such documents a reasonable amount of time prior to such proposed
filing, as the case may be, and will not file or use any such document to which
the Representatives or counsel for the Initial Purchasers shall reasonably
object.

(d) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Initial Purchasers, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Representatives may designate and to
maintain such qualifications in effect so long as required to complete the
distribution of the Securities; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.

(e) Use of Proceeds. The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the General Disclosure
Package and the Final Offering Memorandum under “Use of Proceeds.”

(f) DTCC. The Company will cooperate with the Initial Purchasers and use its
best efforts to permit the offered Securities to be eligible for clearance and
settlement through the facilities of The Depository Trust & Clearing Corporation
(“DTCC”).

(g) Listing. The Company will use its best efforts to effect and maintain the
listing of the Conversion Shares on the New York Stock Exchange.

(h) Restriction on Sale of Securities. During a period of 60 days from the date
of the Final Offering Memorandum, the Company will not, without the prior
written consent of BofA, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file or confidentially
submit any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder or the
issuance of any Underlying Shares, (B) any shares of Common Stock issued by the
Company upon the exercise or settlement (including any “net” or “cashless”
exercises or settlements) of an option or restricted stock unit or warrant or
the conversion of a security outstanding on the date hereof and referred to in
the General Disclosure Package and the Final Offering Memorandum, and which
options or restricted stock units are issued pursuant to existing stock plans of
the Company referred to in the General Disclosure Package and the Final Offering
Memorandum, (C) any shares of Common Stock issued or restricted stock units or
options to purchase Common Stock granted pursuant to existing stock plans of the
Company referred to in the General Disclosure Package and the Final Offering
Memorandum, (D) the repurchase by the Company of any shares of Common Stock
pursuant to agreements referred to in the General Disclosure Package and the
Final Offering Memorandum providing for an option to repurchase or a right of
first refusal on behalf of the Company

 

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pursuant to the Company’s repurchase rights, (E) any shares of Common Stock
issued pursuant to any non-employee director stock plan or dividend reinvestment
plan referred to in the General Disclosure Package and the Final Offering
Memorandum, (F) the issuance by the Company of shares of Common Stock or
securities convertible into, exchangeable for or that represent the right to
receive shares of Common Stock in connection with (1) the acquisition by the
Company or any of its subsidiaries of the securities, business, technology,
property or other assets of another person or entity or pursuant to an employee
benefit plan assumed by the Company in connection with such acquisition, and the
issuance of any such securities pursuant to any such agreement, or (2) the
Company’s joint ventures, commercial relationships and other strategic
transactions, (G) the filing of a registration statement on Form S-8 relating to
securities granted or to be granted pursuant to the Company’s stock plans or any
assumed employee benefit contemplated by clause (F) or (H) the entry into, or
the consummation of the transactions contemplated by, the Capped Call
Confirmations; provided, that the aggregate number of shares of Common Stock
that the Company may sell or issue or agree to sell or issue pursuant to clause
(F) shall not exceed 10% of the total number of shares of Common Stock
outstanding immediately prior to the offering of the Securities contemplated by
this Agreement; and provided, further, that in the case of clause (F), the
Company shall (a) cause each recipient of such securities to execute and deliver
to BofA, on or prior to the issuance of such securities, a lock-up agreement
substantially in the form of Exhibit A hereto to the extent not already executed
and delivered by such recipients as of the date hereof and (b) enter stop
transfer instructions with the Company’s transfer agent and registrar on such
securities with respect to all recipients of such securities, which the Company
agrees it will not waive or amend without the prior written consent of BofA.

SECTION 4. Payment of Expenses.

(a) Expenses. The Company will pay or cause to be paid all expenses incident to
the performance of their obligations under this Agreement, including
(i) preparation, issuance and delivery of the Securities to the Initial
Purchasers and the Underlying Shares and any charges of DTCC in connection
therewith, (ii) the fees and disbursements of the Company’s counsel, accountants
and other advisors, (iii) the qualification of the Securities under securities
laws in accordance with the provisions of Section 3(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Initial
Purchasers in connection therewith and in connection with the preparation of the
blue sky survey and any supplement thereto (such fees not to exceed $10,000),
(iv) the preparation, printing and delivery to the Initial Purchasers of copies
of each Preliminary Offering Memorandum, any Issuer Written Information, the
Final Term Sheet and the Final Offering Memorandum and any amendments or
supplements thereto and any costs associated with electronic delivery of any of
the foregoing by the Initial Purchasers to investors, (v) all fees and expenses
of the Trustee and any expenses of any transfer agent or registrar for the
Securities or the Underlying Shares, (vi) the costs and expenses of the Company
relating to investor presentations on any “road show” undertaken in connection
with the marketing of the Securities, including without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations, travel and lodging expenses of the representatives and officers
of the Company and any such consultants, (vii) the fees and expenses incurred in
connection with the listing of the Conversion Shares on the New York Stock
Exchange and (viii) the costs and expenses (including, without limitation, any
damages or other amounts payable in connection with legal or contractual
liability) associated with the reforming of any contracts for sale of the
Securities made by the Initial Purchasers caused by a breach of the
representation contained in the first sentence of Section 1(a)(iii). It is
further understood, however, that except as provided in this Section 4(a) and
Section 7 hereof, the Initial Purchasers will pay all of their own costs and
expenses, including fees and disbursements of their counsel, transfer taxes
payable on resale of any of the Securities or the Underlying Shares by them and
any advertising expenses connected with any offers they may make and lodging
expenses incurred by them in connection with any road show, as applicable.

 

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(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or
Section 10(a)(i) or (iii) hereof, the Company shall reimburse the Initial
Purchasers for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Initial Purchasers.

SECTION 5. Conditions of Initial Purchasers’ Obligations. The obligations of the
several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company contained herein or in
certificates of any officer of the Company or any of its subsidiaries, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:

(a) Opinion of Counsel for Company. At the Closing Time, the Representatives
shall have received the favorable opinion and 10b-5 statement, dated the Closing
Time, of Wilson Sonsini Goodrich & Rosati, P.C., counsel for the Company, in
form and substance reasonably satisfactory to counsel for the Initial
Purchasers, together with signed or reproduced copies of such letter for each of
the other Initial Purchasers.

(b) Opinions of Counsel for Initial Purchasers. At the Closing Time, the
Representatives shall have received the favorable opinion and 10b-5 statement,
dated the Closing Time, of Davis Polk & Wardwell LLP, counsel for the Initial
Purchasers, together with signed or reproduced copies of such letter for each of
the other Initial Purchasers in form and substance reasonably satisfactory to
the Representatives. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
New York, the General Corporation Law of the State of Delaware and the federal
securities laws of the United States, upon the opinions of counsel satisfactory
to the Representatives. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers and other representatives of the Company
and its subsidiaries and certificates of public officials.

(c) Officers’ Certificate. At the Closing Time, there shall not have been, since
the date hereof or since the respective dates as of which information is given
in the General Disclosure Package or the Final Offering Memorandum, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, and the Representatives shall have received a certificate of the Chief
Executive Officer or the President of the Company and of the chief financial or
chief accounting officer of the Company, dated the Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties of the Company in this Agreement are true and
correct with the same force and effect as though expressly made at and as of the
Closing Time and (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Time.

(d) Accountant’s Comfort Letter. At the time of the execution of this Agreement,
the Representatives shall have received from Ernst & Young LLP a letter, dated
such date, in form and substance satisfactory to the Representatives, together
with signed or reproduced copies of such letter for each of the other Initial
Purchasers containing statements and information of the type ordinarily included
in accountants’ “comfort letters” to underwriters with respect to the financial
statements and certain financial information contained in the Offering
Memorandum.

(e) Bring-down Comfort Letter. At the Closing Time, the Representatives shall
have received from Ernst & Young LLP a letter, dated as of the Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (d) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to the
Closing Time.

 

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(f) Approval of Listing. At the Closing Time, the Conversion Shares shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.

(g) Lock-up Agreements. At the date of this Agreement, BofA shall have received
an agreement substantially in the form of Exhibit A hereto signed by the persons
listed on Schedule D hereto.

(h) CFO Certificate. At the time of the execution of this Agreement, the
Representatives shall have received from the Company a certificate, dated such
date, in form and substance reasonably satisfactory to the Representatives, of
its chief financial officer with respect to certain financial and other
specified information contained in the Offering Memorandum, providing
“management comfort” with respect to such information.

(i) Bring-down CFO Certificate. At the Closing Time, the Representatives shall
have received from the Company a certificate, dated as of the Closing Time, in
form and substance reasonably satisfactory to the Representatives, of its chief
financial officer with respect to certain financial and other specified
information contained in the Offering Memorandum, providing “management comfort”
with respect to such information.

(j) Conditions to Purchase of Option Securities. In the event that the Initial
Purchasers exercise their option provided in Section 2(b) hereof to purchase all
or any portion of the Option Securities, the representations and warranties of
the Company contained herein and the statements in any certificates furnished by
the Company and any of its subsidiaries hereunder shall be true and correct as
of each Option Closing Date and, at the relevant Option Closing Date, the
Representatives shall have received:

(i) Officers’ Certificate. A certificate, dated such Option Closing Date, of the
President or a Vice President of the Company and of the chief financial or chief
accounting officer of the Company confirming that the certificate delivered at
the Closing Time pursuant to Section 5(c) hereof remains true and correct as of
such Option Closing Date.

(ii) Opinion of Counsel for Company. The favorable opinion and 10b-5 statement
of Wilson Sonsini Goodrich & Rosati, P.C., counsel for the Company, in form and
substance satisfactory to the Representatives, dated such Option Closing Date,
relating to the Option Securities to be purchased on such Option Closing Date
and otherwise to the same effect as the opinion required by Section 5(a) hereof.

(iii) Opinions of Counsel for Initial Purchasers. The favorable opinion and
10b-5 statement of Davis Polk & Wardwell LLP, counsel for the Initial
Purchasers, dated such Option Closing Date, relating to the Option Securities to
be purchased on such Option Closing Date and otherwise to the same effect as the
opinion required by Section 5(b) hereof.

(iv) Bring-down Comfort Letter. A letter from Ernst & Young LLP, in form and
substance satisfactory to the Representatives and dated such Option Closing
Date, substantially in the same form and substance as the letter furnished to
the Representatives pursuant to Section 5(d) hereof, except that the “specified
date” in the letter furnished pursuant to this paragraph shall be a date not
more than three business days prior to such Option Closing Date.

(iv) Bring-down CFO Certificate. The Representatives shall have received from
the Company a certificate, dated such Option Closing Date, in form and substance
reasonably satisfactory to the Representatives, of its chief financial officer
with respect to certain financial and other specified information contained in
the Offering Memorandum, providing “management comfort” with respect to such
information.

 

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(k) Additional Documents. At the Closing Time and at each Option Closing Date
(if any), counsel for the Initial Purchasers shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Initial Purchasers.

(l) Termination of Agreement. If any condition specified in this Section shall
not have been fulfilled when and as required to be fulfilled, this Agreement,
or, in the case of any condition to the purchase of Option Securities on an
Option Closing Date which is after the Closing Time, the obligations of the
several Initial Purchasers to purchase the relevant Option Securities, may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time or such Option Closing Date, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 7, 8, 9, 15, 16, 17 and 18
shall survive any such termination and remain in full force and effect.

SECTION 6. Subsequent Offers and Resales of the Securities.

(a) Offer and Sale Procedures. Each of the Initial Purchasers and the Company
hereby establish and agree to observe the following procedures in connection
with the offer and sale of the Securities:

(i) Offers and Sales. Offers and sales of the Securities shall be made to such
persons and in such manner as is contemplated by the Offering Memorandum. Each
Initial Purchaser severally agrees that it will not offer, sell or deliver any
of the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. The Company has
not entered into any contractual arrangement, other than this Agreement, with
respect to the distribution of the Securities or the Underlying Shares and the
Company will not enter into any such arrangement except as contemplated thereby.

(ii) No General Solicitation. No general solicitation or general advertising
(within the meaning of Rule 502(c) under the 1933 Act Regulations) will be used
in the United States in connection with the offering or sale of the Securities.

(iii) Legends. Each of the Securities will bear, to the extent applicable, the
legend contained in “Notice to Investors” in the General Disclosure Package and
the Final Offering Memorandum for the time period and upon the other terms
stated therein.

(iv) Minimum Principal Amount. No sale of the Securities to any one Subsequent
Purchaser will be for less than U.S. $1,000 principal amount and no Security
will be issued in a smaller principal amount. If the Subsequent Purchaser is a
non-bank fiduciary acting on behalf of others, each person for whom it is acting
must purchase at least U.S. $1,000 principal amount of the Securities.

(b) Covenants of the Company. The Company covenants with each Initial Purchaser
as follows:

 

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(i) Integration. The Company agrees that it will not and will cause its
Affiliates not to, directly or indirectly, solicit any offer to buy, sell or
make any offer or sale of, or otherwise negotiate in respect of, securities of
the Company of any class if, as a result of the doctrine of “integration”
referred to in Rule 502 under the 1933 Act Regulations, such offer or sale would
render invalid (for the purpose of (i) the sale of the offered Securities by the
Company to the Initial Purchasers, (ii) the resale of the offered Securities by
the Initial Purchasers to Subsequent Purchasers or (iii) the resale of the
offered Securities by such Subsequent Purchasers to others) the exemption from
the registration requirements of the 1933 Act provided by Section 4(a)(2)
thereof or by Rule 144A thereunder or otherwise.

(ii) Rule 144A Information. The Company agrees that, in order to render the
offered Securities eligible for resale pursuant to Rule 144A, while any of the
offered Securities remain outstanding, it will make available, upon request, to
any holder of offered Securities or prospective purchasers of Securities the
information specified in Rule 144A(d)(4), unless the Company furnishes
information to the Commission pursuant to Section 13 or 15(d) of the 1934 Act.

(iii) Restriction on Repurchases. The Company will not, and will cause its
Affiliates not to, resell any offered Securities which are “restricted
securities” (as such term is defined under Rule 144(a)(3)), whether as
beneficial owner or otherwise (except as agent acting as a securities broker on
behalf of and for the account of customers in the ordinary course of business in
unsolicited broker’s transactions).

(iv) Reservation of Underlying Shares. The Company will reserve and keep
available at all times, free of pre-emptive rights, the Conversion Shares or
such greater maximum number of Underlying Shares as may be issuable from time to
time upon conversion of the Securities for the purpose of enabling the Company
to satisfy all obligations to issue Underlying Shares upon conversion of the
Securities under the Indenture.

(c) Representations, Warranties and Agreements of the Initial Purchasers. Each
Initial Purchaser severally and not jointly represents and warrants to, and
agrees with, the Company that it is a qualified institutional buyer as defined
under Rule 144A (a “Qualified Institutional Buyer”) and an “accredited investor”
within the meaning of Rule 501(a) under the 1933 Act Regulations. Each Initial
Purchaser understands that the offered Securities have not been and will not be
registered under the 1933 Act and may not be offered or sold within the United
States except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the 1933 Act. Each Initial Purchaser severally
represents and agrees that it has not offered or sold, and will not offer or
sell, any offered Securities constituting part of its allotment within the
United States except in accordance with Rule 144A or another applicable
exemption from the registration requirements of the 1933 Act. Accordingly,
neither it nor any person acting on its behalf has made or will make offers or
sales of the Securities in the United States by means of any form of general
solicitation or general advertising (within the meaning of Regulation D) in the
United States. Each Initial Purchaser will take reasonable steps to inform, and
cause each of its Affiliates to take reasonable steps to inform, persons
acquiring Securities from such Initial Purchaser or Affiliate, as the case may
be, in the United States that the Securities (A) have not been and will not be
registered under the 1933 Act, (B) are being sold to them without registration
under the 1933 Act in reliance on Rule 144A or in accordance with another
exemption from registration under the 1933 Act, as the case may be, and (C) may
not be offered, sold or otherwise transferred except (1) to the Company or
(2) in accordance with (x) Rule 144A to a person whom the seller reasonably
believes is a Qualified Institutional Buyer that is purchasing such Securities
for its own account or for the account of a Qualified Institutional Buyer to
whom notice is given that the offer, sale or transfer is being made in reliance
on Rule 144A or (y) pursuant to another available exemption from registration
under the 1933 Act.

 

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SECTION 7. Indemnification.

(a) Indemnification of Initial Purchasers. The Company agrees to indemnify and
hold harmless each Initial Purchaser, its Affiliates, its selling agents and
each person, if any, who controls any Initial Purchaser within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

(i) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, arising out of any untrue statement or alleged untrue statement of
a material fact included in any Preliminary Offering Memorandum, the Final
Offering Memorandum, the information contained in the Final Term Sheet, any
Issuer Written Information or any other information used by or on behalf of the
Company in connection with the offer or sale of the Securities (or any amendment
or supplement to the foregoing) or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;

(ii) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission;
provided that (subject to Section 7(d) below) any such settlement is effected
with the written consent of the Company;

(iii) against any and all expense whatsoever, as incurred (including the
reasonable and documented fees and disbursements of counsel chosen by the
Representatives), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in any
Preliminary Offering Memorandum, the Final Offering Memorandum or the
information contained in the Final Term Sheet (or any amendment or supplement to
the foregoing) in reliance upon and in conformity with the Initial Purchaser
Information.

(b) Indemnification of Company, Directors and Officers. Each Initial Purchaser
severally agrees to indemnify and hold harmless the Company, its directors, its
officers and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in any
Preliminary Offering Memorandum, the Final Offering Memorandum or the
information contained in the Final Term Sheet (or any amendment or supplement to
the foregoing) in reliance upon and in conformity with the Initial Purchaser
Information.

(c) Actions against Parties; Notification. Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying party of any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall

 

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not relieve such indemnifying party from any liability hereunder to the extent
it is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 7(a) above, counsel to the indemnified parties shall be selected by the
Representatives, and, in the case of parties indemnified pursuant to
Section 7(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
the reasonable and documented out of pocket fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 7 or Section 8 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for the reasonable and documented out of pocket fees and
expenses of counsel, such indemnifying party agrees that it shall be liable for
any settlement of the nature contemplated by Section 7(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement, unless such
amounts are being contested in good faith.

SECTION 8. Contribution. If the indemnification provided for in Section 7 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Initial Purchasers, on the other hand, from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company, on the one hand, and of
the Initial Purchasers, on the other hand, in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

The relative benefits received by the Company, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company,
on the one hand, and the total underwriting discount received by the Initial
Purchasers, on the other hand, bear to the aggregate initial offering price of
the Securities as set forth on the cover of the Final Offering Memorandum.

 

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The relative fault of the Company, on the one hand, and the Initial Purchasers,
on the other hand, shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

Notwithstanding the provisions of this Section 8, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities purchased by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 8, each person, if any, who controls an Initial
Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act and each Initial Purchaser’s Affiliates and selling agents shall have
the same rights to contribution as such Initial Purchaser, and each director of
the Company, each officer of the Company, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Company. The
Initial Purchasers’ respective obligations to contribute pursuant to this
Section 8 are several in proportion to the aggregate principal amount of Initial
Securities set forth opposite their respective names in Schedule A hereto and
not joint.

SECTION 9. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Initial Purchaser or its
Affiliates or selling agents, any person controlling any Initial Purchaser, its
officers or directors or any person controlling the Company and (ii) delivery of
and payment for the Securities.

SECTION 10. Termination of Agreement.

(a) Termination. The Representatives may terminate this Agreement, by notice to
the Company, at any time at or prior to the Closing Time (i) if there has been,
in the judgment of the Representatives, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
General Disclosure Package or the Final Offering Memorandum, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial

 

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markets in the United States or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the completion of the offering or
to enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or (iv) if trading generally on the
NYSE American or the New York Stock Exchange or in the Nasdaq Global Select
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by order of the Commission, FINRA or any other
governmental authority, or (v) a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(vi) if a banking moratorium has been declared by either Federal or New York
authorities.

(b) Liabilities. If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 1, 7, 8, 9, 15,
16, 17 and 18 shall survive such termination and remain in full force and
effect.

SECTION 11. Default by One or More of the Initial Purchasers. If one or more of
the Initial Purchasers shall fail at the Closing Time or an Option Closing Date
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the “Defaulted Securities”), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Initial Purchasers, or any other initial purchasers, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:

(i) if the number of Defaulted Securities does not exceed 10% of the aggregate
principal amount of the Securities to be purchased on such date, each of the
non-defaulting Initial Purchasers shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Initial Purchasers, or

(ii) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased on such date, this Agreement
or, with respect to any Option Closing Date which occurs after the Closing Time,
the obligation of the Initial Purchasers to purchase, and the Company to sell,
the Option Securities to be purchased and sold on such Option Closing Date,
shall terminate without liability on the part of any non-defaulting Initial
Purchaser.

No action taken pursuant to this Section shall relieve any defaulting Initial
Purchaser from liability in respect of its default.

In the event of any such default which does not result in a termination of this
Agreement or, in the case of an Option Closing Date which is after the Closing
Time, which does not result in a termination of the obligation of the Initial
Purchasers to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the (i) Representatives or (ii) the Company shall
have the right to postpone Closing Time or the relevant Option Closing Date, as
the case may be, for a period not exceeding seven days in order to effect any
required changes in the General Disclosure Package or the Final Offering
Memorandum or in any other documents or arrangements (provided that any Option
Closing Date must occur during the Option Closing Period). As used herein, the
term “Initial Purchaser” includes any person substituted for an Initial
Purchaser under this Section 11.

 

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SECTION 12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Initial Purchasers shall
be directed to BofA at One Bryant Park, New York, New York 10036, attention of
Syndicate Department (facsimile: (646) 855-3073), with a copy to ECM Legal
(facsimile: (212) 230-8730), to Citigroup at 388 Greenwich Street, New York, New
York 10013, attention of General Counsel (facsimile: (646) 291-1469), to Wells
Fargo at 500 West 33rd Street, New York, New York 10001, attention of Equity
Syndicate Department (facsimile: (212) 214-5918) and to KeyBanc at 127 Public
Square, 4th Floor, Cleveland, Ohio 44114, attention of Equity Syndicate; notices
to the Company shall be directed to it at Medallia, Inc., 575 Market Street,
Suite 1850, San Francisco, California 94105, attention of Chief Financial
Officer and General Counsel.

SECTION 13. No Advisory or Fiduciary Relationship. The Company acknowledges and
agrees that (a) the purchase and sale of the Securities pursuant to this
Agreement, including the determination of the initial offering price of the
Securities and any related discounts and commissions, is an arm’s-length
commercial transaction between the Company, on the one hand, and the several
Initial Purchasers, on the other hand, (b) in connection with the offering of
the Securities and the process leading thereto, each Initial Purchaser is and
has been acting solely as a principal and is not the agent or fiduciary of the
Company, any of its subsidiaries or their respective stockholders, creditors,
employees or any other party, (c) no Initial Purchaser has assumed or will
assume an advisory or fiduciary responsibility in favor of the Company with
respect to the offering of the Securities or the process leading thereto
(irrespective of whether such Initial Purchaser has advised or is currently
advising the Company or any of its subsidiaries on other matters) and no Initial
Purchaser has any obligation to the Company with respect to the offering of the
Securities except the obligations expressly set forth in this Agreement, (d) the
Initial Purchasers and their respective affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Company and (e) the Initial Purchasers have not provided any legal, accounting,
regulatory or tax advice with respect to the offering of the Securities and the
Company has consulted its own respective legal, accounting, regulatory and tax
advisors to the extent it deemed appropriate.

SECTION 14. Recognition of the U.S. Special Resolution Regimes.

(a) In the event that any Initial Purchaser that is a Covered Entity becomes
subject to a proceeding under a U.S. Special Resolution Regime, the transfer
from such Initial Purchaser of this Agreement, and any interest and obligation
in or under this Agreement, will be effective to the same extent as the transfer
would be effective under the U.S. Special Resolution Regime if this Agreement,
and any such interest and obligation, were governed by the laws of the United
States or a state of the United States.

(b) In the event that any Initial Purchaser that is a Covered Entity or a BHC
Act Affiliate of such Initial Purchaser becomes subject to a proceeding under a
U.S. Special Resolution Regime, Default Rights under this Agreement that may be
exercised against such Initial Purchaser are permitted to be exercised to no
greater extent than such Default Rights could be exercised under the U.S.
Special Resolution Regime if this Agreement were governed by the laws of the
United States or a state of the United States.

For purposes of this Section 14, a “BHC Act Affiliate” has the meaning assigned
to the term “affiliate” in, and shall be interpreted in accordance with, 12
U.S.C. § 1841(k). “Covered Entity” means any of the following: (i) a “covered
entity” as that term is defined in, and interpreted in accordance with, 12
C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and
interpreted in accordance with, 12 C.F.R. §

 

26

--------------------------------------------------------------------------------

47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in
accordance with, 12 C.F.R. § 382.2(b). “Default Right” has the meaning assigned
to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§
252.81, 47.2 or 382.1, as applicable. “U.S. Special Resolution Regime” means
each of (i) the Federal Deposit Insurance Act and the regulations promulgated
thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the regulations promulgated thereunder.

SECTION 15. Parties. This Agreement shall each inure to the benefit of and be
binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.

SECTION 16. Trial by Jury. The Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and affiliates) and
each of the Initial Purchasers hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.

SECTION 17. GOVERNING LAW. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE
ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK WITHOUT REGARD TO ITS
CHOICE OF LAW PROVISIONS.

SECTION 18. Consent to Jurisdiction; Waiver of Immunity. Any legal suit, action
or proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby shall be instituted in (i) the federal courts of the United
States of America located in the City and County of New York, Borough of
Manhattan or (ii) the courts of the State of New York located in the City and
County of New York, Borough of Manhattan (collectively, the “Specified Courts”),
and each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court, as to which such jurisdiction is non-exclusive) of such courts in any
such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.

SECTION 19. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement. Counterparts
may be delivered via facsimile, electronic mail (including any electronic
signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic
Transactions Act, the Electronic Signatures and Records Act or other applicable
law, e.g., www.docusign.com) or other transmission method and any counterpart so
delivered shall be deemed to have been duly and validly delivered and be valid
and effective for all purposes.

 

27

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SECTION 21. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.

SECTION 22. Xtract Research LLC. The Company hereby agrees that the Initial
Purchasers may provide copies of the Preliminary Offering Memorandum and the
Final Offering Memorandum relating to the offering of the Securities and any
other agreements or documents relating thereto, including, without limitation,
any trust indentures, to Xtract Research LLC (“Xtract”) following the completion
of the offering for inclusion in an online research service sponsored by Xtract,
access to which is restricted to “qualified institutional buyers” as defined in
Rule 144A under the 1933 Act.

 

28

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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Initial Purchasers and the Company in accordance with its terms.

 

Very truly yours, MEDALLIA, INC. By  

/s/ Roxanne Oulman

 

Title: Chief Financial Officer

 

[Signature Page to Purchase Agreement]

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CONFIRMED AND ACCEPTED,

as of the date first above written:

BOFA SECURITIES, INC. By  

/s/ Stewart Berry

  Authorized Signatory

For itself and as a Representative of the other Initial Purchasers named in
Schedule A hereto.

 

[Signature Page to Purchase Agreement]

--------------------------------------------------------------------------------

CONFIRMED AND ACCEPTED,

as of the date first above written:

CITIGROUP GLOBAL MARKETS INC. By  

/s/ Christopher Tufts

  Authorized Signatory

For itself and as a Representative of the other Initial Purchasers named in
Schedule A hereto.

 

[Signature Page to Purchase Agreement]

--------------------------------------------------------------------------------

CONFIRMED AND ACCEPTED,

as of the date first above written:

WELLS FARGO SECURITIES, LLC By  

/s/ Elizabeth Alvarez

  Authorized Signatory

For itself and as a Representative of the other Initial Purchasers named in
Schedule A hereto.

 

[Signature Page to Purchase Agreement]

--------------------------------------------------------------------------------

CONFIRMED AND ACCEPTED,

as of the date first above written:

KEYBANC CAPITAL MARKETS INC. By  

/s/ Renn Anderson

  Authorized Signatory

For itself and as a Representative of the other Initial Purchasers named in
Schedule A hereto.

 

[Signature Page to Purchase Agreement]

--------------------------------------------------------------------------------

SCHEDULE A

The initial offering price of the Securities shall be 100% of the principal
amount thereof, plus accrued interest, if any, from the date of issuance.

The purchase price to be paid by the Initial Purchasers for the Securities shall
be 97.25% of the principal amount thereof.

 

Name of Initial Purchaser

   Principal
Amount of Securities  

BofA Securities, Inc.

   $ 200,000,000  

Citigroup Global Markets Inc.

     85,000,000  

Wells Fargo Securities, LLC

     85,000,000  

KeyBanc Capital Markets Inc.

     40,000,000  

Craig-Hallum Capital Group LLC

     11,250,000  

Credit Suisse Securities (USA) LLC

     11,250,000  

Needham & Company, LLC

     11,250,000  

Oppenheimer & Co. Inc.

     11,250,000  

Robert W. Baird & Co. Incorporated

     11,250,000  

Roth Capital Partners, LLC

     11,250,000  

Stifel, Nicolaus & Company, Incorporated

     11,250,000  

William Blair & Company, L.L.C.

     11,250,000     

 

 

 

Total

   $ 500,000,000     

 

 

 

 

Sch A-1

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SCHEDULE B

Final Term Sheet

[Attached]

 

Sch B-1

--------------------------------------------------------------------------------

PRICING TERM SHEET   STRICTLY CONFIDENTIAL DATED SEPTEMBER 15, 2020  

 

LOGO [g41429medallia.jpg]

Medallia, Inc.

$500,000,000

0.125% CONVERTIBLE SENIOR NOTES DUE 2025

The information in this pricing term sheet supplements Medallia, Inc.’s
preliminary offering memorandum, dated September 15, 2020 (the “Preliminary
Offering Memorandum”), and supersedes the information in the Preliminary
Offering Memorandum to the extent inconsistent with the information in the
Preliminary Offering Memorandum. In all other respects, this term sheet is
qualified in its entirety by reference to the Preliminary Offering Memorandum,
including all other documents incorporated by reference therein. References to
“we,” “our” and “us” refer to Medallia, Inc. and not to its consolidated
subsidiaries. Terms used herein but not defined herein shall have the respective
meanings as set forth in the Preliminary Offering Memorandum. All references to
dollar amounts are references to U.S. dollars.

 

Issuer:    Medallia, Inc. Ticker/Exchange for Our Common Stock (“common stock”):
   “MDLA”/The New York Stock Exchange. Securities:    0.125% Convertible Senior
Notes due 2025 (the “notes”). Principal Amount:    $500,000,000. Option to
Purchase Additional Notes:    $75,000,000. Denominations:    $1,000 and
multiples of $1,000 in excess thereof. Ranking:    Senior unsecured. Maturity:
   September 15, 2025, unless earlier converted, redeemed or repurchased.
Optional Redemption:   

We may not redeem the notes prior to September 20, 2023. We may redeem for cash
all or any portion of the notes, at our option, on or after September 20, 2023
and prior to the 41st scheduled trading day immediately preceding the maturity
date if the last reported sale price of our common stock has been at least 130%
of the conversion price then in effect for at least 20 trading days (whether or
not consecutive) during any 30 consecutive trading day period (including the
last trading day of such period) ending on, and including, the trading day
immediately preceding the date on which we provide notice of redemption at a
redemption price equal to 100% of the principal amount of the notes to be
redeemed, plus accrued and unpaid interest to, but excluding, the redemption
date.

 

If we elect to redeem fewer than all of the outstanding notes (a “partial
redemption”), we may in such partial redemption deem either (x) only notes
called for redemption or (y) all notes, irrespective of whether they are called
for redemption, to be convertible on account of such

--------------------------------------------------------------------------------

  

redemption during the related redemption period and entitled to an increased
conversion rate, under certain circumstances, if so surrendered for conversion
during such redemption period. If we redeem less than all the outstanding notes,
and only notes called for redemption may be converted in connection with such
partial redemption, at least $100.0 million aggregate principal amount of notes
must be outstanding and not subject to such partial redemption as of the
relevant redemption notice date. See “Description of Notes—Optional Redemption”
in the Preliminary Offering Memorandum No sinking fund is provided for the
notes, which means that we are not required to redeem or retire the notes
periodically.

 

We will give notice of any redemption not less than 45 nor more than 60
scheduled trading days’ written notice before the redemption date before the
redemption date by mail or electronic delivery to the trustee, the conversion
agent (if other than the trustee), the paying agent and each holder of notes.
See “Description of Notes—Optional Redemption.”

Fundamental Change:    If we undergo a “fundamental change” (as defined in the
Preliminary Offering Memorandum under the heading “Description of
Notes—Fundamental Change Permits Holders to Require Us to Repurchase Notes”)
prior to the maturity date of the notes, subject to certain conditions, holders
may require us to repurchase for cash all or part of their notes in principal
amounts of $1,000 or a multiple thereof. The fundamental change repurchase price
will be equal to 100% of the principal amount of the notes to be repurchased,
plus accrued and unpaid interest to, but excluding, the fundamental change
repurchase date. See “Description of Notes—Fundamental Change Permits Holders to
Require Us to Repurchase Notes” in the Preliminary Offering Memorandum. Interest
and Interest Payment Dates:   

0.125% per year.

 

Interest will accrue from September 18, 2020 and will be payable semiannually in
arrears on March 15 and September 15 of each year, beginning on March 15, 2021.

Regular Record Dates:    March 1 and September 1 of each year, immediately
preceding the March 15 and September 15 interest payment date, as the case may
be. Issue Price:    100% of principal, plus accrued interest, if any, from
September 18, 2020 if settlement occurs after that date. Last Reported Sale
Price of Our Common Stock on The New York Stock Exchange on September 15, 2020:
  

$29.15 per share. Initial Conversion Rate:    25.4113 shares of common stock per
$1,000 principal amount of the notes, subject to adjustment. Initial Conversion
Price:    Approximately $39.35 per share of common stock, subject to adjustment.
Conversion Premium:    Approximately 35.0% above the last reported sale price of
our common stock on September 15, 2020.

 

2

--------------------------------------------------------------------------------

Settlement Method:    Cash, shares of our common stock or a combination of cash
and shares of our common stock, at our election, as described in the Preliminary
Offering Memorandum. Joint Book-Running Managers:   

BofA Securities, Inc.

Citigroup Global Markets Inc.
Wells Fargo Securities, LLC
KeyBanc Capital Markets Inc.

Co-Managers:   

Craig-Hallum Capital Group LLC

Credit Suisse Securities (USA) LLC

Needham & Company, LLC

Oppenheimer & Co. Inc.

Robert W. Baird & Co. Incorporated

Roth Capital Partners, LLC

Stifel, Nicolaus & Company, Incorporated

William Blair & Company, L.L.C.

Financial Advisor to Medallia, Inc.:    J. Wood Capital Advisors LLC Pricing
Date:    September 15, 2020. Trade Date:    September 16, 2020. Expected
Settlement Date:    September 18, 2020 (T+2). CUSIP Number (144A):    584021 AA7
ISIN (144A):    US584021AA71 Listing:    None. Use of Proceeds:   

We estimate that the net proceeds from this offering will be $485.3 million (or
approximately $558.2 million if the initial purchasers exercise their option to
purchase additional notes in full), after deducting the initial purchasers’
discount and estimated offering expenses payable by us.

 

We have entered into capped call transactions with one or more of the initial
purchasers or their respective affiliates and other financial institutions (the
“option counterparties”).

 

We expect to use (i) $53.8 million of the net proceeds from this offering to pay
the cost of the capped call transactions and (ii) the remainder of the net
proceeds for general corporate purposes, which may include working capital,
capital expenditures, and potential acquisitions and strategic transactions.

 

If the option granted to the initial purchasers to purchase additional notes is
exercised, we may use a portion of the net proceeds from the sale of such
additional notes to enter into additional capped call transactions. We intend to
use the remaining net proceeds for general corporate purposes.

 

3

--------------------------------------------------------------------------------

Description of Notes—Conversion Rights—Increase in Conversion Rate upon
Conversion upon a Make-Whole Fundamental Change or upon Redemption

Holders who convert their notes in connection with a make-whole fundamental
change or a redemption occurring prior to the maturity date of the notes may be
entitled to an increase in the conversion rate for the notes so surrendered for
conversion.

The following table sets forth the number of additional shares by which the
conversion rate for the notes will be increased per $1,000 principal amount of
notes for each stock price and effective date or redemption notice date, as
applicable, set forth below:

 

 

 

     Stock Price  

Effective date/
Redemption notice
date

   $29.15      $32.00      $35.00      $39.35      $45.00      $51.16     
$60.00      $70.00      $80.00      $100.00      $120.00      $150  
September 18, 2020      8.8940        7.3059        5.9971        4.5695       
3.2751        2.3219        1.4507        0.8671        0.5190        0.1732  
     0.0423        0.0000   September 15, 2021      8.8940        7.2961       
5.9577        4.4628        3.1260        2.1597        1.2980        0.7397  
     0.4194        0.1197        0.0199        0.0000   September 15, 2022     
8.8940        7.2625        5.7954        4.2300        2.8593        1.8962  
     1.0705        0.5639        0.2910        0.0609        0.0028       
0.0000   September 15, 2023      8.8940        7.0219        5.4451       
3.7987        2.4093        1.4834        0.7460        0.3380        0.1435  
     0.0121        0.0000        0.0000   September 15, 2024      8.8940       
6.5153        4.7486        2.9845        1.6233        0.8329        0.3137  
     0.0936        0.0190        0.0000        0.0000        0.0000  
September 15, 2025      8.8940        5.8387        3.1601        0.0000       
0.0000        0.0000        0.0000        0.0000        0.0000        0.0000  
     0.0000        0.0000  

The exact stock prices and effective dates or redemption notice dates may not be
set forth in the table above, in which case:

 

  •  

If the stock price is between two stock prices in the table or the effective
date or redemption notice date, as the case may be, is between two effective
dates or redemption notice dates, as applicable, in the table, the number of
additional shares by which the conversion rate will be increased will be
determined by a straight-line interpolation between the number of additional
shares set forth for the higher and lower stock prices and the earlier and later
effective dates or redemption notice dates, as applicable, based on a 365-day
year.

 

  •  

If the stock price is greater than $150.00 per share (subject to adjustment in
the same manner as the stock prices set forth in the column headings of the
table above), no additional shares will be added to the conversion rate.

 

  •  

If the stock price is less than $29.15 per share (subject to adjustment in the
same manner as the stock prices set forth in the column headings of the table
above), no additional shares will be added to the conversion rate.

Notwithstanding the foregoing, in no event will the conversion rate per $1,000
principal amount of notes exceed 34.3053 shares of common stock, subject to
adjustment in the same manner as the conversion rate as set forth in the
Preliminary Offering Memorandum under the caption “Description of
Notes—Conversion Rights—Conversion Rate Adjustments.”

Our obligation to increase the conversion rate for notes converted in connection
with a make-whole fundamental change or during a redemption period could be
considered a penalty, in which case the enforceability thereof would be subject
to general principles of reasonableness and equitable remedies.

[Remainder of Page Intentionally Blank]

 

4

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This communication is intended for the sole use of the person to whom it is
provided by the sender. This material is confidential and is for your
information only and is not intended to be used by anyone other than you. This
information does not purport to be a complete description of the notes or the
offering. This communication does not constitute an offer to sell or the
solicitation of an offer to buy any notes in any jurisdiction to any person to
whom it is unlawful to make such offer or solicitation in such jurisdiction.

The notes and any shares of common stock issuable upon conversion of the notes
have not been and will not be registered under the U.S. Securities Act of 1933,
as amended (the “Securities Act”), or any other securities laws, and may not be
offered or sold within the United States or any other jurisdiction, except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any other applicable
securities laws. The initial purchasers are initially offering the notes only to
qualified institutional buyers as defined in, and in reliance on, Rule 144A
under the Securities Act.

The notes and any shares of common stock issuable upon conversion of the notes
are not transferable except in accordance with the restrictions described under
“Notice to Investors” and “Transfer Restrictions” in the Preliminary Offering
Memorandum.

A copy of the Preliminary Offering Memorandum for the offering of the notes may
be obtained by contacting (i) BofA Securities, Inc., NC1-004-03-43, 200 North
College Street, 3rd Floor, Charlotte, NC 25255-0001, Attention: Prospectus
Department, by telephone at 1-800-294-1322 or by email at
df.prospectus_requests@bofa.com, (ii) Citigroup Global Markets Inc., c/o
Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 or
by telephone at 1-800-831-9146, (iii) Wells Fargo Securities, LLC, 500 West 33rd
Street, New York, NY 10001, Attention: Equity Syndicate Department, by telephone
at 1-800-326-5897 or by email at cmclientsupport@wellsfargo.com or (iv) KeyBanc
Capital Markets Inc., 127 Public Square, 4th Floor, Cleveland, OH 44114,
Attention: Equity Syndicate or by telephone at 1-800-859-1783.

Any legends, disclaimers or other notices that may appear below are not
applicable to this communication and should be disregarded. Such legends,
disclaimers or other notices have been automatically generated as a result of
this communication having been sent via Bloomberg or another system.

 

5

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SCHEDULE C

Issuer Written Information

Final Term Sheet in the form set forth on Schedule B

 

Sch C-1

--------------------------------------------------------------------------------

SCHEDULE D

List of Persons and Entities Subject to Lock-up

Leslie Stretch

Roxanne Oulman

Jimmy Duan

Mikael Ottoson

Borge Hald

Robert Bernshteyn

Mitchell Dauerman

Leslie Kilgore

Douglas Leone

Stanley Meresman

Amy Pressman

Steven Walske

James M. White

 

Sch D-1

--------------------------------------------------------------------------------

Exhibit A

FORM OF LOCK-UP TO BE DELIVERED PURSUANT TO SECTION 5(g)

September ___, 2020

 

BofA Securities, Inc.
as Representative of the several
Initial Purchasers to be named in the
within-mentioned Purchase Agreement

 

c/o  BofA Securities, Inc.

One Bryant Park

New York, New York 10036

 

 

  Re:

144A Placement by Medallia, Inc.

Ladies and Gentlemen:

The undersigned, an officer and/or director of Medallia, Inc., a Delaware
corporation (the “Company”), understands that BofA Securities, Inc. (the
“Representative”) proposes to enter into a Purchase Agreement (the “Purchase
Agreement”) as representative of the several initial purchasers to be named
therein (the “Initial Purchasers”), with the Company providing for the placement
(the “Placement”) of the Company’s Convertible Senior Notes due 2025 (the
“Securities”). In recognition of the benefit that such Placement will confer
upon the undersigned as an officer and/or director of the Company, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each Initial Purchaser that, during
the period beginning on the date hereof and ending on the date that is 60 days
from the date of the Purchase Agreement (the “Lock-Up Period”), the undersigned
will not, without the prior written consent of the Representative, (i) directly
or indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of any shares of
the Company’s common stock, par value $0.001 per share (the “Common Stock”) or
any securities convertible into or exercisable or exchangeable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition
(collectively, the “Lock-Up Securities”), (ii) exercise any right with respect
to the registration of any of the Lock-Up Securities, or file, cause to be filed
or cause to be confidentially submitted any registration statement in connection
therewith, under the Securities Act of 1933, as amended (the “Securities Act”),
or (iii) enter into any swap, hedging transactions or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Lock-Up Securities, whether any such
swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.

Notwithstanding the foregoing, and subject to the conditions below, the
undersigned may transfer the Lock-Up Securities without the prior written
consent of the Representative:

 

  (i)

as a bona fide gift or gifts or for bona fide estate planning purposes;

 

  (ii)

by will or intestacy;

--------------------------------------------------------------------------------

  (iii)

to any trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned (for purposes of this lock-up agreement,
“immediate family” shall mean any relationship by blood, current or former
marriage, domestic partnership or adoption, not more remote than first cousin)
or if the undersigned is a trust, to a trustor or beneficiary of the trust or to
the estate of a beneficiary of such trust;

 

  (iv)

to a partnership, limited liability company or other entity of which the
undersigned and the immediate family of the undersigned are the legal and
beneficial owner of all of the outstanding equity securities or similar
interests;

 

  (v)

to a nominee or custodian of a person or entity to whom a disposition or
transfer would be permissible under clauses (i) through (iv) above

 

  (vi)

by operation of law, such as pursuant to a qualified domestic order, divorce
settlement, divorce decree or separation agreement;

 

  (vii)

if the undersigned is a corporation, partnership, limited liability company,
trust or other business entity, (A) to another corporation, partnership, limited
liability company, trust or other business entity that is an affiliate (as
defined in Rule 405 promulgated under the Securities Act) of the undersigned, or
to any investment fund or other entity controlling, controlled by, managing or
managed by or under common control with the undersigned or affiliates of the
undersigned (including, for the avoidance of doubt, where the undersigned is a
partnership, to its general partner or a successor partnership or fund, or any
other funds managed by such partnership), or (B) as part of a distribution,
transfer or disposition without consideration by the undersigned to its
stockholders, partners, members or other equity holders;

 

  (viii)

to the Company in connection with the vesting or settlement of restricted stock
units or the exercise of options or other rights to purchase the shares of
Common Stock (including, in each case, by way of “net” or “cashless” exercise),
including any transfer for the payment of exercise price, tax withholdings or
remittance payments due as a result of the vesting, settlement, or exercise of
such restricted stock units, options or rights; provided that if the undersigned
is required to file a report under Section 16(a) of the Exchange Act (as defined
below) reporting a reduction in beneficial ownership of shares of Common Stock
during the Lock-Up Period, the undersigned shall clearly indicate in the
footnotes thereto that the filing relates to the circumstances described in this
clause (viii);

 

  (ix)

to the Company pursuant to any contractual arrangement that provides the Company
with an option to repurchase such shares of Common Stock in connection with the
termination of the undersigned’s employment with the Company; provided that such
contractual arrangement (or a form thereof) is in effect on the date hereof and
is disclosed in the Final Offering Memorandum relating to the Placement
(including the documents incorporated by reference therein); and provided
further that no filing under Section 16(a) of the Exchange Act or other public
filing, report or announcement reporting a reduction in beneficial ownership of
shares of Common Stock shall be required or shall be voluntarily made during the
Lock-Up Period within 30 days after the date the undersigned ceases to provide
services to the Company, and after such 30th day, if the undersigned is required
to file a report under Section 16(a) of the Exchange Act reporting a reduction
in beneficial ownership of shares of Common Stock during the Lock-Up Period, the
undersigned shall clearly indicate in the footnotes thereto that the filing
relates to the termination of the undersigned’s employment or other services; or

--------------------------------------------------------------------------------

  (x)

pursuant to a bona fide third-party tender offer, merger, consolidation or other
similar transaction that is approved by the Board of Directors of the Company
and made to all holders of the Company’s capital stock involving a Change of
Control (as defined below) of the Company, provided that in the event that such
tender offer, merger, consolidation or other similar transaction is not
completed, the undersigned’s Lock-Up Securities shall remain subject to the
provisions of this lock-up agreement;

provided that (A) in the case of any transfer or distribution pursuant to
clauses (i) through (vii) above, each donee, devisee, transferee or distributee
shall execute and deliver to the Representative a lock-up agreement in the form
hereof, (B) in the case of any transfer or distribution pursuant to clauses
(i) through (v) and (vii) above, no filing by any party (donor, donee,
transferor, transferee, distributor or distributee) under the Exchange Act of
1934, as amended (the “Exchange Act”), or other public announcement reporting a
reduction in beneficial ownership of shares of Common Stock shall be required or
shall be made voluntarily in connection with such donation, transfer or
distribution (other than any required filing on a Form 5), (C) in the case of
any transfer or distribution pursuant to clause (vi) above it shall be a
condition to such transfer that any required filing under Section 16(a) of the
Exchange Act, or other public filing, report or announcement reporting a
reduction in beneficial ownership of shares of Common Stock shall clearly
indicate in the footnotes thereto the nature and conditions of such transfer and
no other public filing or announcement shall be made voluntarily in connection
with such transfer or distribution, and (D) in the case of any transfer or
distribution pursuant to clauses (i) through (v) and (vii), any such transfer or
disposition shall not involve a disposition for value.

In addition, the foregoing paragraph shall not apply (A) sales pursuant to a
trading plan of the undersigned established pursuant to Rule 10b5-1 under the
Exchange Act for the transfer of shares of Common Stock (a “10b5-1 Plan”), (B)
to the establishment of a 10b5-1 Plan or (C) to the amendment of a 10b5-1 Plan;
provided that, in the case of sales pursuant to clause (A), it shall be a
condition to such sale that any required filing under Section 16(a) of the
Exchange Act, or other public filing, report or announcement reporting a
reduction in beneficial ownership of shares of Common Stock shall clearly
indicate in the footnotes thereto that such sale was made pursuant to such
10b5-1 Plan, in the case of clause (B), (1) such plan does not provide for the
transfer of Common Stock during the Lock-Up Period and (2) to the extent a
filing by any party under the Exchange Act or other public announcement shall be
made voluntarily in connection with the establishment of such trading plan, such
announcement or filing shall include a statement to the effect that no transfer
of shares of Common Stock may be made under such plan during the Lock-Up Period
and, in the case of clause (C), (1) such plan does not provide for the transfer
of additional shares of Common Stock during the Lock-Up Period beyond what
Common Stock could have been transferred but for the amendment and (2) to the
extent a filing by any party under the Exchange Act or other public announcement
shall be made voluntarily in connection with the amendment of such trading plan,
such announcement or filing shall include a statement to the effect that no
additional transfer of shares of Common Stock will be made under such plan
during the Lock-Up Period beyond what Common Stock could have been transferred
but for the amendment.

For purposes of this lock-up agreement, “Change of Control” shall mean the
transfer (whether by tender offer, merger, consolidation or other similar
transaction), in one transaction or a series of related transactions that is
approved by the Board of Directors of the Company, to a person or group of
affiliated persons, of the Company’s voting securities if, after such transfer,
such person or group of affiliated persons would hold more than 66 2/3% of the
outstanding voting securities of the Company (or the surviving entity).

The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the
transfer of the Lock-Up Securities except in compliance with the foregoing
restrictions.

--------------------------------------------------------------------------------

The undersigned hereby consents to receipt of this lock-up agreement in
electronic form and understands and agrees that this this lock-up agreement may
be signed electronically. In the event that any signature is delivered by
facsimile transmission, electronic mail, or otherwise by electronic transmission
evidencing an intent to sign this this lock-up agreement, such facsimile
transmission, electronic mail or other electronic transmission shall create a
valid and binding obligation of the undersigned with the same force and effect
as if such signature were an original. Execution and delivery of this lock-up
agreement by facsimile transmission, electronic mail or other electronic
transmission is legal, valid and binding for all purposes.

The undersigned understands that the Initial Purchasers are entering into the
Purchase Agreement and proceeding with the Placement in reliance upon this
lock-up agreement. The undersigned further understands that this lock-up
agreement is irrevocable and shall be binding upon the undersigned’s heirs,
legal representatives, successors, and assigns. The undersigned hereby
represents and warrants that the undersigned has full power and authority to
enter into this lock-up agreement. This lock-up agreement and any claim,
controversy or dispute arising under or related to this lock-up agreement shall
be governed by and construed in accordance with the laws of the State of New
York, without regard to the conflict of laws principles thereof.

Notwithstanding anything to the contrary contained herein, this lock-up
agreement will automatically terminate and the undersigned shall be released
from all obligations hereunder upon the earliest to occur of (A) the Company
advising the Representative in writing that it has determined not to proceed
with the Placement, (B) the Purchase Agreement being executed but then
terminated (other than the provisions thereof which survive termination) prior
to payment for and delivery of any Securities to be sold thereunder, or
(iv) September 30, 2020, if the Purchase Agreement does not become effective by
such date; provided, however, that the Company may, by written notice to the
undersigned prior to such date, extend such date for a period of up to one
additional month.

 

[Signature page follows]

--------------------------------------------------------------------------------

Very truly yours,

 

  Name of Security Holder (Print exact name) By:       Signature If not signing
in an individual capacity:   Name of Authorized Signatory (Print)   Title of
Authorized Signatory (Print) (indicate capacity of person signing if signing as
custodian, trustee, or on behalf of an entity)

 

[Signature Page to Lock-Up Agreement]